In its interim results for the six months ended 31 December 2025 (1H2026), the real estate investment company highlighted low vacancies across its portfolio and increasing interest in direct property assets, driving price growth and improved capital market sentiment.
For the period ended 31 December 2025, Fortress Real Estate Investments reported like-for-like net operating income (NOI) growth of 7.0% and 6.6% in its core retail and logistics portfolios, respectively, coupled with positive lease-reversion income from lease expiries.
Fortress owns a direct property portfolio valued at R38,7 billion. The portfolio includes logistics properties in South Africa and Central and Eastern Europe (CEE), valued at R24,1 billion, and a portfolio of direct retail properties in South Africa, valued at R11,9 billion. In addition, Fortress holds a 14,2% interest in NEPI Rockcastle.
“We expect the prevailing market dynamics to translate into better valuations and continued higher asking prices for assets, which bodes well for our portfolio of quality core assets,” explains Steven Brown, CEO at Fortress Real Estate Investments.
All disposals after 30 June 2025 were concluded at a premium to the most recent formal valuations and at a 4,9% premium to book value, generating R271,5 million in gross proceeds.
However, Brown says the improving market conditions warrant a more patient approach to the disposal of non-core assets to maximise returns, with the company declining several offers at significant premiums to book values during the period under review.
“Given the improving demand for these assets, timing is key. This shift in approach was intentional to allow market expectations to align with our view that the current value of our non-core assets is above our own book values.”
“We expect the market prices to continue firming during the course of the year following additional interest rate cuts and improved market confidence,” adds Brown.
The company’s strong financial results were also buoyed by the favourable demand and supply dynamics in the market, with portfolio vacancy rates by rental falling from 3,4% to 2,8%.
Brown highlights a notably low 0,3% vacancy rate in the South African logistics portfolio, indicative of solid demand for premium-grade logistics facilities.
Commenting on the robust demand, Brown says the company continues to add new developments in key nodes, which are mostly pre-let, with limited speculative space coming to market.
“Tenants are also remaining in their existing facilities due to a lack of alternative choices. The benefit of this is seen in our positive logistics rental reversions of 7% for this period.”
Tenant turnover growth in the retail portfolio was 4,6% for the 12 months ended 31 December 2025, remaining ahead of consumer price inflation for the period. Efficiency enhancements at its retail centres have contributed to performance and NOI growth in this portfolio.
The loan-to-value ratio also reduced to 38,1%, down from 39,1% at 30 June 2025.
“Utility management continues to be a key operational focus area on the back of the challenges presented by local municipalities, their service delivery and ongoing administrative issues,” explains Brown.
These measures include additional solar installations, water backup, and data-driven efficiency initiatives.
As at 31 December 2025, Fortress had 103 operational solar PV plants, including three in CEE, with an installed capacity of 36,75MWac, up from 96 plants and 35,49MWac at 30 June 2025.
“Our aim is to have 120 operational plants, with a target of 40MWac by 30 June 2026,” states Brown.
- The strong first-half performance of FY2026 also includes distribution per share growth of 15,4% for 1H2026 over 1H2025, and a distributable earnings guidance upgrade, with total distributable earnings now expected to be approximately 10% higher compared to the previously guided range of 7,3% to 8,8%.
- 1H2026 distributable earnings increased by 16,8%, to R1,07 billion, when compared to 1H2025. Based on its 1H2026 performance, the Board of Fortress Real Estate Investments declared an interim dividend of 87,89 cents per share.
Shareholders can also elect a scrip alternative in the form of additional Fortress Real Estate Investments Ltd (JSE:FFB) shares issued at a 3% discount to the prevailing volume-weighted average price (VWAP), less the interim dividend.
“Our 16,7% growth in distributable earnings and 15,4% increase in interim distributions reflect the strength and quality of our core portfolio, disciplined capital allocation, and improving operating environment,” concludes Brown.