Spear, a Western Cape-focused Real Estate Investment Trust (REIT), has successfully raised R457.75 million through an equity capital raise via a vendor consideration placement.
This milestone follows the unconditional acquisition of the Emira Western Cape portfolio, further strengthening Spear's commitment to its regional growth strategy.
The placement enables the issuance of 50,302,197 new shares to public shareholders at an issue price of R9.10 per share—representing a 1% discount to Spear's 30-day volume-weighted average price (VWAP) of R9.19 per share, calculated before 13 September 2024.
The new shares are expected to be listed and issued by 09:00 on Monday, 23 September 2024.
Spear REIT CEO, Quintin Rossi, said: “Spear has remained laser-focused on building a high-quality, regionally centred real estate portfolio that consistently generates sustainable cashflows and profitability.
"The proceeds of Spear’s vendor consideration placement will be put to work to generate a mission-statement-aligned return for all stakeholders after the implementation of the new portfolio acquisition along with seeking out attractive portfolio growth opportunities within the region.”
The Western Cape continues to lead South Africa's real estate investment market, with superior Provincial and Municipal investment fundamentals driving increased economic activity, favourable real estate valuations, and improved returns.
Spear is close to finalising its R1.146 billion acquisition of a 13-asset portfolio from the Emira Property Fund, which will expand its assets under ownership to R5.3 billion.
The newly acquired portfolio spans 93,500m² and includes a diverse range of high-quality industrial, medical retail, and commercial office properties located in prime Cape Town areas.
Spear’s management will continue to pursue incremental investment opportunities and consider further portfolio diversification, aligned with its strategic objectives.
The proceeds from the vendor consideration placement will be used to settle short-term debt obligations and replenish the company’s revolving credit facility, which will be impacted by the Category 1 transaction upon its completion.
With the implementation of the new portfolio and vendor placement by the end of October 2024, Spear’s loan-to-value (LTV) ratio is expected to fall between 33% and 34%.
Spear’s strong balance sheet will provide the flexibility needed to seize future transactional opportunities as they arise, its management said.
Management remains optimistic that its strategy of growth through acquisitions, developments, and a clear renewable energy and water continuity plan will enable Spear to grow its portfolio in an income-accretive manner, solidifying its position as a mid-cap SA REIT.
At its recent pre-close presentation for HY2025, Spear reported robust performance within the Western Cape, reduced vacancy rates due to strong leasing activity, and positive rental reversions at the portfolio level.
The group is set to announce its operational and financial results for HY2025, covering the six months ending August 2024, on 24 October 2024.
Shares in the group are up some 30% over the past year.
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