Logistics property firm Fortress eyes a brighter future
BUSINESS LIVE / 06 JUNE 2018 - 05:04 / ALISTAIR ANDERSON
Fortress has set its sights on becoming SA’s leading logistics property company within three to five years, having put the worst five months in its history behind it.
So far in 2018, the industrial-focused property group’s B-shares have lost about 60% of their value after major sell-offs following accusations its management inflated share prices.
Fortress hosted a pre-close period investor conference call on Tuesday when CEO Mark Stevens said Fortress had done everything in its power to respond to criticism about how it ran its business.
Fortress listed its A and B shares in October 2009 with a combined market capitalisation of R1.8bn.
Its combined market capitalisation sits at about R37.3bn. The company could now focus on its aggressive expansion plans and possibly double its portfolio in the next three years.
"We can have a fresh start now and roll out numerous value adding developments including two massive projects in Durban," said Stevens.
The group would own 150 high-quality logistics and 50 of the best-rated retail assets in SA within three to five years, he said. It would continue to hold stakes in offshore NepiRockcastle and Greenbay Properties.
A few reports released at the beginning of 2018 saw asset managers suggest that Fortress and other members of the Resilient stable of companies had tried to boost each other’s share price artificially.
Fortress, a real estate investment trust, said it listened to its critics and removed the cross-holding it had with the Resilient property group.
Previously, Resilient had held shares in Fortress and vice versa. This was unwound and Fortress now owned just under 10% of Resilient, Stevens said.
Resilient does not own any shares in Fortress.
Fortress was also finalising the consolidation of its broad-based black economic empowerment trust, Siyakha 2 on to its balance sheet, thereby simplifying its structure as it looked to rebuild favour with investors.
Locally, the company was finally making traction with first two new industrial developments to be built in Durban in decades, at Cornubia and Clairwood, having overcome numerous planning hurdles.
Clairwood is set to be worth R4bn, with nearly 360,000m² of A-grade industrial space in Durban South. Cornubia, in Durban North will offer 112,000m² logistics space adjacent to the popular Umhlanga node.
Nedbank Securities property fund manager Len van Niekerk said Fortress’s strategy was bearing fruit as it looked to again reward investors with strong capital and dividend growth like it had done in recent years.
"Fortress has been improving the quality of its portfolio over a period of time, disposing of older industrial, making the strategic decision to exit office and to invest in modern logistics," he said.
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