Fortress surges on strong demand and low vacancies

• Distributable earnings up 16.8% as demand lifts logistics and retail performance
• Vacancies fall to 2.8%, with SA logistics near fully let at 0.3%
• Asset disposals at premiums signal strengthening property market values

Fortress delivers strong growth on market tailwinds‍

Improving property market conditions and strong demand for core assets have powered a robust performance from Fortress Real Estate Investments in its interim results for the six months ended 31 December 2025 (1H2026).

Fortress reported solid growth across key metrics, supported by low vacancies, rising rental reversions, and renewed investor interest in direct property assets.

At a time when sentiment in listed property is recovering, Fortress is positioning itself to benefit from tightening supply, particularly in logistics and convenience retail.

Operational strength driving earnings growth‍

Fortress delivered like-for-like net operating income (NOI) growth of 7.0% in retail and 6.6% in logistics, underpinned by strong leasing activity and positive rental reversions.

Vacancies across the portfolio declined from 3.4% to 2.8%, with the standout performer being the South African logistics portfolio, where vacancies dropped to an exceptionally low 0.3%.

This reflects a structural shortage of premium logistics space, tenants are staying put, and new developments are largely pre-let before completion.

Portfolio scale and strategic positioning‍

Fortress’s direct property portfolio is valued at approximately R38.7 billion, comprising:

• Logistics assets: R24.1 billion (SA + Central & Eastern Europe)
• Retail assets: R11.9 billion (South Africa)
• Strategic stake: 14.2% in NEPI Rockcastle

This positioning gives Fortress diversified exposure, with logistics now forming the backbone of its growth strategy.

CEO View: Market conditions turning‍

CEO Steven Brown highlighted improving market dynamics as a key driver of value: 

“We expect the prevailing market dynamics to translate into better valuations and continued higher asking prices for assets.”

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Fortress is already seeing this play out. Asset disposals concluded after June 2025 were achieved at a 4.9% premium to book value, generating over R271 million in proceeds.

Notably, the company has adopted a more patient disposal strategy, turning down offers in anticipation of further price firming.

Income growth and shareholder returns‍

The group reported strong earnings momentum:

• Distributable earnings up 16.8% to R1.07 billion
• Distribution per share up 15.4%
• Interim dividend declared at 87.89 cents per share

Fortress also upgraded its full-year guidance, now expecting around 10% growth in distributable earnings, ahead of earlier forecasts.

This reflects both operational performance and improving market conditions.

Defensive retail and high-demand logistics‍

Fortress continues to benefit from a well-balanced portfolio:

Logistics:

• Strong demand driven by limited supply
• Positive rental reversions of ~7%
• Expansion in key nodes with pre-let developments

Retail:

• Tenant turnover growth of 4.6%, ahead of inflation
• Focus on commuter and convenience retail
• Stable, defensive income streams

This combination positions the REIT well in a market where consumer pressure persists but essential retail remains resilient.

Efficiency, sustainability and cost control‍

Operational efficiency remains a key focus area.

Fortress has scaled its sustainability initiatives with:

• 103 solar PV plants installed
• Capacity increased to 36.75MWac
• Target of 120 plants and 40MWac by June 2026

These measures are not just ESG-driven, they are critical in managing rising municipal costs and improving operational margins.

‍Balance sheet and risk management‍

The group continues to strengthen its balance sheet, with loan-to-value (LTV) reducing to 38.1%, down from 39.1%.

This provides flexibility to:

• Fund new developments
• Pursue strategic acquisitions
• Manage interest rate risk

Fortress’s latest results highlight a clear shift: quality assets in the right sectors are back in demand. With:

• Near-zero logistics vacancies
• Rising rental growth
• Asset price recovery
• Strong earnings momentum

Fortress is well-positioned to outperform as the property cycle turns. For investors, the message is clear, logistics-led portfolios with defensive retail exposure are leading the recovery in listed property.

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