November 25 2025 15:30
SOUTH AFRICA AND WESTERN EUROPE
Burstone Group, a fully integrated international real estate investor and funds and asset management business, last week reported financial results for the six months to end-September 2025, which showed a strong underlying real estate performance and growing fee income.
The period saw Burstone consolidating its strategy which includes owning properties directly and in managing other funds and assets. Burstone was previously known as Investec Property Fund, having been created by the Investec group.
4 Sandown Valley Crescent, Sandton, South Africa
Burstone achieved significant growth in the like-for-like net operating income from its South African portfolio and consistent performances from its co-investment into real estate portfolios across Europe and Australia.
“These results reflect the resilience of the underlying portfolios and the benefits of Burstone’s diversified earnings model. Additionally, the Group’s proactive asset recycling, continued platform expansion, and cost discipline has supported overall earnings quality and balance sheet resilience,” said CEO, Andrew Wooler.
Burstone’s CEO, Andrew Wooler
The distributable income per share (DIPS) increased 3.0% to 51.07 cents per share (1H25: 49.53 cents), supported by strong underlying real estate performance.
The group achieved strong like-for-like net operating income (NOI) growth from its South African portfolio of 5.3%, driven by improved vacancies and lower negative reversions.
It said there was a stable performance from its European investment as the strategy prioritised capturing rental reversions over short-term vacancy, which was evidenced by 16.3% positive reversions.
The Australian investment strategy was starting to deliver, with meaningful contributions to Group earnings as asset management initiatives took effect.
Burstone grew its fee income from 3rd party funds management activities by 70.6% to R58m, now representing 14.1% of distributable earnings (1H25: 8.5%).
There were new equity commitments from Australian capital partners of A$170m to deploy into growth opportunities. The group reduced total operating overheads by 5.5%.
The overall DIPS performance was partially offset by marginally dilutive South African disposals in FY25, the impact of funding capital expenditure, offshore investments and transactional cash flow timing.
The balance sheet was stable with pro forma LTV of 39.0% and the group has earmarked R1bn to R1.5bn of assets for disposal over the next 18 months to support future co-investment activity that would support up to R10bn of 3rd party GAV potential, Burstone said.
The company’s board will apply a payout ratio of 90%, declaring a dividend of 45.96 cents per share (1H25: 44.58 cents per share) for the period.
The hybrid business model is driving enhanced returns and significantly increases value, according to Burstone.
Burstone manages total assets with a gross asset value (GAV) of approximately R42.4bn across South Africa, Europe and Australia, of which R23.8bn represents third-party GAV.
Approximately 67% of the Group’s total GAV is offshore in Europe and Australia as Burstone is well positioned to grow equity under management across new and existing platforms.
Burstone’s focus is on building a capital-efficient international business that generates diversified and sustainable returns from underlying real estate investments; combined with additive fee income from funds and asset management activities.
The South African portfolio reflected improving property fundamentals, delivering strong operational performance across a diversified asset base. The South African portfolio remains a key creator of balance sheet liquidity and necessary capacity to support both local and international platform growth.
The SA like-for-like net operating income increased 5.3% year-on-year, driven by strong retail growth and recovery in the office sector, partially offset by a tenant-specific default in the industrial portfolio.
The retail portfolio’s performance which had +11.5% like-for-like (LFL) net operating income growth (NOI), was led by Zevenwacht Mall, following partial redevelopment of the centre, and improved trading conditions across other retail centres.
Burstone’s domestic office sector achieved 4.1% like-for-like net operating income growth, benefitting from lower negative reversions and improved tenant retention, while the Industrial sector battled with negative 3.8% LFL NOI, and experienced a decline because of a tenant business default.
Strong leasing activity led to an improved vacancy across the total portfolio of 4.7% (FY25: 6.7%), with portfolio reversions improving to negative 2.5% (1H25: negative 8.5%).
The group invested R143m in capital expenditure and has committed to an additional solar rollout of 8MW (+60%) within the next year.
European real estate performance
The partnership with Blackstone which was signed last year, on the Pan European Logistics platform marked a cornerstone European platform that stands, as a clear example of its strategic roll-out of the funds and asset management strategy in the region as the group considers new and alternative growth strategies, Burstone said.
Hoppegarten, Germany
Burstone’s 20% co-investment and retained management mandate provides long-term alignment and earnings potential as the platform matures.
Operationally, the portfolio delivered stable returns, underpinned by strong positive rental reversions of 16.3%, offset by increased vacancy to 14.8% as the strategy prioritises maximising rental growth over short-term income.
Australian real estate performance
Burstone has, through its Irongate partnership, co-invested. R330m into two industrial platforms alongside TPG Angelo Gordon and Phoenix Property Investors (“Phoenix”). The total GAV of these platforms is c. A$400m / R4.5bn.
The group’s investments were made at low initial yields, but with strong reversionary potential. During the period, these platforms returned R14m (1H25: nil).
The group still retains its effective 18.67% ownership stake in the ITAP Fund Australia (ITAP), which will realise returns over the medium-term.
Fund management activities
Irongate, the Group’s fund management platform in Australia in which it holds 50%, acts as a platform for Burstone to grow its funds management business and acts as a framework for the group’s funds and asset management strategy.
During the period, Australian 3rd party equity under management grew to A$668m, a 7% increase, driven by increased equity deployment alongside TPG AG into two recent acquisitions, with a combined asset value of A$85.6m.
Irongate has successfully attracted additional 3rd-party EUM, with existing capital partners committing a further A$170m of growth equity, which when deployed will increase group equity under management by 11%.
Additionally, Irongate is actively bidding for industrial core plus opportunities in the region.
In Europe, Bursotne aims to leverage its existing European footprint to expand its industrial and logistics exposure and continues evaluating additional opportunities to launch new fund platforms that will attract 3rd party capital.
In South Africa, the Group is committed to the launch of the SA Funds platform, catalysing Burstones fund management model locally. The launch of this platform is subject to final approvals from cornerstone institutional capital partners.
The group is transitioning from a traditional property owner to an integrated international real estate funds and asset management business. Burstone’s performance reaffirms its progress over the past year in achieving operational stability and scaling its funds and asset management business across its respective regions.
As a result, earnings momentum is building as underlying real estate performance strengthens and funds management activities gain traction. Renewed focus on strategic operational alignment across geographies is expected to yield cost efficiencies over the short-to-medium term, Wooler said. Balance sheet strength remains critical to support Burstone’s growth ambitions and fund platform scalability.
alistair@propertyflash.co.za
