Johannesburg - Listed property fund, Fortress Income Fund, reported a 14.36% growth in income payouts for the year ending June and also about to announce a significant acquisition, CEO Mark Stevens tells Fin24.
"We’ve been listed on the Johannesburg Stock Exchange for nearly five years now with a market capitalisation of around R11bn," he said.
Stevens explained that Fortress consists of two separately listed units. "The A unit trades vey similarly to a gilt or a debt instrument whereas the B unit is a far higher risk profile unit, but obviously with the higher risk comes the higher return."
He added that the business is growing well.
"We’ve grown the business hard, I think there’s been lots of good asset management that’s been done over the last five years and today we sit with a portfolio, that’s mostly swayed towards the retail side on the direct property.
"We’ve got nearly 50 outlying shopping centres and these are shopping centres that cater to mostly high footfall, commuter-orientated shoppers and these are in our opinion prized assets and genuinely they all trade very well. And we continually spend time, effort, money taking these centres from being good centres and making them better centres," he said.
On the indirect property, or the listed equities, Fortress has a portfolio that is valued at around R6.3bn and mostly swayed towards holdings in NEPI and Rockcastle - two companies that have off-shore based income flows.
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"NEPI side is on the euro, on Rockcastle it’s on the dollar and these have been very good investments for us in the course of the year, they have performed well, they have performed to budget. But generally where we have done well is with the devaluation of the rand.
"So all-in-all if you look at performance of Fortress, we’ve had a 14.3% increase in distribution and if you look at the individual performance of the A and the B; the A unit has grown at 5% as projected, as we have previously put out.
"The B unit has had a good year; the growth in the B unit for the year has been just over 50% so once again I think the shareholders of both units have been pleased with the results we have put out.
Going forward, Stevens said the firm sees more investment in direct property.
"It’s clearly not an easy market at the moment, there’s a lot of cash floating around, a lot of cash looking for investments. We compete in that same market as well and you have the opportunity of picking up property every now and then and we’re pleased that we believe we’re about to announce a significant acquisition".
He said that the news will probably be issued in the JSE news service, SENS in the next week or two.
As far as the indirect property is concerned, Stevens said the firm operates as an opportunistic fund.
"So where there’s opportunity in the listed entities, where we believe there might be upside, there might be a positive carry on the equities, we once again will look at acquisitions on that side.
"We do so ourselves with the growth fund, we are trying to get the fund to the magical R20bn number, that’s where I think the market looks to have the size where most of the big boys are operating at the moment."
He said that the company believes it will be there in the next year or so by making mature achievements, good investments and investments we’ll be happy to keep for the long-run.