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Trading and pre-close operational update
FORTRESS REAL ESTATE INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2009/016487/06)
JSE share code: FFB
ISIN: ZAE000248506
Bond company code: FORI
LEI: 378900FE98E30F24D975
("Fortress" or "the Company")
TRADING AND PRE-CLOSE OPERATIONAL UPDATE
Shareholders and noteholders are referred to the results announcement for the year ended 30 June 2025 ("FY2025"), released on SENS on 4 September 2025.
We hereby provide an update on Fortress' operations for the period subsequent to 30 June 2025.
Fortress is a real estate investment company with a diversified portfolio of high-quality logistics and retail assets across South Africa and
Central and Eastern Europe ("CEE"). The group owns direct logistics properties valued at R23,5 billion, along with a South African retail
portfolio worth R11,8 billion. Fortress also holds approximately R14,8 billion in NEPI Rockcastle shares, providing indirect exposure to one of
the CEE region's leading retail property portfolios. Together, these investments give shareholders access to a real estate platform in excess of
R50 billion in value, supported by a strong development pipeline that underpins future growth.
The logistics sector remains a standout performer, backed by sustained demand for high-quality, secure warehousing space. Vacancy rates in the
South African logistics portfolio remain at a historic low of 0,3% with a five percentage points reduction in the vacancy in our CEE portfolio
following a lower vacancy in Gdansk Logistics Park, reaffirming the appeal of our assets. Since 30 June 2025, we have completed 55 231m2 of new
logistics developments, with a further 76 550m2 currently under construction. Pre-letting activity remains robust, driven by the superior quality
of our facilities, which include best-in-class flooring, generous yard space and higher eaves for enhanced racking and volumetric efficiency.
These properties also benefit from excellent connectivity and well-established transport infrastructure.
Our retail portfolio continues to perform well, achieving like-for-like tenant turnover growth of 3,9% and sustaining a low vacancy of 0,6%.
This resilience reflects the ongoing success of asset management initiatives, as well as the positive impact of recently refurbished and expanded
centres. We remain focused on ensuring our retail assets stay relevant, competitive and attractive to both shoppers and tenants.
Our capital recycling strategy, enhancing core assets while disposing of underperforming properties, continues to deliver tangible benefits.
Year-to-date, we have sold non-core properties with a combined book value of R258,7 million, realising proceeds of R271,5 million, representing
a 4,9% premium to book value. The average yield achieved on disposals, excluding land, during the period was 9,6%. These funds have been reinvested
into new logistics developments and strategic retail upgrades and extensions. At the date of this update, assets with a combined book value of
R159 million are classified as held for sale.
Following the recent 25 basis points interest rate cut by the South African Reserve Bank, and better than expected operational metrics, we
increase our forecast for distributable earnings for the financial year ending 30 June 2026 ("FY2026") to a range of R2,099 billion to
R2,129 billion, representing year-on-year growth of between 7,3% and 8,8%. Previous guidance for distributable earnings was in the range of
R2,073 billion to R2,103 billion.
SA logistics and logistics developments
Vacancies, based on rental, in our South African ("SA") logistics portfolio improved further to 0,3% at 31 October 2025 from 0,4% at 30 June 2025.
This low vacancy level reflects continued demand for newly completed developments, effective asset management across the existing portfolio and
the enhanced overall quality of our logistics platform following the successful disposal of higher-vacancy non-core assets.
At Eastport Logistics Park ("Eastport"), construction of the 20 840m2 warehouse for Crusader Logistics was completed on schedule in August 2025.
Crusader Logistics, an existing tenant at Eastport, is expanding within the park, and has signed a five-year lease, with an option, in favour
of Fortress, to extend for a further five years. This lease commenced on 1 September 2025. Construction of the 30 296m2 warehouse for Liquor
Runners was completed on schedule, with the tenant taking beneficial occupation during October 2025. Demand for space at Eastport is encouraging
and the construction of the 12 996m2 speculative warehouse will be completed in December 2025. This warehouse has been let to an existing
tenant in the park, Teralco Logistics, on a three-year lease. Teralco Logistics will vacate their current warehouse of 22 095m2 in the park,
which is now being actively marketed with encouraging interest shown by prospective tenants. Following these completed developments, a further
30 000m2 of gross lettable area ("GLA") is available for development at Eastport. In addition, we retain our option to expand north of Eastport,
a site on which we can develop a further 150 000m2. Additionally, we have recently commenced discussions on a site south of Eastport on which
approximately 90 000m2 of GLA can be developed.
We have concluded a lease for the development of a new warehouse measuring 24 507m2 at Longlake Logistics Park ("Longlake") with Suzuki.
Construction of this warehouse commenced in July 2025, with beneficial occupation planned for July 2026. The first warehouse at Longlake,
measuring 19 099m2 and previously leased to Liquor Runners, has been let to Overnight Logistics. Demand for space at Longlake is promising and
the construction of the 18 982m2 speculative warehouse is on schedule for completion in October 2026. Once these developments have been completed,
Longlake will be fully developed.
Discussions are ongoing with a potential tenant for the final site, Pocket 6, at Clairwood Logistics Park ("Clairwood"). We expect to finalise
a lease for a 30 000m2 warehouse during the 2026 calendar year. Post the construction and letting of Pocket 6, Clairwood will comprise
approximately 300 000m2 of fully-let premium logistics space within a secure and well-located park environment.
Central and Eastern European logistics and logistics developments
CEE logistics vacancies, based on rental, decreased from 15,1% at 30 June 2025 to 9,9% at 31 October 2025. The majority of this vacancy is located
in Gdansk Logistics Park. In Gdansk, Rossmann has signed a five-year lease for 4 152m2, with lease commencement planned for April 2026.
The remaining vacant space, previously occupied by Regesta, is actively being marketed, with interest from both existing tenants in our portfolio,
as well as new tenants.
At Bydgoszcz Logistics Park, construction of Phase 2 of Hall C was completed on schedule in July 2025. Volcano, an existing tenant in the park,
has leased 4 095m2 for seven years and their occupation of Hall C commenced in July 2025. Construction of the pre-leased 7 346m2 warehouse
for Inter Cars is progressing well and is scheduled for completion in April 2026, with the 10-year lease commencing in May 2026. Bydgoszcz enjoys
good demand for our logistics space offering and the 7 020m2 speculative warehouse, due to be completed in April 2026, is progressing well, with
strong interest from prospective tenants. This logistics park currently comprises 77 000m2 of completed GLA and has a single vacancy of 2 160m2.
Once fully developed, the park will consist of 91 000m2 of logistics space. Given the success in Bydgoszcz, we have entered into discussions to
acquire a site measuring 10 hectares, or approximately 48 000m2 of developable GLA, which is in close proximity to our existing Bydgoszcz
Logistics Park.
At Stargard Logistics Park, construction of the 5 700m2 warehouse for Hine is on schedule for completion by December 2025. Together with the
new Hine warehouse, Stargard Logistics Park now comprises 48 000m2 of fully-leased GLA.
Post 30 June 2025, we concluded the acquisition of an industrial site in the city of Wroclaw, Poland. The buildings comprise 76 000m2 of GLA on
a total site area of 240 000m2 located seven kilometres north-east of the city centre. The asset forms part of the expansion plans for a large
multinational engaged in the assembly of products related to the growing European and United Kingdom market for efficient household heating.
The site was acquired on an attractive yield of 8,75% and the tenant has entered into a 20-year lease agreement. There is potential to develop
additional GLA on the site and assist the current tenant in upgrading the facility to better fit their requirements as they expand their operations.
In Romania, we have entered into discussions to acquire two additional land sites for further logistics developments, both serving the Bucharest
market. One site is 11,5 hectares, or approximately 61 400m2 of GLA, located near our existing asset, north-west of Bucharest. It is adjacent to
the new A0 ring road on a new offramp allowing efficient access for tenants. The second site is under option, which allows us time to secure
pre-leases while final steps of the zoning approval take place. This site allows for approximately 105 000m2 of GLA and is also located on
the new A0 ring road.
The table below provides a summary of our logistics park developments in SA and CEE:
Fortress' GLA Let Lease Estimated Completion
Logistics park Description/tenant ownership (m2) GLA term yield date
% (100%) (100%) (years) (%)$
Developments completed post 30 June 2025
Bydgoszcz (Poland) Hall C (phase 2) - Volcano 100 4 095 4 095 7 8,3* Jul 2025
Eastport Crusader Logistics 2 65 20 840 20 840 10^ 8,5 Sep 2025
Eastport Liquor Runners 65 30 296 30 296 5 8,1& Sep 2025
Total 55 231 55 231
Currently under development Estimated
completion
date
Eastport Teralco Logistics 65 12 996 12 996 3 8,5 Dec 2025
Stargard (Poland) Hall E (phase 1) - Hine 100 5 700 5 700 10 7,5* Dec 2025
Bydgoszcz (Poland) Hall C (phase 2) - Inter Cars 100 7 345 7 345 10 7,4* April 2026
Bydgoszcz (Poland) Hall C (phase 2) - Speculative 100 7 020 - - 7,4* April 2026
Longlake Suzuki 100 24 507 24 507 8 8,6 Jul 2026
Longlake Speculative 100 18 982 - - 8,5 Oct 2026
Total 76 550 50 548
Total: 100% of developments 131 781 105 779
* Yield shown in Euro.
$ Development cost in this calculation includes cost of finance, internal project management fees and all other costs.
^ Initial lease period is five years, with an option in favour of the landlord to extend for five years, which we intend to exercise.
& 8,5% effective yield achieved through a stepped lease agreement.
Our current development pipeline in SA, excluding land options, consists of approximately 200 000m2 of undeveloped GLA, of which 57 000m2 is
currently under development and 143 000m2 is available for future developments. The total value of undeveloped GLA in the SA pipeline is
approximately R2,6 billion (R1,4 billion excluding the Eastport North and South sites), which is estimated to be completed over the next three years.
The table below provides a summary of our logistics parks in South Africa:
Currently under development
Completed Available GLA Let/under Speculative/ Remaining GLA
Ownership Total GLA developments for development offer Unlet to be developed
Park (%) (m2) (m2) (m2) (m2) (m2) (m2)
Louwlardia 100% 89 656 89 656 - - - -
Eastport 65% 318 911 273 521 45 390 12 996 - 32 394
Eastport - Pick n Pay 100% 163 533 163 533 - - - -
Longlake 100% 99 003 55 514 43 489 24 507 18 982 -
Clairwood 100% 297 528 266 716 30 812 - - 30 812
Cornubia 50,1% 110 296 56 463 53 833 - - 53 833
Rivergate 100% 44 071 18 214 25 857 - - 25 857
Sub Total 1 122 998 923 617 199 381 37 503 18 982 142 896
Eastport North (option) 65% 150 000 - 150 000 - - 150 000
Total - SA logistics 1 272 998 923 617 349 381 37 503 18 982 292 896
Our current development pipeline in CEE, excluding land options, consists of approximately 246 000m2 of undeveloped GLA, of which 20 000m2 is
currently under development and 226 000m2 available for future developments. The total value of undeveloped GLA in CEE is approximately
R2,4 billion, which is estimated to be completed over the next three years.
The table below provides a summary of our logistics parks in Central and Eastern Europe:
Currently under development
Completed Available GLA Let/under Speculative/ Remaining GLA
Ownership Total GLA developments for development offer unlet to be developed
Park (%) (m2) (m2) (m2) (m2) (m2) (m2)
Bydgoszcz 100% 91 466 77 101 14 365 7 345 7 020 -
Stargard 100% 98 574 42 276 56 298 5 700 - 50 598
Lodz 100% 82 294 53 719 28 575 - - 28 575
Zabrze 100% 76 499 46 259 30 240 - - 30 240
Gdansk 100% 105 989 50 916 55 073 - - 55 073
Wroclaw 100% 76 011 76 011 - - - -
Bucharest - ELI Park 100% 50 140 50 140 - - - -
Bucharest - Milano 80% 61 400 - 61 400 - - 61 400
Total - CEE logistics 642 373 396 422 245 951 13 045 7 020 225 886
Retail
Our retail portfolio, predominantly commuter-oriented and focused on convenience shopping, remains defensively positioned. For the 12 months to
31 October 2025, like-for-like tenant turnover increased by 3,9% compared to the prior period, with tenant sales growth continuing to outpace
national consumer price inflation. From 1 July 2025 to 31 October 2025, the retail portfolio achieved a collection rate of 101%. Vacancies remained
low at 0,6% at 31 October 2025, underscoring stable demand and the continued strength of the portfolio.
Our asset management strategy continues to prioritise maintaining low vacancies by enhancing and diversifying the tenant mix. Notable additions
include Clay Cafe at 204 Oxford Shopping Centre, Checkers Outdoor at Equinox Mall, a new Standard Bank branch in AbaQulusi Plaza, as well as Absa,
FNB and Standard Bank branches at Sterkspruit Plaza.
Access improvements at several centres have been positively received by local communities, particularly the upgrades and repairs to the surrounding
roads at AbaQulusi Plaza and the completion of the new traffic circle at Pineslopes Shopping Centre.
We remain focused on serving the commuter market, evidenced by the ongoing development of a new bus rank at Sterkspruit Plaza, along with additional
parking to meet increased shopper demand. Furthermore, a larger ablution facility has been constructed to cater for the higher footfall following
the recent expansion of the centre.
Extensions and asset management initiatives remain key, while we explore new developments given the tenant demand in certain underserved markets.
Earthworks for the 7 900m2 extension of Botlokwa Plaza are underway and the extension is scheduled for completion in 1H2027. The extension of
Tzaneen Lifestyle Centre (25% owned by Fortress) will include an additional 20 000m2 of GLA and introduce Pick n Pay, Dis-Chem and other fashion
retailers. Earthworks are underway and completion is expected during FY2027.
Industrial and Inofort
Vacancies in the industrial portfolio decreased marginally from 10,0% at 30 June 2025 to 9,9% at 31 October 2025. Of the 26 969m2 of industrial
vacancies, 10 200m2 comprises the office component of these properties, with the majority of this vacancy located in Isando. Well-located, smaller
industrial units remain in demand and interest from potential purchasers for these as well as the multi-user industrial parks is gaining momentum.
Office
Office vacancies, based on rental, increased from 21,3% at 30 June 2025 to 25,8% at 31 October 2025. The office portfolio currently comprises
15 properties with a book value of R719 million, which represents less than 1,5% of our total assets. The office portfolio remains non-core.
Vacancies
Total vacancies, based on rental, decreased from 3,4% at 30 June 2025 to 3,1% at 31 October 2025.
Based on rental Based on GLA
Oct 2025# Jun 2025# Oct 2025 Jun 2025
Sectoral vacancy % % % %
Total 3,1 3,4 3,3 3,7
Logistics - SA 0,3 0,4 0,3 0,4
Logistics - CEE 9,9 15,1 10,1 14,4
Retail 0,6 0,6 0,6 0,9
Industrial 9,9 10,0 8,9 7,9
Office 25,8 21,3 26,6 23,7
Other ^ 0,3 3,2 0,3 3,6
Information based on Fortress' economic interest in wholly-owned and co-owned properties.
# Vacancy based on the gross rental (100% of GLA and value) of the building.
^ Includes residential units and serviced apartment properties.
Direct property disposals
We continue to sell non-core properties, with total disposals for the FY2026 financial year-to-date amounting to R271 million, with a corresponding
book value of R259 million. The average yield achieved on disposals, excluding land, during this period was 9,6%.
The market for direct properties in South Africa is becoming more competitive with both investors and owner occupiers. The yields on direct assets
should compress due to increased demand, as well as lower long bond yields being observed. However, this is likely to take time, as the direct
market typically lags these market shifts. We are confident in achieving disposals at prices above our book values and remain patient in order to
achieve the best economic outcome from the disposal of our non-core assets, without compromising on our strategic goals.
The following properties have transferred since 30 June 2025:
Book value
Net proceeds Jun 2025 Transfer
Property name Sector (R'000) (R'000) date
Otto Volek Road Pinetown * Industrial 112 000 112 000 Oct 25
Clovelly Business Park Midrand Industrial 83 000 75 042 Oct 25
560 Malcolm Moodie Crescent Jet Park Industrial 17 500 15 780 Oct 25
9 Milkyway Avenue Linbro Park Logistics 14 600 12 629 Sep 25
Greenbushes *^ Land 12 803 12 803 Jul 25
Hilston Street Kya Sands Industrial 9 500 9 496 Sep 25
Greenbushes *^ Land 7 217 7 217 Aug 25
Lakeview Business Park 3 Industrial 6 000 4 854 Nov 25
Montague Business Park *^# Land 4 513 4 513 Oct 25
Wynberg Workshops Block B *^# Industrial 4 330 4 374 Aug 25
271 463 258 708
* Held for sale at 30 June 2025
^ Portion of the property
# Fortress' pro-rata share
The following properties are currently held for sale, none of which have yet transferred:
Book value
Net proceeds Jun 2025
Property name Sector (R'000) (R'000)
City Centre Mthatha Retail 118 000 109 000
Petunia Road Bryanston Office 27 000 24 000
Lakeview Business Park 7.1 Industrial 20 000 16 137
Lakeview Business Park 4 Industrial 5 900 4 772
Lakeview Business Park 5 Industrial 5 800 5 205
176 700 159 114
Energy and water solutions
We remain firmly committed to expanding our solar photovoltaic ("solar PV") capacity across our property portfolio. At present, we have 98 operational
solar PV systems with a total installed capacity of 35,86MWac, an increase from 96 systems totalling 35,49MWac at 30 June 2025. By 30 June 2026, our
goal is to commission an additional 20 plants, bringing the total number of installations to 118 and increasing overall capacity to 40,19MWac.
The ongoing roll-out of solar PV infrastructure has meaningfully increased our renewable energy generation. Between July 2025 and October 2025,
we produced approximately 16,746MWh of solar energy, 43% more than the 11,718MWh generated during the same period in the previous year.
We have also commissioned three battery energy storage systems, at a retail centre and at two logistics assets, to enhance our returns from the
solar PV installations.
Propelair toilets have been installed at five retail centres (Weskus Mall, Evaton Mall, Mayville Mall, Crossroads Plaza and Sterkspruit Plaza),
with further installations underway at 204 Oxford Shopping Centre, Park Central Shopping Centre and Central Park Bloemfontein. Monthly water savings
are already substantial at 420 000 litres/month at Weskus Mall, 245 000 litres/month at Evaton Mall and 205 000 litres/month at Mayville Mall.
Based on these positive results, we plan to extend installations across the broader portfolio.
NEPI Rockcastle
NEPI Rockcastle released its interim results for the six months to 30 June 2025 on 19 August 2025 and subsequently released a comprehensive business
update on 19 November 2025, both available on its website at www.nepirockcastle.com. The current value of our investment in NEPI Rockcastle is
approximately R14,8 billion.
Funding, liquidity and treasury
In September 2025, we strengthened our funding position by securing a new five-year, EUR50 million term facility from Standard Bank Isle of Man.
In November 2025, we further enhanced liquidity by raising an additional three-year, EUR15 million term facility and a EUR10 million revolving
credit facility from Absa. The improved liquidity and favourable pricing allowed for the early settlement of the EUR17,9 million facility with mBank.
Fortress' hedging strategy remains consistent with that of previous periods and currently comprises 81% caps and 19% swaps. This structure positions
us to benefit from potential reductions in interest rates, given the higher proportion of caps, while still maintaining protection in the event
of rate increases.
We remain fully compliant with the key performance indicators associated with our sustainability-linked notes, consistent with previous reporting
periods, and we are on track to meet our December 2025 targets.
At group level we maintain strong liquidity, with R4,6 billion in cash and available facilities. Our financial position remains solid, with a
loan-to-value ("LTV") ratio of approximately 39,8% as at the date of this announcement, comfortably within all covenants.
Currently we have a collar over 18,75 million NEPI Rockcastle shares. The put and call strikes are R110 and R145 respectively, with maturities
between January 2026 and August 2026. We retain the dividends on these shares as well as the risks and rewards of ownership.
Outlook and guidance
We are increasing our distributable earnings forecast for FY2026 to a range of R2,099 billion to R2,129 billion, representing year-on-year growth
of between 7,3% and 8,8%.
This forecast is based on the following assumptions:
Fortress-specific assumptions
- Our distributable earnings methodology will remain consistent with that of prior periods, as previously communicated;
- NEPI Rockcastle maintains a 90% payout ratio and meets its published distributable earnings per share guidance for their financial year ending
31 December 2025;
- No material sales, or acquisitions, outside of our planned pipeline occur which necessitate a revision to this forecast;
- There is no unforeseen failure of material tenants in our portfolio;
- Contractual escalations and market-related renewals will be achieved with no major change in vacancy rates;
- Tenants will be able to absorb the recovery of rising utility costs and municipal rates; and
- The current funding structure provided by the collar over 18,75 million NEPI Rockcastle shares remains intact for the full period.
Macroeconomic and regulatory assumptions
- There is no unforeseen material macroeconomic deterioration in the markets in which Fortress has exposure;
- There are no unforeseen adverse socio-political and geo-political events in the jurisdictions in which Fortress has exposure;
- There are no changes to current tax legislation in the jurisdictions in which the Company operates; and
- There are no changes to current interest rates by the European Central Bank or the South African Reserve Bank.
The forecast has not been reviewed or reported on by the Company's external auditors.
26 November 2025
Lead equity sponsor
Java Capital
Debt sponsor and joint equity sponsor
Nedbank CIB
Date: 26-11-2025 01:45:00
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