Logistics property group Fortress has raised its earnings forecast for the 2026 financial year by 7.5%, expecting distributable earnings to reach as much as R2.075bn.
Rising demand for logistics space and low vacancy levels have boosted demand for its properties, the company said in its pre-close operational update for the year to end-June.
“Currently, 117 915m² of new logistics developments are under way, with 72.7% pre-let. This strong letting activity reflects the superior quality of our facilities, which feature best-in-class flooring, expansive yards and 15m eaves heights, allowing for increased racking and warehouse volume,” the group said.
Fortress said it was on solid financial footing ahead of year-end, citing about R5bn in cash reserves and a loan-to-value ratio of 39.8%, comfortably within its bank covenant thresholds.
It has continued to streamline its portfolio, disposing of noncore assets. Some of the funds raised have been reinvested into new logistics developments and strategic upgrades across its retail portfolio.
The owner of Union Park in Alberton has classified properties valued at R147m as held for sale, as it continued to refine its portfolio and exit noncore assets.
Despite a tough consumer environment, Fortress reported 4% like-for-like tenant turnover growth and a low retail vacancy rate of 0.9%, boosted by asset management initiatives and recent centre upgrades.
Office vacancies eased slightly to 24.7% at end-May from 25.5% in December, though the segment remains noncore, accounting for just 1.5% of total assets with a book value of R734m across 16 properties.
Vacancy rates in Fortress’s Central and Eastern Europe logistics portfolio rose to 2.5% by May 31, up from 1.4% at the end of 2024, primarily due to 3,849m² vacant in Hall A at Stargard park and 6,005m² of newly completed space at its Zabrze site in Poland.
Fortress has signed an eight-year lease with Suzuki for a 24,507m² warehouse at its Longlake Logistics Park in Johannesburg, with construction kicking off in July and handover expected by July 2026.
“Demand for space at Longlake remains encouraging, and the construction of a 19,099m² speculative warehouse is progressing on schedule for completion in October 2026. Once these developments are finalised, Longlake will be fully built out. Meanwhile, we’re in ongoing discussions with a potential tenant for the final site — Pocket 6 — at our Clairwood Logistics Park,” the group said.
On its energy initiatives, the group said it now has 87 operational solar PV installations, up from 59 a year ago. It has plans to grow this to 96 systems by end-June.
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