Investors the big winners after Fortress Income Fund’s takeover of Capital Property Fund

FORTRESS Income Fund’s takeover of Capital Property Fund, which was the largest merger in the history of the South African listed property sector, is set to hold more benefits for its investors.

Fortress, which finalised the takeover of Capital last year, announced on Wednesday that its B shareholders would receive a dividend per share that was between 94% and 96% higher for the year to June than it was for the comparable period in 2015.

“The dividend per Fortress B share for the year ended 30 June 2016 will be between 136,90c and 137,68c per share, being between 94% and 96% higher than the 70,41c per B share for the previous financial year, the company said in a statement.

Fortress has a dual-unit share structure to cater for investors with varying risk appetites. Investors in the A units have a preferential claim to earnings and receive a 5% increase in distributions from earnings. The remainder of distributions are attributable to B unit investors.

The Fortress A dividend was 61,38c per share for the six months to June in the previous comparable period and would escalate by the lower of 5% and the most recently available Consumer Price Index figure.

The CPI figure is 6,35% and the Fortress A dividend growth would therefore be limited to 5%.

Financial results for the year ended June 30 2016 will be published on or about 11 August 2016.

Fortress, which focuses on retail centre assets near transport nodes including taxi ranks and bus and railway terminals acquire industrial and office specialist Capital.

Fortress now has a market capitalisation of about R54bn. If its A and B share are added together, it ranks in the top five JSE-listed property stocks by size.

It has been a strong performer in terms of growth compared with other property stocks.

“At Fortress’s interim results, the company provided guidance of achieving 95% distribution growth in the next financial year, which is in line with the recent announcement. The company has delivered some of the strongest growth in the sector. It will be interesting to find out at their year-end results whether the company will be able to continue its strong growth trajectory off such a high base,” Chloe Ma, a listed property analyst at Stanlib said.