Fortress achieves record assets, vacancy rate

In its 2023 financial year, Fortress Real Estate Investments achieved its largest portfolio of direct real estate assets but saw a drop in headline earnings in the period.

Fortress published its 2023 financial year results today, revealing a record in the company’s property portfolio and vacancy rate.

Fortress’ portfolio of direct real estate assets, excluding developments in progress, is now valued at R30 billion, its largest since listing in October 2009.

The company also achieved its lowest vacancy rate since listing, at 3.7%, compared to 5.4% in FY 2022.

“At the core of this result is the continued capital recycling through the disposal of older, under-performing properties to fund new developments that are in demand and have lower structural Vacancies,” said Fortress CEO Steven Brown.

“Our continued strategic focus on developing and letting premium-grade logistics real estate in South Africa and Central and Eastern Europe, as well as growing our convenience and commuter-oriented retail portfolio, has proven to be successful.”

However, the company’s headline earnings declined in FY 2023, dropping from R2.52 billion in 2022 to R1.91 billion in 2023.

On the other hand, basic earnings per share grew from 70.33 cents to 281.92 cents per share.

Fortress’ total revenue increased from R3.45 billion in 2022 to R3.79 billion in 2023. 

“Rising interest rates have impacted commercial real estate globally, both from a valuation perspective and an increase in funding costs,” Brown said.

“South Africa has not been immune to this global trend, but the impact has been less pronounced than in developed markets.” 

“Higher interest rates have led to flat investment property valuations across our portfolio despite higher net operating income. Fortress has hedged 85% of its interest rate risk for a period of 3.5 years, which has mitigated the impact of higher interest costs on our debt.”