Burstone expects to deliver just 2% growth in distributable earnings for the first half of 2026 — at the bottom end of its full-year guidance — as cautious global investor sentiment and the collapse of a key tenant in SA’s industrial sector weigh heavily on performance.
The subdued performance shows capital deployment fell short of expectations, the group said in a pre-close update for the six months to end-September, blaming tough global economic conditions across its markets.
“This is a result of slower capital deployment during the first half, due to global investor headwinds, together with a material business failure in SA’s industrial sector,” the group said.
It expects this to translate into distributable income per share of about 50.56c for the first half, compared with 49.53c in the previous period.
Despite this, Burstone’s SA operations continue to show resilience amid broader macro pressures. The local portfolio has delivered a stable operational performance and income growth, driven by strong property fundamentals. Like-for-like net property income is expected to rise between 4% and 5%, driven by solid retail sector gains.
The office portfolio is expected to post 3% like-for-like net operating income growth, supported by low vacancies and improved rental reversions. Industrial is set to decline 5%, hit by a major tenant failure, though partly offset by 4%-5% positive reversions.
Total vacancies across the SA portfolio are expected to hold steady at about 6% to 7%, it said.
“In SA, economic growth is still muted, but declining inflation is paving the way for gradual interest rate cuts. In relation to the real estate sector, industrial and retail segments demonstrate resilience, while office demonstrates positive signs of recovery,” the group said.
Burstone’s European business gained momentum after the Blackstone deal, which solidified its asset management platform in the region.
Its joint venture with Irongate is driving its Australian funds growth, with assets under management (AUM) up 7% to about A$668m (R8.68bn) since March. The group boosted exposure in industrial and logistics with two acquisitions: Hemmant (A$46.6m) and Glendenning (A$39m).
Earnings from Burstone’s Irongate management platform are set to surge between 70% and 90%, driven by strong AUM growth, though from a relatively low base, the group said.
It expects its loan-to-value ratio to be about 38.5% for the first half.
Burstone’s shares closed down 3% at R8.33 on the JSE on Tuesday.
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