Steven Brown
Fortress Real Estate Investments
CEO
Building on the strength of its strategic growth plan, Fortress Real Estate Investments has reaffirmed the confidence investors have in the property investment company and rewarded them with a total shareholder return in excess of 30% for the financial year.
The company’s strategic pivot away from office, industrial, underperforming properties, and non-core assets, and into quality assets in high-growth, state-of-the-art logistics and defensive commuter and convenience retail assets in South Africa and Central and Eastern Europe (CEE) continues to power growth and deliver value.
“The global and local real estate markets have benefited from reduced interest rates and improved market fundamentals, which first emerged in the latter part of 2024 with the start of GNU and G20 this year,” explains Steven Brown, CEO at Fortress Real Estate Investments.
This favourable shift in market dynamics coincided with a move away from a particularly complex capital structure in February 2024, which placed Fortress in a stronger market position.
Shifting to a real estate investment company (REIC) has unlocked various benefits, including specific tax deductions in relation to development allowances that are otherwise not claimable as a REIT.
“Over this period, investors have returned to the direct real estate market, providing an underpin to our direct property valuations, which have increased by 6,5% from FY2024 on a like-for-like basis,” continues Brown.
“We have also seen encouraging investor returns in the listed real estate market, with our shares currently trading at a 10% discount to net asset value (NAV), from over 20% at the start of the financial year.”
The company’s combined portfolio, which includes two thirds’ logistics properties in South Africa and CEE valued at R22.7 billion, and a third of the portfolio of retail properties of R11.8 billion in South Africa, provides shareholders with exposure to listed and liquid shares that pay regular after-tax dividends.
“We also currently hold approximately R15.8 billion in NEPI Rockcastle shares, which together, provide a portfolio of real estate assets in excess of R50 billion, supported by a significant development pipeline.”
The continued focus on a higher-quality portfolio is evident in the company’s FY2025 performance.
A low overall vacancy rate of 3,4% across the portfolio based on rentals supported the strong results. Logistics vacancies are at a record low at 0,4% which confirms the ongoing demand Fortress has for its high-quality warehouses located in secure logistics parks.
The retail portfolio delivered strong like-for-like net operating income (NOI) growth of 9,4%, which is materially above the inflation rate for the year of 3,0%.
“This portfolio contributed 35% to our total NOI and remains a significant driver of our growth. Our focus in commuter and convivence shopping centres are trading well and have growth potential into the future, combined with disposing of underperforming centres and investing in our current malls, has contributed to the outperformance,” continues Brown.
“Our development team again contributed meaningfully to our performance and reached a milestone, with our in-house teams in South Africa and Poland developing 70% of our current logistics properties. We have a remaining 210,000 m² of GLA to develop over the next four years with most of that being in the CEE region.”
Further progress in rolling out the company’s renewable energy strategy continues to unlock operational and cost efficiencies. Fortress installed a further 37 solar photovoltaic (PV) plants across its portfolio, an increase of 62,7% from the prior year.
“Fortress now operates 96 solar PV systems, including sites in Poland and Romania. We reached a major sustainability milestone this year, having generated 100 million kilowatt-hours (kWh) of renewable energy since the launch of our first rooftop solar photovoltaic (PV) installation in 2017.”
Total distributions for FY2025 of R1,956 billion represent an increase of 9,4% on the prior year. Growth in distribution per share was 22,9% for 2H2025 compared to the prior six-month period for 2H2024.
This resulted in a final dividend of 86,29 cents per share for 2H2025 in addition to the 1H2025 interim after-tax cash dividend of 76,15 cents per share paid in April 2025. The total distribution for FY2025 amounted to 162,44 cents per share.
To provide more options for its diverse shareholder base, Fortress continues to allow shareholders to receive the final dividend in cash or as a scrip dividend in the form of NEPI Rockcastle shares at a ratio of 0,678 for every 100 Fortress B shares held.
Brown is optimistic about the year ahead, with the company’s focused portfolio, strong development pipeline and favourable market conditions supporting an improved outlook for FY2026.
“We’re forecasting growth of between 6,0% and 7,5% in distributable earnings per share,” he explains.
“Our consistent success comes from a disciplined commitment to our strategy. We are firmly focused on strengthening the quality and earnings power of our core portfolio, advancing development projects, maintaining low vacancies, delivering more efficiencies through sustainability projects and continuing to maximise capital allocation. These priorities position us to continue to power growth in distributable earnings and create lasting value for our shareholders, tenants and our surrounding communities,” concludes Brown.