Fortress Income Fund more than doubled its B-share dividend to shareholders in the six months to December, a period in which it also completed the biggest merger in South African listed property history.
“We had a very good 2015,” CEO Mark Stevens said yesterday on the release of the group’s interim results.
“Turnover numbers at our malls were better than anticipated.
“Resilient REIT, in which we have a stake, fared better than anticipated. We were also helped by the weakening rand.”
Mr Stevens expected the company to increase its B-share dividend by 95% for the 2016 financial year overall despite economic headwinds.
Fortress, which focuses on retail centre assets near transport nodes, acquired industrial property group Capital Property Fund during the reporting period, creating a fund with a market capitalisation of nearly R50bn.
Fortress has a dual share structure to cater for investors with varying risk appetites. Investors in A shares have a preferential claim to earnings and receive a 5% increase in distributions. The remainder are attributable to B-share investors.
The B-share dividend was 62.81c, an increase of 101.2% over the previous comparable period. Of the substantial growth in the dividend of the B shares, 39.1% was attributable to the Capital acquisition funded with equity issued at a lower yield than the yield of the Capital portfolio.
“Growth was also enhanced by the continued depreciation of the rand against the British pound, the euro and the US dollar to which Fortress has exposure through its investments in (property funds) Hammerson, Nepi (New Europe Property Investments) and Rockcastle respectively,” he said.
Hammerson invests in UK malls, Nepi focuses on Romania retail, and Rockcastle owns property assets in Poland.
Mr Stevens said Fortress’s direct property portfolio performed ahead of budget. It was also included in the MSCI Emerging Markets index, attracting foreign index tracker investors.
Evan Robins of Old Mutual Investment Group said this had enhanced Fortress.
“The inclusion in the … index does result in demand from index trackers, which pushes up the price.”
source" Business Day
