Logistics property group Fortress Real Estate Investments reports that “favourable structural market conditions continue to support growth and performance”, resulting in financial results buoyed by strong demand and supply dynamics.
The company’s most recent market update says portfolio vacancy rates by rental are falling from 3.4% to 2.8%.
Fortress’s interim results for the six months ended December 31 highlight low vacancies across its portfolio and increasing interest in direct property assets, driving price growth and improved capital market sentiment.
Like-for-like net operating income (NOI) grew by 7.0% and 6.6% in its core retail and logistics portfolios, respectively, coupled with positive lease-reversion income from lease expiries, a company statement says.
“We expect the prevailing market dynamics to translate into better valuations and continued higher asking prices for assets, which bodes well for our portfolio of quality core assets,” says Steven Brown, CEO of the company, whose property portfolio is valued at R38.7 billion.
Along with logistics properties in South Africa and Central and Eastern Europe, valued at R24.1bn, Fortress also has a portfolio of direct retail properties in South Africa, valued at R11.9bn.
The company statement says that all disposals after last June were concluded at a premium to the most recent formal valuations and at a 4.9% premium to book value, generating R271.5 million in gross proceeds.
However, Brown says the improving market conditions warrant a more patient approach to the disposal of non-core assets to maximise returns, with the company declining several offers at significant premiums to book values during the period under review.
“Given the improving demand for these assets, timing is key. This shift in approach was intentional to allow market expectations to align with our view that the current value of our non-core assets is above our own book values.”
“We expect the market prices to continue firming during the course of the year following additional interest rate cuts and improved market confidence,” adds Brown.
He highlights a notably low 0.3% vacancy rate in the South African logistics portfolio, indicative of solid demand for premium-grade logistics facilities.
Commenting on the robust demand, Brown says the company is continuing to add new developments in key nodes, which are mostly pre-let, with limited speculative space coming to market.
“Tenants are also remaining in their existing facilities due to a lack of alternative choices. The benefit of this is seen in our positive logistics rental reversions of 7% for this period.”
Tenant turnover growth in the retail portfolio was 4.6% for the 12 months ended December 31, 2025, remaining ahead of consumer price inflation for the period. Efficiency enhancements at its retail centres have contributed to performance and NOI growth in this portfolio.
The loan-to-value ratio also reduced to 38.1%, down from 39.1% as at June 30, 2025.
“Utility management continues to be a key operational focus area on the back of the challenges presented by local municipalities, their service delivery and ongoing administrative issues,” explains Brown.
These measures include additional solar installations, water backup, and data-driven efficiency initiatives.
As for silver, the spot price climbed 3.9% to $90.73 per ounce, a three-week high. On January 29, silver scaled an all-time peak of $121.64.
BofA noted that the white metal could rise again above $100 per ounce this year.
