Fortress A shares rebound with a market-leading 19.5% total return

Posted On Wednesday, 04 September 2019 10:05 Published by
Rate this item
(0 votes)

Fortress REIT Limited A shares have recorded the best performance among real estate stocks on the JSE this year, with an impressive 19.5% total return.

-STEVEN-BROWN-

This compares with a more pedestrian 5.3% for the SA Listed Property Index as companies generally battle to navigate tough economic conditions.

Fortress A’s distribution per share grows at the lower of 5% or CPI, which according to newly appointed Fortress CEO, Steve Brown, is attractive in a challenging South African market.

“A strong pipeline of logistics developments within the Fortress portfolio and a renewed focus on value creation continues to provide a buffer against the economic headwinds,” he adds.

In the most recent results Fortress management guided that the distribution growth at the lower of 5%, or CPI, remains on track for 2020 and beyond.

The A-share dividend yield is approximately 7.3%, which together with 5% growth can provide a total investor return of 12.3% at current levels.

“It provides a low risk secured preferred dividend to that of the Fortress B, which presents higher investor risk. The other significant advantage for our A-share investors is the liquidity which allows investors to easily and quickly trade in and out of the lower risk Fortress A shares ,” says Brown.

Positive compound growth in the medium term by Fortress could therefore present an outperforming total return to investors.

The fact that Coronation and Allan Gray both hold over 10% of the Fortress A shares in issue at the moment is another positive, as it means the shares are highly liquid, in contrast to the few other A unit shares available on the JSE.

Both the A and B shares are underpinned by Fortress’s high-quality portfolio.

“We plan to grow our logistics-focused properties to two thirds of our total portfolio by 2020 as we forge ahead with a raft of new developments,” says Brown.

Fortress has one of the largest logistics property development pipelines in SA, accounting for over R4 billion over the next five years.

In its annual results for the year to 30 June 2019 , Fortress today reported the dividend for the A amounts to 148.35 cents from 141.77 cents per share in the previous comparable period, a 4.64% increase, and the dividend for the B share declined from 179 cents to 155.50 cents, but not on a like-for-like basis given the prior treatment of interest on the loan to the previous BEE trusts.

Direct retail and logistics properties stood out as the leading performers in the portfolio.

“Fortress is on track and geared for an exciting future, with interest from prospective tenants remaining extremely positive,” concludes Brown.

Last modified on Wednesday, 04 September 2019 10:15

Most Popular

Balwin Properties and ABSA launch South Africa’s first green home loan

Mar 13, 2020
Apartment 71933
JSE-listed Balwin Properties Limited (Balwin Properties or the Company) and Absa Group…

Growthpoint reports a steady first half with its growth strategies paying dividends

Mar 11, 2020
Growthpoint Properties Group CEO Norbert Sassee
Growthpoint Properties (JSE: GRT) reported distributable income growth of 2.2% to R3.2bn,…

Spear REIT launches innovative self-isolation campaign for returning travellers in Cape Town, South Africa to combat COVID-19:

Mar 18, 2020
Double Tree Op
JSE listed Spear REIT Limited, the owner of the Double Tree by Hilton Cape Town, is the…

Financial Fitness – Is this the right time to buy property?

Mar 20, 2020
Governor Lesetja Kganyago SARB1
With the South African Reserve Bank’s announcement of interest rates cut of 100 basis…

Precautions, planning and preparation - the real estate agent's guide to weathering the Covid19 storm

Mar 16, 2020
Corona
With the Corona Virus now in SA and beginning to cause widespread panic, we are not only…

Please publish modules in offcanvas position.