Fortress Income Fund results show fantastic growth

Posted On Monday, 18 February 2013 10:31 Published by eProp@News
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LISTED property loan stock company Fortress Income Fund on Wednesday reported 10.89% growth in distributions for the six months ended December, compared to the same period the previous year.

Fortress CEO Mark Stevens said while the fund was "very pleased" with distributions growth ahead of its 10% target, "we are pleased also because our pipelines for either refurbishments, extensions and new developments are starting to become significant now".

A combined distribution for A-and B-linked units of 69.47c was declared compared to total distributions of 62.65c in the prior comparable period.

Of this, 56.01c accrues to the A-linked units and 13.46c to the B-linked units, representing growth of 5% and 44.6% respectively.

Fortress focuses on retail-centre assets situated around transport nodes, including taxi ranks and bus and railway terminals, targeting the fast growth in these markets.

Mr Stevens said they would continue to focus on the retail market falling within the lower living standards measures (LSM) since many areas were still underserviced, even though this market was "starting to get a little bit cluttered".

Many new property listings had driven the demand for these types of properties "through the ceiling", and greater demand had increased these asset prices while bringing down yields, he said.

Mr Stevens said the biggest opportunities were "to improve or extend assets" and to build new developments in good locations.

Fortress’s property portfolio is 71.2% retail when measured by the value of the properties, although Mr Stevens said "if retail was at 100% I wouldn’t be unhappy".

"We like to see ourselves now as a retail fund," he said.

While the office portfolio had high vacancies, this was due to one building which skewed the figure, and Fortress would not actively look to dispose of its remaining office properties although the fund would dispose of them "as and when the opportunity arises".

Stanlib investment analyst Ndabe Mkhize said the results showed "fantastic growth … which was slightly ahead of expectations for the interim results even though the full-year forecast is in line with prior management guidance".

Mr Mkhize said Fortress’s focus on shopping centres in non-metropolitan towns and in rural areas close to taxi and bus ranks "is yielding handsome dividends for the company".

Meanwhile, the fund’s pipeline of new developments and redevelopments "should underpin the high growth rate of distributions for the foreseeable future", he said.

Fortress’s financial gearing at 22% loan-to-value was still below the sector average, and Mr Mkhize said that "we expect even better growth when the management has found investment opportunities to apply debt finance".

Source: BD

Last modified on Monday, 18 February 2013 10:37

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