Fortress Real Estate Investments closed FY2026 with stronger distributable earnings, rising property values and materially lower gearing, as its long-running strategy of recycling capital into higher-quality logistics and convenience retail assets continued to translate into improved operating performance.

For the year ended 30 June 2026, Fortress reported distributable earnings of R2.234 billion, 14.2% higher than FY2025 and ahead of its R2.15 billion guidance. The total dividend increased 10.1% to 178.80 cents per share, comprising an interim dividend of 87.89 cents and a final dividend of 90.91 cents.

The results underline the scale of Fortress’s transformation from a broader diversified property owner into a business increasingly concentrated on logistics in South Africa and Central and Eastern Europe (CEE), supported by commuter and convenience-focused retail assets.

Fortress’s direct property portfolio was valued at approximately R40.9 billion at year-end. This comprised R19.2 billion of South African logistics assets, R12.9 billion of retail property and R6.3 billion of CEE logistics property, with smaller exposures to industrial, office and other assets. In addition, Fortress held a 14.4% interest in NEPI Rockcastle, valued at around R15.3 billion at the date of the report, giving shareholders exposure to direct and indirect real estate assets exceeding R56 billion.

Portfolio quality drives operating growth
The strongest feature of the results is the underlying operating performance of the core South African portfolio.

Like-for-like net operating income grew 8.4% in South African logistics and 7.3% in retail, contributing to overall like-for-like portfolio NOI growth of 6.8%. Fortress also recorded 6.4% like-for-like growth in South African property values.

Management attributes this improvement to years of capital recycling. Since 2019, Fortress has disposed of R11.6 billion of assets while developing and acquiring approximately R17.5 billion of newer property. The strategy has progressively replaced older stock with modern logistics facilities, expansions and acquisitions expected to deliver stronger future earnings growth.

At 30 June, the total direct portfolio vacancy rate was 2.8% by GLA, compared with 3.7% a year earlier. The portfolio had a weighted average lease expiry of 4.4 years, average in-force escalations of 5.9% and an annualised property yield of 8.6%.

The sectoral figures illustrate where the strength lies. South African logistics vacancies remained exceptionally low at 1.4%, although up from 0.4%, while retail vacancies increased from 0.9% to 2.3%. CEE logistics showed a substantial improvement, with vacancy declining from 14.4% to 2.7% as recently developed space was absorbed. Office remains the weakest part of the portfolio, with vacancies of 23.7%, although office exposure is now relatively small.

Strong valuations lift statutory profit
Fortress’s IFRS profit increased sharply to R5.15 billion, from R2.67 billion in FY2025, while profit attributable to equity holders rose to R5.07 billion. Basic earnings increased to 417.04 cents per share from 222.87 cents.

This growth was influenced substantially by valuation movements. Fortress recognised a R2.40 billion fair-value gain on investment property, together with a R1.20 billion gain on its listed investment and a R231 million gain on derivative instruments. Overall fair-value gains amounted to R3.66 billion compared with only R213 million in the previous year.

The property revaluation reflects strengthening direct real estate markets and improving cash flows across the portfolio. The group’s entire property portfolio is independently externally valued annually, with investment property valuation remaining the principal key audit matter identified by KPMG. The auditor nevertheless issued an unmodified audit opinion, concluding that the financial statements fairly present Fortress’s financial position and performance.

Balance sheet strengthens materially
One of the most significant improvements was in leverage.
Fortress’s SA REIT loan-to-value ratio declined from 39.1% to 34.0%, while net debt reduced to R19.46 billion from R20.79 billion. SA REIT NAV increased to R35.3 billion, with NAV per share rising from R25.15 to R27.46.

The group ended the year with cash and cash equivalents of almost R6 billion, compared with R5.25 billion in FY2025. Gross interest-bearing borrowings were R27.12 billion.

Fortress also benefited from easing South African funding costs. Its all-in weighted average cost of rand debt declined from 9.13% to 8.65%, while the cost of euro-denominated debt increased from 4.20% to 4.56%.

A key capital event was the R1.35 billion accelerated bookbuild launched just before year-end, through which 55.67 million new FFB shares were placed at R24.25 per share. The shares were formally issued on 3 July 2026. The additional equity provides Fortress with capital to fund its development pipeline without needing to dispose of assets into what management views as an improving direct property market.

Logistics remains the growth engine
Fortress has an in-house development pipeline exceeding R4.6 billion across South Africa and CEE. Its European exposure is increasingly concentrated in Poland, which represents almost 89% of its CEE portfolio by valuation, with Romania accounting for the balance.

Projects under development include logistics parks in Zabrze, Łódź, Gdańsk, Stargard and Bucharest, while the South African pipeline includes Longlake, Clairwood, Cornubia Ridge, Eastport, Rivergate and other logistics developments.

During FY2026 Fortress also acquired a 51% controlling interest in the owner of Balfour Mall in Johannesburg, an industrial property in Wrocław, Poland, and an 80% share in development land in Bucharest.

NEPI Rockcastle remains an important earnings contributor
Fortress’s investment in NEPI Rockcastle remains strategically significant. At 30 June the investment had a carrying value of nearly R15 billion, with Fortress receiving R1.17 billion in NEPI Rockcastle dividends during FY2026. The holding was 14.43% at year-end.

Overall, FY2026 presents a business with stronger operating fundamentals, lower leverage and meaningful development capacity. The combination of low logistics vacancies, improving property values, substantial liquidity and access to fresh equity leaves Fortress positioned to continue its development-led growth strategy, although rising global energy prices and interest rates remain potential pressures.

The central message from the results is that Fortress’s portfolio recycling strategy is increasingly visible in both earnings and valuations: the company is now more concentrated in the logistics and retail assets it considers capable of delivering sustainable long-term income growth.