Fortress’ CBD portfolio and township centres are bucking the trend with strong growth in retail performance.
The diversified property group has seen its centres thrive and remain resilient despite slow economic growth.
In its interim results to December 31, the group, which owns logistics and retail properties in SA and Central and Eastern Europe and is valued at R23.71bn, reported 6.5% growth in turnover for its township centres and 4.8% in CBDs, with both higher than the 3.4% growth in suburban areas.
Fortress CEO Steven Brown highlighted the CBD portfolio’s strong performance, noting the positive results at Park Central Shopping Centre and Mafikeng Station Boulevard, which benefited from an improved tenant mix.
A recent enhancement at City Centre Mthatha was boosted by the addition of new tenants, including Pedros and McDonald’s.
“The new Spitz store at The Plaza (Mbombela) also performed above expectations. Our four township centres continue to perform well and are all fully let, with grocery and value fashion retailers leading growth in this segment. Trade within the rural portfolio is stable.”
The slower growth in the suburban category is primarily due to the redevelopment projects at 204 Oxford Shopping Centre and Bloemfontein Value Mart, which caused disruptions in trade during the period. The performance of this portfolio segment was further affected by vacancies at Pineslopes Shopping Centre towards the end of 2024.
“These vacancies have subsequently been filled, and the new tenants are in their beneficial occupation period. Trade at 204 Oxford has improved following the completion of their development and the introduction of a Woolworths Food Market. The suburban category should see improved trading when the Bloemfontein Value Mart project is complete and when the new tenants commence trading at Pineslopes,” Brown said.
Fortress had initially projected distributable earnings of about R1.78bn for the year to end-June. However, a stronger-than-expected operational performance and lower interest rates prompted the company to update its forecast to about R1.93bn.
The JSE-listed group reported 5.9% like-for-like growth in net operating income across its entire portfolio. It also completed the sale of noncore assets worth R809.5m — an overall premium of 3.3% above their book value.
The group expanded into Poland with the acquisition of a 50,916m² logistics park in Gdańsk, together with additional land on which a further 55,073m² of gross lettable area in logistics facilities can be developed.
The group reported a reduced overall portfolio vacancy rate of 3.1%, based on gross rental income. It also invested €100m in Nepi Rockcastle to support strategic acquisitions, strengthening their dominant position in the Central and East European retail market.
The group’s retail portfolio vacancies, based on gross lettable area, decreased to 1.1%, from 1.7% on June 30 2024. Comparable turnover in the retail portfolio for the 12 months to end-December recorded a 4.3% increase compared to the same period previously.
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