Category Archives: Markets & Investing

The 10-year return on South Africa’s biggest self-storage property fund

Stor-Age, South Africa’s only specialist self-storage REIT on the JSE said its rental income rose by 8.3% during the year ended 31 March 2025, supported by a 16,000m² increase in occupancy, reflecting steady performance amid portfolio expansion and growing demand.

The group grew its trading portfolio from 99 to 108 properties, pushing its total gross lettable area (GLA), including developments, past 700,000m².

Stor-Age also owns the fifth largest UK self storage brand, Storage King, with its portfolio of properties representing more than 50% of the Group’s property assets by value.

The group said it marked a decade of consistent performance and significant portfolio growth, releasing its tenth annual set of results since listing on the JSE in 2015.

Financial Highlights:

  • Earnings: Distributable income per share for the year 123.01 cents, up 4.1%
  • Financial performance: Rental income up 8.3%, occupancy up 16 000m² and net investment
    property value up 6.0% to R12 billion
  • Portfolio growth: Number of trading properties increased from 99 to 108, with the total portfolio
    including developments now exceeding 700 000m² GLA
  • Strategic partnerships: Working with Hines, one of the largest privately held real estate investors
    and managers globally, on five development projects in the UK
  • Balance sheet management: Loan-to-value ratio of 31.3% and 84.2% of net debt subject to interest
    rate hedging
  • Future outlook: Forecasting distributable income per share growth of 5 – 6% for FY26

Stor-Age CEO Gavin Lucas, said: “In 2015 we brought to market a highly specialised self storage REIT, the first self storage REIT to be listed on an emerging market exchange globally and the first, and still only, of the real estate “alternatives” to be listed on the JSE.

“After a decade of consistent performance, we are pleased to have delivered another strong set of trading results, driven by gains in occupancy and rental rates. While continuing to maintain a conservative balance sheet, we’ve also grown the number of trading properties in our portfolio from 99 to 108.”

He noted that assuming R100 was invested on the date of the group’s listing in November 2015 and provided that the full pre-tax dividend was reinvested, an investment in Stor-Age would be worth R329 at the end of May 2025.

The same investment in the JSE All Share Index and in the JSE All Property Index would be worth R255 and R112 respectively.

“The underpin to this stellar performance has been our same-store rental income growth in both SA since 2016 and the UK since 2017, with the compound annual growth rate over the periods in excess of 9% and 8% in SA and the UK respectively, well ahead of the corresponding GDP figure of less than 1% in each market.”

During the past twelve months the South African portfolio delivered another strong performance with same-store rental income and net property operating income increasing by 10.2% and 11.1% respectively compared to the prior year.

The UK portfolio delivered an equally pleasing set of results, with same-store rental income and net property operating income increasing by 6.5% and 5.0% respectively.

Over the past two years, the Company has completed 12 new developments, six each in South Africa and the UK. Each of these developments were completed in JV structures, where Stor-Age partners with institutional or private equity capital, enabling the Company to acquire, develop, operate and manage assets across multiple locations.

In FY25 the Company opened two new developments in SA, one in Century City in Cape Town and another in Kramerville in Johannesburg, and one development in the UK, located in Leyton in East London.

In addition, the Company added four new third-party managed properties in the UK and acquired an existing operator in South Africa, Extra Attic, located near Cape Town Airport.

Post year-end, in June 2025 the Company opened a new £25 million property in Acton, West London in its JV with Moorfield. In addition, following Stor-Age entering into a third-party management agreement with Hines earlier in the year to manage the acquisition of a three-property portfolio in the UK, the two companies have now also partnered on five additional development projects.

Hines is a privately owned global real estate investment manager overseeing $90 billion in assets across multiple property sectors. Stor-Age’s development pipeline at year-end consisted of 18 active projects at various stages of planning and completion, amounting to over 83 000m² GLA.

Stor-Age is forecasting distributable income per share growth of 5 – 6% in FY26.

The group’s share price is up 14.6% over the past year, to R16.07.

Vukile boosts guidance for 2026

JSE-listed Vukile Property Fund has posted strong financial results for the year ended March 2025, with profit more than doubling over the period.

The company delivered a 6% increase in its full-year dividend and a 3% rise in funds from operations (FFO) per share. Looking ahead, it has raised its guidance for 2026, expecting at least 8% growth in both FFO and dividends.

Profit attributable to shareholders rose sharply to R3.2 billion from R1.6 billion the previous year, while basic earnings per share climbed nearly 78% to 270.71 cents.

Gross property revenue reached R4.4 billion, and operating profit before finance costs increased by 40% to R3.26 billion.

The group declared a final dividend of 76.5 cents per share, bringing the total for the year to 131.7 cents. Net asset value per share also improved to R22.39.

The increase in direct property investments – from R36.6 billion to R50.3 billion – was driven largely by acquisitions in Spain and Portugal.

Vukile exited its positions in Lar España and Fairvest during the year, ending its exposure to listed indirect property holdings.

In South Africa, Vukile’s retail portfolio showed positive signs, with vacancies falling to 1.7%, trading activity rising, and operating costs decreasing as a share of income.

The company also expanded its renewable energy programme, with solar now supplying more than a quarter of its portfolio’s electricity needs.

Performance in Spain and Portugal remained strong, with high occupancy levels, rising rents, and long lease terms. New acquisitions during the year included several shopping centres across both countries, further expanding the group’s European footprint.

Post year-end, the company completed another deal in Portugal with the acquisition of Forum Madeira.

Vukile maintained a stable financial position with R2.1 billion in cash and R2.5 billion in undrawn credit facilities at year-end. Its loan-to-value ratio stood at 40.95%, while its hedge ratio increased to 83.9%, up from 58.5% the year before. Only a small portion of the group’s debt is due in the next financial year.

Looking ahead, the company expects to build on its performance through continued operational focus and selective acquisitions.

For the year ending 31 March 2026, Vukile is guiding for at least 171.5 cents in FFO per share and a dividend of at least 142.2 cents. A separate announcement detailing the final dividend and its tax treatment will be issued via SENS.

Shares in Vukile are up 20% over the past year, to R19.62, outperforming the listed property sector which is forecast to deliver 8%-9% income returns in 2025.

South Africa’s best performing REITS right now

South Africa’s REIT sector maintained its upward momentum in May 2025, delivering a 4.1% return for the month.

Once again, it outperformed both the broader equity market (3.1%) and bonds (2.7%), reinforcing its recovery trajectory.

This latest gain follows a strong 6.9% return in April, bringing the sector’s year-to-date performance to 6.7%—a notable rebound after a sluggish start in January.

Although REITs still lag behind the broader equity market’s impressive 14% year-to-date growth, they have now outpaced bonds in 2025.

This shift signals renewed investor confidence, coinciding with South Africa’s 10-year government bond yield recently dipping below 10% for the first time in over three years.

Ian Anderson, head of Listed Property and portfolio manager at Merchant West Investments – and compiler of the SA REIT Association’s monthly Chart Book – attributed the sector’s improving sentiment to several key drivers.

“The positive outlook is largely driven by expectations of lower interest rates in South Africa, a small reprieve in global tariff tensions, and growing evidence that property fundamentals are strengthening. These trends set the stage for higher distributable earnings growth across the sector in 2025 and 2026.”

Several REITs published financial results in May, providing further evidence of the sector’s ongoing recovery.

Redefine Properties, for instance, reported interim results for the period ending February 2025, with revenue rising 3.5% and distributable income per share increasing 0.7%.

The company maintained its full-year guidance, projecting distributable income per share between 50 and 53 cents – representing growth of 0% to 6%.

Equites Property Fund posted full-year results in line with expectations, increasing distributions by 2.1% to 133.92 cents per share.

More notably, the company’s guidance for 2026 exceeded consensus, with anticipated distribution growth between 5% and 7%, driven by robust rental escalations and a premium logistics portfolio shaped by two years of strategic asset recycling.

Equites was the top-performing REIT in May, with its share price advancing 10%.

Spear REIT also delivered strong results, benefiting from its focused strategy in the Western Cape. Its share price rose 9% following the release of its full-year results for the period ending February 2025.

The company also announced the acquisition of Berg River Business Park in Paarl for R182.15 million through an all-share transaction.

Other REITs reporting in May included Burstone, Delta Property Fund, Dipula Properties, Emira Property Fund, and Octodec Investments. Across the board, a consistent theme emerged: improving property fundamentals across all sub-sectors, further boosting investor sentiment.

The total market capitalisation of South Africa’s REIT sector has now exceeded R250 billion—its highest level since January 2020.

“With further interest cuts a possibility, stabilising macroeconomic conditions, and improving company guidance, investor confidence remains strong, and the momentum is likely to carry through the remainder of 2025,” said Anderson.

Economic headwinds persist despite SARB’s easing stance

The South African Reserve Bank (SARB) cut its main repo rate by 25 basis points to 7.25% on Thursday. The decision by the Monetary Policy Committee (MPC) was unanimous, although one member preferred a larger cut of 50 bps.

Unlike the MPC members, the market has been divided regarding a rate cut, said Reza Hendrickse, portfolio manager at PPS Investments.

“Doves have argued inflationary pressures are subdued and real interest rates in SA are therefore too high. As such, there is ample scope to cut rates to support economic growth without stoking inflation.”

“Hawks, on the other hand, have argued that there is limited room for a cut, given rates are close to the SARB’s neutral level, and global risks are elevated, posing a risk to the rand.”

Economists polled by Reuters had predicted a close call, with a significant minority expecting that the typically cautious MPC might hold the policy rate.

In addition, Hendrickse said that although inflation is well below the 4.5% mid-point level, it is currently in the region of where the SARB would like it to be in the longer term.

The SARB trimmed its GDP projection to 1.2% for 2025, increasing to 1.8% by 2027. It still views structural reforms as supportive of longer-term growth but acknowledges headwinds from slower global growth, said Hendrickse.

“Inflation in SA is running at below 3% year-on-year, and the SARB has revised its inflation forecast lower, given oil and rand dynamics, as well as the cancelled VAT hike.”

In his closing comments, the governor raised the point that the SARB’s work, in conjunction with National Treasury, on lowering the inflation objective from 4.5% to 3% was at an advanced stage.

“The MPC is advocating for lowering the target, which it sees as beneficial over the long term. The market is not entirely convinced, however, with some believing it is more important for South Africa to achieve higher nominal growth to ease the debt burden,” the financial expert said.

Nedbank economists said the votes reflect a remarkable about-turn from the caution that dominated the March meeting. “Unsurprisingly, the benign inflation outcomes of recent months, a very subdued inflation outlook, and the rand’s unexpected resilience in the face of global uncertainty tilted the debate in favour of further easing.”

Inflation forecasts: The SARB again concluded that inflation remains well contained, substantially lowering its headline and core inflation forecasts. It sees headline inflation averaging only 3.2% in 2025 before slowly creeping up to 4.2% and 4.4% in 2026 and 2027, respectively.

The revisions stem from a lower starting point, expectations of a firmer rand, and lower global oil prices, said Nedbank. These factors offset the impact of higher fuel levies, it said.

“Of course, they removed the earlier VAT increases from their assumptions. The SARB expects core inflation to average 3.3% this year, rising to 4.5% in 2027. Altogether, the SARB’s forecasts paint a benign inflation picture for the next three years.”

“The MPC also changed its risk assessment of the inflation outlook from upside to balanced. The rand’s impressive pullback from the lows of early April likely strengthened the Committee’s confidence in their inflation forecasts,” Nedbank said.

The lender said it expects some acceleration in growth during the remainder of the year. The main boost will come from domestic demand, supported by firmer consumer confidence, sustained by a recovery in real household incomes driven by lower inflation and lower debt service costs due to lower interest rates.

“Despite minor progress on the structural front, operating conditions remain challenging, and production costs high,” it warned. The weaker global recovery will weigh on output, particularly given South Africa’s elevated cost structures, underlying inefficiencies, and significant infrastructure constraints.

“Accelerating structural reforms is the key to enhancing the international competitiveness of industries. This would enable the economy to grow faster and create more jobs without hitting supply bottlenecks, driving up costs, and stoking inflation.”

Nedbank expects growth of 1% in 2025 and 1.5% on average over the next three years. “However, the uncertain global environment and implicit collapse of AGOA pose significant downside risks,” it warned.

FNB chief economist Mamello Matikinca-Ngwenya said the MPC’s decision to cut interest rates highlights a greater focus on domestic fundamentals.

“Inflation remains below the bottom of the inflation target range, and high-frequency data reflects a weak start to 2025 from a productive sector point of view, which will be worsened by faltering global prospects. Ultimately, the macroeconomic outlook is benign, providing ample space for a continued cutting cycle.

“South Africa’s difficult fiscal trajectory is delaying any improvements in sovereign risk and borrowing costs. The outlook on interest rates will continue to reflect these risks,” she said.

BetterBond said the cut in the prime lending rate to 10.5% provides welcome relief to homeowners, “and sends a strong signal to investors that South Africa is intent on stimulating economic growth.”

“With three rate cuts since September, we’ve already seen a boost in homebuying activity! The prime rate is now only slightly higher than pre-pandemic levels, and if more cuts happen as anticipated, we could see even more buyers entering the market.”

Mortgage relief as prime rate drops to 10.75%

The property industry has welcomed the latest interest rate cut announced by South African Reserve Bank Governor Lesetja Kganyago, viewing it as much-needed relief for consumers – particularly homebuyers and mortgage applicants.

Following the May meeting of the Monetary Policy Committee (MPC), the Reserve Bank lowered the repo rate by 25 basis points to 7.25%, while the prime lending rate now stands at 10.75%.

While modest, the reduction is expected to make mortgage repayments slightly more manageable, providing a welcome reprieve amid ongoing economic strain.

The decision reflects the central bank’s confidence in the current inflation outlook, with consumer inflation remaining below the 3–6% target range — creating space for monetary easing.

Subdued economic growth, low inflation and weaker consumer and business confidence made a compelling case for further interest rate relief, which manifested at this month’s (May) MPC meeting, said Dr Andrew Golding, chief executive of the Pam Golding Property group.

Encouragingly, with inflation remaining below 3% (2.85% in April), the Monetary Policy Committee seized the opportunity to give South Africa’s economy a much-needed boost in sentiment.

“Furthermore, with Inflation surprising on the downside in recent months and, with a petrol price cut likely next month (June) – although partially offset by the 15 cents per litre hike in the fuel levy – price pressures are likely to remain subdued.”

Coupled with this is the fact that local economic recovery was sluggish in the first quarter of the year, with GDP growth forecasts downgraded to around 1.5% for 2025, he said.

In addition, consumer confidence trended downwards, partly due to the proposed 2% VAT hike and general increase in the tax burden in the 05/06 Budget.

Golding noted that the hike in the fuel levy, instead of a VAT hike, is likely to stress already constrained household finances. “Apart from providing some debt relief for consumers in general, a reduction in the interest rate is a positive indicator for sentiment in the housing market, providing encouragement for those with existing mortgages or seeking credit to buy their first home.”

Golding pointed out that analysts arguing for a rate cut ahead of the MPC’s decision noted that at least 15 major central banks have cut interest rates since early-April, when the US administration triggered a wave of turmoil with punitive tariffs hikes which were subsequently temporarily paused.

“Given the weak state of the local economy and the benign inflation rate, the Reserve Bank appears to have followed the lead of these banks.”

The Bureau for Economic Research (BER) has suggested that it is a matter of time before the Reserve Bank introduces a lower inflation target, which will also discourage further interest rate cuts as the Bank attempts to anchor inflation expectations around the new, lower inflation target.

The governor said that the committee considered a scenario with a 3% inflation objective, which corresponds to the low end of our target range. “We will also consider scenarios with a 3% objective at future meetings,” Kganyago said.

While welcoming the rate cut, Samuel Seeff, chairman of the Seeff Property Group, believes it falls short of what the economy urgently needs.

The rate reduction – the fourth since mid-2024 – brings the prime lending rate from 11% to 10.75%.

Although a positive step, Seeff argued that the Reserve Bank missed a crucial opportunity to cut by 50 basis points, which would have offered greater relief to consumers and injected much-needed momentum into the economy and property market.

Seeff said that at this pivotal juncture, there is nothing more critical right now than economic growth and job creation. “Lowering borrowing costs would stimulate business investment and crucially, put more money back into the pockets of consumers, thereby boosting spending.”

“The property market currently still lags the pre-Covid volumes with the first quarter of this year disappointingly some 10% down compared to the same time last year.”

Nonetheless, Seeff said that with continued access to mortgage finance and areas seeing price growth where stock is tightening, there are positive signs for both buyers and sellers.

Rate Cut on Monthly Bond Repayments

(Based on a 20-year loan term at the new prime rate of 10.75%)

Bond AmountPrevious RepaymentNew RepaymentMonthly Saving
R750,000R7,741R7,614R127
R900,000R9,290R9,137R153
R1,000,000R10,322R10,152R170
R1,500,000R15,483R15,228R255
R2,000,000R20,644R20,305R339
R2,500,000R25,805R25,381R424
R3,000,000R30,966R30,457R509
R5,000,000R51,609R50,761R848

Seeff said that while the rate cut is welcome, more decisive action will be needed in upcoming MPC meetings to truly unlock economic growth and support South African households.

Delta Property Fund turnaround strategy ongoing

Delta Property Fund has reported improved operational performance for the financial year ended 28 February 2025, despite recording a wider annual net loss of R104.2 million compared to R77.6 million in the previous year.

The real estate investment trust (REIT), which owns a portfolio of commercial office properties largely leased to government and state-linked tenants, increased net operating income by 10.3% to R721.4 million, driven by cost savings and disposals of non-core assets.

Rental income however, declined marginally by 1.9% to R1.14 billion, while property operating expenses fell by 12.8%, aided by reduced municipal rates and tighter cost controls.

Despite this, the company recorded a greater loss due to non-cash fair value adjustments, increased expected credit losses, and higher tax expenses.

Basic and diluted earnings per share fell to -14.6 cents (FY24: -9.3 cents), while headline earnings per share dropped to 10.4 cents from 15.9 cents.

“Our turnaround strategy continues to gain momentum, notwithstanding macro-economic pressures. The office segment we operate in remains exceptionally competitive, and it is pleasing to see the impact of our disposal strategy, prudent debt management, rigorous cost control measures, lease renewals and concerted efforts to reduce property vacancies making an impact,” said the group’s chief executive, Bongi Masinga.

The vacancy rate improved to 31.9%, or 18.4% when excluding assets held for sale. Six non-core properties worth R158 million were disposed of during the year, with further disposals pending.

The weighted average lease expiry decreased slightly to 14.7 months, reflecting short-term lease renewals.

The Group’s loan-to-value ratio remained high at 59.5% (FY24: 59.4%), but interest cover improved to 1.4 times. Total interest-bearing debt reduced marginally to R3.9 billion, with R237.5 million in capital repayments made, partly funded by property sales.

The average rental collection rate was 95.1%, though trade receivables increased to R155.2 million due to delayed payments by some tenants. A bad debt provision of R61 million was recorded.

No dividend was declared for the year, consistent with FY24, as the company focuses on balance sheet stability and reducing debt. The board confirmed that the business remains a going concern.

Delta said it remains committed to improving its financial position through asset sales, cost containment, lease renewals, and continued engagement with lenders to extend debt maturities and reduce interest costs.

Pick n Pay CEO questions pace of new store openings in South Africa

Pick n Pay chief executive officer, Sean Summers, says the aggressive expansion across South Africa’s retail sector could undermine long-term profitability.

Speaking after the group’s earnings release on Monday, and reported by Bloomberg, Summers cautioned against retailers who are prepared to just open stores at any cost.

Retail square metreage per capita in South Africa is approaching, or even exceeding, that of the United States, he noted, expressing concern over the sustainability of such rapid physical expansion in a market with much lower consumer spending power.

Company disclosures show that the top five retailers opened more than 700 stores in 2024 and have already added 230 new outlets in early 2025, said Summers.

This comes despite the National Treasury cutting its economic growth forecast to an average of 1.6% over the next three years – down from 1.8% – due to subdued domestic demand and global trade uncertainties.

Pick n Pay’s own strategy has diverged from the expansionist trend. The company is in the midst of a turnaround plan, which has included closing underperforming stores and refocusing efforts on its value segment.

Meanwhile, rivals such as Shoprite and Pepkor continue to scale up their store networks. Pepkor, South Africa’s largest retailer by footprint, reported 168 new store openings in just six months to March 2025—an average of 28 stores per month—as it pushes deeper into value-focused apparel, electronics, and cellular categories.

Shoprite Group, Africa’s largest retailer said in its financial results for the 26 weeks ended 29 December 2024, that it opened 248 stores, with 122 more in the pipeline.

Retailers like Woolworths and Spar are struggling to keep pace. The former is with margin pressure and shifting consumer behaviour towards more affordable shopping baskets, while SPAR is battling to keep market share amid rising competition – particularly from the rapid growth of online grocery platforms.

Analysts warn that without corresponding growth in consumer demand; the sector risks a glut of underutilized retail space.

“Sales densities in South Africa must be much lower than in the US because obviously per capita spending in South Africa is well below the US,” said Charles Allen, a London-based analyst at Bloomberg Intelligence.

“It does make you wonder how people eventually are going to justify the return on the investment.”

Despite pockets of resilience in the value segment, the broader environment remains difficult. High unemployment, stagnant incomes, and slow economic growth continue to limit household spending.

South Africa’s largest retailer is opening 28 stores each month

Listed retailer Pepkor continued to execute on its growth strategy with the opening of 168 new stores during the first half of FY25, expanding its total footprint to 5 978 stores across key markets.

This includes the successful rollout of 32 Ayana stores, reinforcing its position in the adult wear segment and marking significant progress in retail space growth of 2.1% year-on-year.

This expansion supported strong retail performance, driving 12.8% revenue growth to R48.8 billion and 13.3% operating profit growth to R5.8 billion.

Pepkor is a Cape Town-based investment and holding company focused on the discount and value consumer retail and fintech markets and has the largest retail store footprint in southern Africa.

The group delivered 12.4% growth in HEPS to 84.3 cents, and 18.9% growth in normalised HEPS, underpinned by robust cost management, strategic execution in fintech, and ongoing market share gains.

Highlights:
-Revenue up 12.8% to R48.8 billion
-Gross profit margin expanded 110 bps to 39.2%
-Operating profit up 13.3% to R5.8 billion
-Normalised HEPS up 18.9% to 84.3 cents
-Strong cash conversion at 82.3% and 23.7% return on net assets

Pepkor’s Traditional Retail business demonstrated strong trading momentum, with PEP, Ackermans, and Speciality contributing significantly:

-PEP opened 43 new stores, reaching 2 649 stores
-Ackermans added 19 stores, totaling 1 018
-Speciality grew to 972 stores
-Ayana, Pepkor’s new adult wear brand, launched in 32 stores

The group said that merchandise sales increased 10%, with like-for-like sales up 7.8%. Growth was broad-based across all regions and supported by improved product availability, expanding credit adoption, and robust cellular performance.

The group noted that its fintech segment grew revenue by 34.5% to R7.9 billion, with its FoneYam smartphone rental reaching over 1.5 million customers.

Pepkor’s strategic growth included the acquisition of Choice Clothing (107 stores, effective 1 June 2025, with potential to scale beyond 300), the proposed acquisition of Legit (adding approximately 462 stores to Speciality), and the Shoprite furniture business, which contributed around 400 stores to the Lifestyle segment, expanding its base from 922 stores.

Pepkor entered into a transaction agreement with Retailability Limited in March to acquire 462 stores, including the following brands: Legit, Swagga, Style and Boardmans.

Looking ahead, Pepkor said its trading momentum continued into H2 FY25, supported by early winter season demand and strong base store performance.

The group noted that it remains on track to open 250–300 new stores in FY25.

Western Cape infrastructure growth pays dividends for Spear REIT

Western-Cape focused Spear REIT has posted its financial results for the year ended February 2025, achieving significant milestones in asset value growth, financial and operational performance.

A major highlight of the financial year was the completion of a R1.15 billion transaction, in which Spear acquired 13 prime real estate assets located within the Western Cape.

Spear’s total portfolio value increased by 20%, rising from R4.6 billion in FY2024 to R5.53 billion in FY2025.

The investment portfolio now comprises 39 income-generating properties, covering 487,418m² of gross lettable area (GLA). The portfolio remains well-diversified, with 63% industrial, 26% commercial, and 11% retail real estate by GLA – ensuring resilience and adaptability across different market conditions.

Market capitalisation also grew by R1 billion, reaching R3 billion at year-end, it said.

In a separate announcement issued via SENS on 21 May 2025, Spear confirmed the acquisition of Berg River Business Park in Paarl for R182.15 million.

The 30,000m² multi-let industrial park, situated in the Paarl Industrial node, will be acquired through a Section 42 asset-for-share transaction.

The asset is expected to deliver an initial yield of 9.35%, marking Spear’s first entry into the Paarl real estate market and further reinforcing its Western Cape growth strategy.

CEO Quintin Rossi, said: “The trading environment remains constrained and unpredictable, with challenges such as intermittent loadshedding, crime and a dangerously high unemployment rate, continuing to exert pressure on South Africa’s appeal to investors and the country’s financial resources.

“Despite these obstacles, the South African-listed property sector has shown strong signs of recovery, outperforming bonds, equities and cash for two consecutive years.”

This recovery, he said, has been bolstered by a declining interest rate environment, providing much- needed relief to income statements across the board.

“Encouragingly, the Western Cape Provincial Government and local authorities have shown remarkable focus and intent in driving economic growth and job creation within the province. Their efforts have resulted in the largest infrastructure investment allocations in the Cape Metro, further strengthening job creation and economic growth in the region.”

The core portfolio demonstrated resilient trading throughout a year marked by uncertainty, optimism, declining inflation, reduced debt costs, and reliable energy supply. “These conditions contributed to improved key performance indicators, making FY2025 the strongest overall core portfolio performance in Spear’s post Covid- 19 journey,” said Rossi.

Spear said its asset management and leasing teams capitalised on the positive momentum across the Western Cape, taking full advantage of improved market conditions. “This proactive approach resulted in higher occupancy rates across all portfolio asset types,” it said.

Spear’s core portfolio occupancy rose to 97% — a 388bps improvement year-on-year — reflecting strong leasing momentum and sustained tenant demand. The company’s asset base grew by 19.54%, while market capitalisation rose by R1 billion to R3.3 billion.

The group declared a total distribution per share (DPS) of 81.27 cents and a distributable income per share (DIPS) of 85.55 cents, both up over 3% from FY2024. Rental collections remained robust at 98.59%.

Industrial Portfolio
Accounting for 63% of total GLA, Spear’s industrial assets delivered stable performance, achieving 98.85% occupancy. Rental growth was supported by 7.30% in-force escalations, while 42,365 m² of industrial space was renewed or relet with positive rental reversions.

Retail Portfolio
Despite a challenging consumer environment, retail assets maintained 96.05% occupancy, with 9,622 m² of GLA renewed or relet and 8.53% positive rental reversions. The addition of two medical retail assets — leased to Intercare and Clicks — further bolstered the portfolio’s resilience.

Commercial Portfolio
The Western Cape office market showed signs of recovery, and Spear capitalised on this momentum. Occupancy rose to 92.99%, up from 84.37% in FY2024. While renewals yielded a slight negative rental reversion of -3.17%, the strong location and infrastructure of these assets ensured continued letting momentum.

Looking ahead, Spear forecasts DIPS growth of 4%–6% for FY2026, with a maintained 95% payout ratio. This is underpinned by assumptions including continued stable energy supply, successful lease renewals, and no major tenant failures.

South Africa’s largest REIT is leaning into the country’s hottest asset class right now

Growthpoint Properties, South Africa’s largest primary JSE-listed REIT, phase 2 of its Arterial Industrial Estate development in Cape Town.

The developer says it has strategically grown its logistics and industrial assets from 15% to 20% of the total SA portfolio value in recent years.

At the same time, Growthpoint has expanded its investment in modern logistics warehouses — the cornerstone of its long-term value creation strategy in the industrial sector. These state-of-the-art facilities now account for approximately half of the portfolio’s gross lettable area.

The company is also strategically concentrating its investments in high-demand, better-performing regions, with a particular focus on the Western Cape and KwaZulu-Natal.

By completing Phase 2 of its Arterial Industrial Estate, Growthpoint has increased capacity in this high-demand location with the addition of six premium warehouse units. Offering a combined 21,831m² of new lettable space, the units range in size from 2,945m² to 5,713m², designed to accommodate a diverse range of business requirements.

With both phases now complete, the development represents a total investment of nearly R400 million by Growthpoint.

The estate is experiencing strong demand, with two of the six units in Phase 2 already snapped up supported by strong tenant interest, highlighting the need for high-quality industrial space in the region.

Phase 1 of Arterial Industrial Estate, spanning 19,741 square meters is fully let to top names in national and international industry.

“Growthpoint is reporting strong performance in its logistics and industrial portfolio, fuelled by high occupancy rates and a strategic focus on modern facilities. Our well-let logistics and industrial portfolio demonstrates the increasing demand for modern, strategically located facilities,” said Errol Taylor, Growthpoint’s head of Asset Management, Logistics and Industrial Property.

Arterial Industrial Estate is strategically positioned in Blackheath, a popular industrial hub in Cape Town, offering exceptional access to key transportation routes, including the R300, N1, and N2 highways, as well as Cape Town International Airport and the region’s seaports.

This prime location allows businesses to efficiently connect with both local and global markets.

The estate offers 24-hour security, flexible warehouse and office space, and a commitment to sustainability, including solar panels and a four-star Green Star certification from the Green Building Council of South Africa.

“This project reflects a continued and deliberate pivot toward better-performing, future-fit logistics assets and aligns with Growthpoint’s strategy of targeted investment and divestment, and development,” said Taylor.