June 9 2026 12:35
JOHANNESBURG, SOUTH AFRICA
Burstone Group recently announced financial results for the year to end-March 2026, wherein it said its South African properties had rebounded after a depressed period. The “South African real estate market rebound” contributed to distributable income per share (DIPS) increasing 2.2% to 104.71 cents compared with 102.47 cents in the 2025 financial year.
Burstone maintained its 90% payout ratio. Investors want real estate investment trusts (Reits) to pay a large portion of their distributable earnings as dividends each year. They are mandated to pay at least 75% of their income as a dividend each year in terms of Reit rules. When the Reit dispensation was adopted by South African companies from late 2013 onward, many SA Reits chose to pay out 100% of their annual distributable income out annually.
CEO Andrew Wooler said “management’s careful execution and disciplined approach” had ensured that the group fulfilled its growth projections for the 2026 period. This allowed it to declare a dividend of 94.24 cents per share (FY25: 92.22 cents per share) for the period.
The solid operational performances from the South African real estate portfolio’s assets included like-for-like net operating income (NOI) growth of 4.2%, a vacancy reduction from 6.7% to 2.7% and a 5% uplift in South African valuations.
“The group continued to deliver on our strategy as a fully integrated international real estate investor and fund and asset management business, driving earnings growth, operational efficiencies and enhanced recurring income streams. Our diversified business model proved resilient in very uncertain and volatile global economic and political environments and is what will continue to differentiate Burstone as a leading capital efficient real estate business with growth in fee income over time,” Wooler said.
Burstone Group’s funds management strategy continued to gain momentum across its European and Australian portfolios, with a 6% increase in equity under management (EUM) and fee revenue now representing 15.5% of total income. Reits are supposed to earn mist of their income from traditional rent but Burstone is becoming a rental income and fee earning hybrid property company.
Burstone secured R4.4bn of third-party equity commitments during the period, which is expected to accelerate earnings growth upon deployment. This will allow the business to leverage these funds to between R10bn to R12bn in potential asset acquisitions.
Burstone Group CFO, Myles Kritzinger said the company’s investment case lay in how it was diversified.
“These results reflect Burstone’s diversified earnings model, underpinned by the strength of the respective real estate investments. In addition, the Group’s proactive asset recycling strategy, continued platform expansion, and refinancing initiatives supported earnings quality and enhanced balance sheet resilience throughout the year,” said Kritzinger.
Burstone’s real estate income was generated across three geographies: South Africa, Europe and Australia, with performance across all regions demonstrating solid property fundamentals, Kritzinger said.
South Africa remained the dominant contributor with strong net operating income growth, he said.
The South African portfolio delivered steady income growth across a diversified asset base. The portfolio’s like-for-like (LFL) NOI increased by 4.2% 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.
Strong leasing activity reduced the portfolio vacancy to 2.7%, compared with 6.7% in the 2025 financial year. Negative reversions widened to 7.9%, from negative 4.6% in the 2025 financial year, largely reflecting the expected expiry of long-dated office leases.
The portfolio delivered an upward portfolio revaluation of circa R0.6bn (c. 5% increase) and circa R0.9bn of asset sales during the period at close to book value, excluding Balfour Mall.
Burstone’s exposure to Europe provided resilient co-investment returns with reversionary upside despite increased vacancies. The performance of Burstone’s Pan European Logistics (PEL) portfolio NOI was down marginally by 3% on a LFL basis.
During the year, the Burstone launched its European Light Industrial (ELI) platform with Hines Group, where Hines has committed €130m of equity to support the asset aggregation strategy. Burstone will invest circa 20% of the platform equity and perform the role of investment and asset manager, leveraging its existing European footprint and management expertise across those markets. The first tranche of acquisitions (€34m) is close to completion with a significant near-term pipeline under due diligence.
The Burstone-Irongate JV performed albeit slowly, as asset management initiatives took effect and positive rental reversions were captured.
The Australia real estate co-investments into industrial platforms, alongside capital partners TPG Angelo Gordon and Phoenix Property Investors, delivered R27m (FY25: R1m) of earnings and positive reversions were captured. The platforms remain under-rented relative to the market by c.20%, supporting earnings growth, material capital uplift in the medium term.
During the reporting period, Burstone supported the growth of these platforms by deploying R72m of equity into two new industrial asset acquisitions.
Burstone continued to pursue and deliver on its “South African Core Plus” platform, with finality expected in three months. The SA Core Plus platform catalyses the local fund management strategy, will enhance earnings and create significant capital for the Group at or near net asset value (NAV).
Across Europe and Australia, the Group’s fund and asset management operations performed in line with expectations during FY26, supported by stable management fees and continued execution alongside capital partners.
This reflected the group’s ability to attract third-party equity and its capacity to scale opportunities in partnership with leading institutional investors, such as Blackstone, Hines, La Caisse, formerly Ivanhoe Cambridge, Phoenix, TPG Angelo Gordon and Metrics and Frasers.
During the period, Burstone built balance sheet capacity through effective asset recycling, which secured optionality and operating leverage from established platforms, enabling the Group to deploy capital selectively as opportunities emerged.
Burstone’s diversified business model shielded it from a volatile global macro-economic and political environment, which included tariffs, supply-chain disruptions and energy shocks contributing to rising inflationary and cost pressures across markets.
Wooler said that Burstone was on track to guide its 2027 financial year’s dividend per share (DPS) growth of between 7% and 9% driven by DIPS guidance of 4% to 6% and an increased payout ratio to 92.5%.
Burstone Group’s diversified business model is underpinned by its robust real estate portfolio, exposure to different asset classes and geographies, recurring fee income streams and multiple capital sources, which supported the company’s measured growth expectations, Wooler said.
Asked if Burstone has its sights on trophy assets in SA, Wooler said Burstone remained open to new opportunities where the real estate fundamentals made sense for Burstone, and where the group could add value over time through its hands-on asset management skillset.
“We don’t necessarily target trophy assets. It’s never about what an asset looks like on the front page of our annual report but about how and where we can roll up our sleeves and create value,” he said.
Wooler said Burstone couldn’t control outside economic forces, so its focus was on what’s under the team’s control,
“It’s as Stephen Koseff always used to say at Investec, “do our jobs and deliver,” he said.
“We have had to navigate many uncertainties over the last few years. Covid, rate changes, internalisation, a shift in strategy. But we have made huge progress and the results are starting to come through in our strong real estate performance, especially from SA, which underpins our trajectory. Our approach to the funds management strategy is also starting to pay dividends. It hasn’t been without some speed bumps along the way, but you can now really see the impact of the last three years’ worth of work coming through in our guidance numbers,” he said.
alistair@propertyflash.co.za
