Fortress Real Estate reaffirms distributable earnings forecast for FY2026, provides FY2027 guidance

Fortress Real Estate Investments has reaffirmed its distributable earnings forecast for the financial year ending 30 June 2026 (FY2026) of at least R2 150 million. This translates into a forecast distribution of at least 176,48 cents per share, compared with 162,44 cents per share for the financial year ended 30 June 2025.

WORDS & PHOTOS: SUPPLIED

The Board further provided earnings guidance for the financial year ending 30 June 2027 (“FY2027”) of approximately R2 310 million, representing a 7,4% increase compared to FY2026 guidance.

According to CEO Steven Brown, sustained strength in the logistics and retail sectors has been instrumental in supporting the company’s overall operational performance.

“The logistics sector continues to outperform, underpinned by sustained demand for premium, secure warehousing,” said Brown.

Overall vacancies, by rental, declined to 2,3% at 31 May 2026 compared to 2,8% at 31 December 2025. More specifically, vacancy levels remain low at 1,4% in the South African logistics portfolio, while vacancies in the Central and Eastern Europe portfolio improved materially to 1,8% (9% at 31 December 2025), driven mainly by improved occupancy at Gdańsk Logistics Park.

“These low vacancy rates reflect strong demand for high-quality developments in secure, well-located parks, proactive asset management and the enhanced quality of our logistics platform,” Brown said.

Fortress logistics portfolio

Strong demand and pre-leased space across the Fortress logistics portfolio, most notably at the Eastport and Longlake Logistics Parks, and the Bydgoszcz Logistics Park in Poland, continue to support a robust development pipeline.

“Since 30 June 2025, we have completed 88 292m² of new logistics space, with a further 65 662m² under construction,” added Brown.

This includes 50 000m² of Gross Lettable Area (GLA) currently under construction in South Africa, and 15 000m² in Poland.

The retail portfolio also continues to perform well, delivering like-for-like tenant turnover growth of 4,2% and maintaining a low vacancy rate of 0,8%.

“Asset management initiatives, together with recently refurbished and expanded centres, continue to support the resilience and performance of the retail portfolio,” explained Brown.

Fortress continued to implement its capital recycling strategy, disposing of non-core and underperforming properties. For the FY2026 year-to-date, disposals with a combined book value of R362,4 million realised proceeds of R382,5 million, a 5,5% premium to book value, with an average exit yield on disposals, excluding land, of 8,3%.

The company has reinvested these proceeds into logistics developments and strategic retail upgrades, extensions and an acquisition.

Steven Brown, CEO of Fortress Real Estate Investments Ltd

This included the acquisition of a controlling 51% stake in Balfour Mall in Highlands North, Johannesburg. The 37 000m² suburban retail centre aligns with Fortress’ strategy of investing in well-located, community-serving retail assets, with redevelopment plans already at an advanced stage. The retail centre was acquired at a yield of approximately 10%. The Group acquired a controlling stake in partnership with Consolidated Urban and Forever Young Capital. The price paid for 100% of the asset was R175 million.

Fortress continues to invest in energy resilience through the expansion of solar photovoltaic (PV) capacity across its portfolio.

“At present, we have 113 operational solar PV systems with installed capacity of 38,84MWac. Between July 2025 and May 2026, Fortress produced approximately 50,334MWh of solar energy, 26,6% more than the same period in the prior year. A further nine installations are on site, seven of which are expected to be operational by 30 June 2026, bringing total capacity to 40MWac across 120 installations,” Brown said.

Fortress plans to commission an additional eight plants, increasing total installations to 130 and overall capacity to 42MWac.

“We have installed three battery energy storage systems totalling 1,95MWh at one retail centre and two logistics assets to enhance returns from the solar PV installations,” added Brown.

“Orders have been placed for a further seven installations, totalling 5,1MWh, at three retail and four logistics properties, with the first plants expected online by July 2026.”

Alongside continued investment in asset quality and energy resilience, Fortress strengthened its liquidity and funding position through successful capital market issuances, disciplined debt settlement and diversified offshore funding.

“We maintain a strong liquidity position, with R7,6 billion in cash and available facilities, and a loan-to-value ratio of approximately 38,8%, comfortably within all covenant thresholds.

With our liquidity, a disciplined balance sheet and a high-quality pipeline across two continents, we are well-positioned to continue delivering growth across our logistics and retail real estate platform,” concluded Brown.