JSE-listed real estate investment company (REIC) Fortress Real Estate Investments has increased its total distributions for the financial year ended June 30 by 9.4% year-on-year to R1.9-billion.

Growth in distributions a share was 22.9% for the second half of the financial year, compared with the second half of the 2024 financial year.

This resulted in a final dividend of 86.29c a share for the second half of the year under review, in addition to the interim after-tax cash dividend of 76.15c a share paid in April.

The total distribution for the financial year was 162.44c a share, the company says.

Meanwhile, the company made a strategic pivot away from office, industrial, underperforming properties and noncore assets.

Its move into quality assets in high-growth logistics, commuter and convenience retail assets in South Africa and Central and Eastern Europe continues to power growth and deliver value, it says.

“The global and local real estate markets have benefited from reduced interest rates and improved market fundamentals, which first emerged in the latter part of 2024 with the start of t Government of National Unity and G20 this year,” says CEO Steven Brown.

This favourable shift in market dynamics coincided with a move away from a complex capital structure in February 2024, which placed Fortress in a stronger market position, he adds.

The continued focus on a higher-quality portfolio is evident in the company’s performance during the financial year under review.

A low overall vacancy rate of 3.4% across the portfolio, based on rentals, supported the strong results. Logistics vacancies are at a record low of 0.4%, which confirms the ongoing demand that Fortress has for its high-quality warehouses located in secure logistics parks.

Further, the retail portfolio delivered strong like-for-like net operating income (NOI) growth of 9.4%, which is materially above the inflation rate for the year of 3%.

“This portfolio contributed 35% to our total NOI and remains a significant driver of our growth.

“Our commuter and convenience shopping centres are trading well and have growth potential into the future and, when combined with disposing of under-performing centres and investing in our current malls, have contributed to the out-performance [of our results],” says Brown.

“Our development team again contributed meaningfully to our performance and reached a milestone, with our in-house teams in South Africa and Poland developing 70% of our current logistics properties.

“We have 210 000 m² of gross lettable area remaining to develop over the next four years, with most of that being in the Central and Eastern Europe region.”

Meanwhile, the company is making progress in rolling out its renewable-energy strategy, which continues to unlock operational and cost efficiencies.

Fortress installed a further 37 solar PV plants across its portfolio, which is an increase of 62.7% from the prior year.

“Fortress now operates 96 solar PV systems, including sites in Poland and Romania. We reached a major sustainability milestone this year, having generated 100-million kilowatt-hours of renewable energy since the launch of our first rooftop solar PV installation in 2017.”

Additionally, the REIC is optimistic about the year ahead, as it has a focused portfolio, strong development pipeline and favourable market conditions supporting an improved outlook for the 2026 financial year.

“We are forecasting growth of between 6% and 7.5% in distributable earnings per share,” says Brown.

“Our consistent success comes from a disciplined commitment to our strategy. We are firmly focused on strengthening the quality and earnings power of our core portfolio, advancing development projects, maintaining low vacancies, delivering more efficiencies through sustainability projects and continuing to maximise capital allocation.”

These priorities position the company to continue to power growth in distributable earnings and create lasting value for its shareholders, tenants and surrounding communities, he adds.

Further, the shift to a REIC has unlocked various benefits, including specific tax deductions in relation to development allowances that are otherwise not claimable as a real estate investment trust.

“We have also seen encouraging investor returns in the listed real estate market, with our shares currently trading at a 10% discount to net asset value, from over 20% at the start of the financial year,” he says.

The company’s combined portfolio includes two-thirds logistics properties in South Africa and Central and Eastern Europe valued at R22.7-billion, and one-third of the portfolio retail properties at R11.8-billion in South Africa.

This provides shareholders with exposure to listed and liquid shares that pay regular after-tax dividends, Brown avers.