Fortress REIT puts its faith in the Polish logistics sector

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Waimea logistics park in Poland which was recently acquired by Fortress, South Africa’s third largest real estate investment trust (Reit). Waimea logistics park in Poland which was recently acquired by Fortress, South Africa’s third largest real estate investment trust (Reit).

Fortress REIT recently announced that it had bought its first offshore properties in Poland for R700 million — an indication that its management is confident about the prospects of the European logistics market.

The acquisition, which follows the release of the group’s interim results posted last week, comes as Fortress forges ahead with its expansion drive into the better-performing logistics property market.

Fortress, which owns high-end logistics assets and commuter retail centres, is also the largest shareholder in NEPI Rockcastle Plc. active in high-growth retail in Central and Eastern Europe.

The first two acquisitions in Poland are Waimea Group’s two logistics park in Bydgoszcz and Stargard, ideally situated in regional industrial zones benefitting from strong infrastructure.

Both developments are close to Germany presenting a supply proposition for clients targeting Europe’s largest economy.

Central and Eastern Europe is one of the most exciting long-term logistics and warehousing investment propositions globally. The region is often referred to as “the new Silk Road as Asian and Western European suppliers and manufacturers capitalise on the regions highly skilled but lower-cost human capital,” says Brown.

Waimea’s 48 300 square metre logistics park at Bydgoszcz can be expanded to 91 000 square metres. Waimea’s logistics park at Stargard includes an existing hall of 11 500 square meters with the potential to expand to approximately 80 000 square metres.

Interim Results

The company improved its balance sheet strength with access to cash and available facilities of R2.8-billion and it reduced its loan-to-value (LTV) ratio slightly to 38.1% at the end of December from 38.5% at the end of June 2020.

It also reduced its vacancy rate to 6.8% from 8.9% during the comparable six-month period to the end of 2019, and had maintained its trading density despite the impact of Covid-19 restrictions and changes in market conditions, Fortress CEO and MD Steven Brown said during a presentation of the company's interim results on March 11.

The group successfully sold ZAR 1.1 billion of largely non-core office and industrial assets at above book value over the last six months.

Fortress will continue to dispose of assets in line with “our strategy to invest in, develop and manage South Africa’s largest holding of quality, state-of-the-art logistics assets located at leading urban logistics growth nodes as well as key convenience retail hubs in townships and rural areas,” says Brown.

During the period, the company had done letting or has received offers on some 340 000m2 of the group’s one million square metre GLA development pipeline in SA.

In South Africa, the group will be spending around R1 billion this financial year in rolling out various logistics developments, many of these currently underway.

Fortress’s multi-billion-rand developments on the go locally include the likes of Eastport Logistics Park in Gauteng and Clairwood Logistics Park on the site of the old Clairwood Racecourse near the port in south Durban.

In its latest results, the group opted not to pay out an interim dividend, but aims to retain its Reit status and pay the requisite level of dividends for its June 2021 year-end.


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