Fortress FY HEPS plunges on COVID-19 lock-down

Property group Fortress has declared a reduced annual dividend for its A and B shareholders and a headline loss of 161.5% as it withstood a difficult trading period due to the impact of the COVID-19 pandemic. Despite facing challenges, the group reported robust rental collections and maintained a healthy balance sheet, having been in a strong financial position before the crisis hit. Fortress CEO, Steve Brown, highlighted the company's resilience during a recent interview with CNBC Africa. Brown discussed how the pandemic affected Fortress over the last six months, emphasizing the impact of the hard lockdown on property values and the market market on the company's shareholding. Despite these challenges, Fortress managed to collect 93% of its rent during the lockdown period from April to August, with a collection rate of 97% in August alone. Brown expressed optimism about the future, noting that the company entered the pandemic with a strong balance sheet that allowed it to weather the storm. He attributed Fortress's ability to maintain robust rental collections to its defensive portfolio composition, which includes logistics real estate and essential retail properties. The company provided relief measures to tenants totaling approximately 143 million Rand, with discounts and deferrals offered to support businesses during the crisis. Looking ahead, Brown discussed the potential impact of ongoing economic uncertainties on corporate debt and rental trends. He acknowledged the volatility in the market and highlighted the importance of proactive measures taken by Fortress to manage its debt exposure. Brown expressed cautious optimism regarding the economic outlook, citing the low interest rates in South Africa as a potential positive factor for the company. However, he noted that the recovery in rental income may be slower than expected due to changing economic dynamics. When asked about future opportunities, Brown highlighted the potential benefits of the Africa Continental Free Trade Area and the development of South Africa as a regional logistics hub. He emphasized the importance of diversifying Fortress's portfolio beyond the domestic market and expanding its presence in the logistics real estate sector. Brown expressed hope that increased trade activity and infrastructure development in Africa would drive demand for warehouse facilities, supporting Fortress's development pipeline of over a million square meters in the coming years. Overall, Brown remains cautiously optimistic about the company's future prospects, emphasizing the importance of strategic planning and portfolio diversification in navigating the challenging economic landscape.