FORTRESS AIMS TO BOOST LOGISTICS PORTFOLIO WITH R1.5BN IN DEVELOPMENTS
Category Industrial News
Fortress REIT Limited plans to grow its logistics property portfolio to two thirds of its total portfolio by 2020 with new developments amounting to a combined R1.5 billion.
With one hundred logistics-focused properties under its belt equaling 42% of its total portfolio, the remainder of the group’s portfolio consists of retail (35%), industrial (13%) and office (10%) properties. Fortress plans to recalibrate its overall portfolio mix to two-thirds logistics and one-third commuter-focused, rural retail properties over the course of the next two years.
Mark Stevens, CEO of Fortress comments:
“The rebalancing of our property portfolio towards a mix of roughly two thirds logistics and one third commuter and rural retail is a reflection of where we envisage growth in the foreseeable future.”
“With the new-found optimism in the country, we have seen a noticeable increase in interest from prospective tenants across our entire portfolio. However, we believe the logistics and rural retail space offers the best opportunity to capitalise on this growth.”
Fortress is currently developing six new logistics properties and one retail facility with a combined total gross lettable area (GLA) in excess of 154 000m2 and a cost of R1.5 billion. The initial building at Clairwood Logistics Park with a GLA of 24 977m2 will be ready to welcome the first tenant in September 2018. Fortress concluded a lease for the development of Makro’s twenty-second store at Cornubia Ridge Logistics Park, which will commence trading in the first quarter of 2019. This will be a new destination facility in the ever expanding and burgeoning Umhlanga node.
In Gauteng, Fortress has started developing the second speculative building at Union Park with a GLA of 22 414m2 and discussions with various logistics users are ongoing. To complement its existing buildings at Louwlardia Logistics Park, Fortress is developing a new 17 715m2 building on the corner of Nelmapius Drive and Old Pretoria Road. Negotiations are at an advanced stage with a blue-chip user to occupy this property. Fortress is also developing a 23 569m2 building at Westlake View to complement its existing asset that was recently let to Bongani Rainmaker Logistics. In conjunction with M&T Developments, Fortress is developing the new 24 700m2 Gauteng distribution centre for Savino Del Bene and a further 21 300m2 building at its flagship development property on the R21 Highway known as Eastport Logistics Park.
“All of our logistics facilities are state of the art structures featuring laser levelled FM2 concrete flooring with the new buildings designed to a 15m eaves height. When you’re working in the highly competitive world of logistics, offering the latest state of the art facilities allows our tenants to maximise their racking efficiencies and economies of scale” said Stevens.
The last four months has also seen Fortress complete three additional developments with a total GLA of 71 000m2. The two flagship developments among these are the 34 025m2 Worldwide Automotive Group building and the 23 642m2 We Buy Cars facility at Louwlardia Logistics Park in Centurion. In addition, Fortress developed a 13 340m2 logistics facility at Union Park that was fully let on completion to Voltex (Pty) Ltd, a subsidiary of Bidvest Limited.
“All of these developments, the recently completed ones as well as the new developments, are located within logistics parks, which our research has shown provides the best return on investment over time,” said Stevens.
“To achieve our goal of rebalancing our portfolio we will continue selling our existing office and industrial properties and repositioning our investments towards the logistics and rural retail space.”
Fortress has transferred out a total of twenty properties with a cumulative value of R1.6 billion in the current financial year to date, which commenced on 1 July 2017. The group’s retail strategy is centred on the high-growth, retail market in close proximity to commuter nodes in rural locations, which include Thohoyandou, Polokwane, Makhado, Lephalale and Botlokwa in Limpopo; as well as Nelspruit in Mpumalanga; and Evaton, south of Johannesburg.
“While the major metropolitan areas in South Africa are saturated with retail space, the dominant centres in the rural locations continue to enjoy good growth. We believe this offers the best long-term opportunity for growth in the retail property space, both in terms of footfall and expenditure” concluded Stevens.
Author: Property Wheel
