FORTRESS REAL ESTATE INVESTMENTS LIMITED - Trading and pre-close operational update

Decision framework

Current stance: Filing Positive

Evidence from the filing

• The company reaffirmed its FY2026 distributable earnings forecast of at least R2 150 million (176,48 cents per share) and provided FY2027 guidance of R2 310 million, a 7,4% year-on-year increase.

  “Following the Group's consistent operational performance, we reaffirm our distributable earnings forecast for the financial year ending 30 June 2026 ("FY2026") of at least R2 150 million, translating into a forecast distribution of at least 176,48 cents per share, compared to 162,44 cents per share for the financial year ended 30 June 2025 ("FY2025"). The Board further provides earnings guidance for the financial year ending 30 June 2027 ("FY2027") of approximately R2 310 million, representing a 7,4% increase compared to FY2026 guidance.”

• Capital recycling remains highly effective, with R362,4 million in non-core property book value sold for R382,5 million, realising a 5,5% premium to book value at an 8,3% exit yield.

  “For the 30 June 2026 financial year-to-date, we have disposed of non-core properties with a combined book value of R362,4 million, realising proceeds of R382,5 million, representing a premium of 5,5% to book value.”

• The retail portfolio demonstrated strong operational resilience, delivering 4,2% like-for-like tenant turnover growth, a 100% collection rate, and low vacancies of 0,8%.

  “For the 12 months to 30 April 2026, like-for-like tenant turnover increased by 4,2% compared to the prior comparative period, with tenant sales growth continuing to outpace national consumer price inflation. The retail portfolio achieved a collection rate of 100% for the period from 1 July 2025 to 31 May 2026. Vacancies, by rental, remained low at 0,8% at 31 May 2026, underscoring stable demand and the continued strength of the portfolio.”

• The balance sheet remains robust with R7,6 billion in available liquidity, a 38,8% loan-to-value ratio, and the successful issuance of a R1,6 billion ZARONIA-referenced note.

  “We maintain strong liquidity, with R7,6 billion in cash and available facilities. The Group's financial position remains solid, with a loan-to-value ratio of approximately 38,8% at the date of this announcement, comfortably within all covenant thresholds and well positioned to repay expiring facilities of R905 million under the DMTN programme, maturing in August 2026.”

• The balance sheet remains robust with R7,6 billion in available liquidity, a 38,8% loan-to-value ratio, and the successful issuance of a R1,6 billion ZARONIA-referenced note.

  “In April 2026, following the successful bond auction concluded in March 2026, we raised a further R1,6 billion seven-year note under the DMTN programme in April 2026, the first listed property company in South Africa to issue a ZARONIA-referenced note.”

• South African logistics vacancies increased from 0,3% at December 2025 to 1,4% at May 2026, primarily due to a single vacated warehouse.

  “Vacancies, based on rental, in our South African ("SA") logistics portfolio increased to 1,4% at 31 May 2026, compared to 0,3% at 31 December 2025.”

• The acquisition of a 51% stake in Balfour Mall introduces turnaround risk, as the centre carries a high 45% vacancy rate requiring redevelopment.

  “The centre has a high vacancy of 45%, for which no value was attributed in the initial yield and price.”

• The distributable earnings forecasts for both FY2026 and FY2027 are unaudited management projections and remain subject to macroeconomic and tenant-failure variables.

  “The forecasts have not been reviewed or reported on by Fortress' external auditor and are the responsibility of the board of directors.”

• The ongoing derivative collar over 18,75 million NEPI Rockcastle shares leaves the group exposed to potential equity market volatility and margin risks.

  “We currently have a collar over 18,75 million NEPI Rockcastle shares. The put strikes range from R110 to R122, and call strikes range from R145 to R168 respectively, with maturities between August 2026 and March 2027.”

• The group faces a near-term debt maturity wall of R905 million under its DMTN programme in August 2026.

  “well positioned to repay expiring facilities of R905 million under the DMTN programme, maturing in August 2026.”

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