Tag Archives: Spear REIT

Western Cape REIT flexes strong interim growth

Spear REIT, the Western Cape-focused real estate investment trust (REIT), has published its unaudited financial results for the six months ended August 2025, maintaining its interim dividend payout, and reaffirming full-year guidance of 4–6% growth in distributions per share.

For the interim period, distributable income per share rose by 5.21% to 43.78 cents, with a distribution per share of 41.59 cents. The group maintained a payout ratio of 95%, in line with previous periods.

Total distributable income increased by 55.76% year-on-year to R173.2 million, while revenue excluding smoothing climbed by 25.72% to R385.9 million. Headline earnings per share grew to 43.33 cents, and basic earnings per share surged by 64.47% to 73.96 cents.

Spear’s loan-to-value (LTV) ratio was significantly reduced to 13.85%, down from 27.09% at FY2025, reinforcing the Group’s balance sheet strength and capacity for further growth.

Spear remains the only regionally specialised REIT in South Africa, investing exclusively within the Western Cape. Its diversified property portfolio – valued at R5.7 billion – comprises 39 properties across the industrial (39%), commercial (42%), retail (17%), and development land (1%) sectors.

The industrial sector continues to anchor the portfolio, contributing 62% of GLA and boasting high occupancy levels, while retail and commercial properties also showed resilient performance, aided by favourable economic and demographic trends in the region.

Group-wide occupancy levels remain robust at 95.03%, with the overall vacancy rate at just 4.97%, reflecting strong tenant retention and positive letting momentum.

Industrial Portfolio: With 304,310m² of GLA, Spear’s industrial assets – comprising warehousing, logistics, and manufacturing spaces – delivered defensive income streams. New developments such as the GTX Development in George and Bravo Park Extension 2 in Blackheath are set to expand GLA by over 37,000m².

Retail Portfolio: Spear’s convenience and destination retail assets delivered performance in line with expectations, benefiting from a return in consumer spending power.

National retailers now account for 47.5% of the tenant mix, with plans to grow this proportion as a credit risk mitigant.

Commercial Portfolio: The office segment showed improvement, supported by return-to-office trends, semigration, and increased demand for quality office space in Cape Town.

Vacancies have continued to decline, aided by focused letting strategies and supply constraints in key nodes.

During HY2026, Spear acquired R1.074 billion in new properties at an average yield of 9.54%, exceeding its weighted average cost of capital.

These assets will be incorporated into the core portfolio in the second half of FY2026.

The acquisitions include:

-Berg River Industrial Business Park
-Consani Industrial Park
-Maynard Mall

These, the group said, are expected to enhance long-term value and support the REIT’s goal of sustained income growth.

Spear has reiterated its full-year distribution per share (DIPS) growth guidance of between 4% and 6% compared to FY2025, with a maintained payout ratio of 95%.

This guidance reflects confidence in the group’s strong operational performance and favourable regional dynamics, it said.

Spear REIT acquires Cape Town’s Maynard Mall

Spear REIT has acquired Maynard Mall, a 25,969m² convenience shopping centre in Wynberg, Cape Town, for R455 million – a move that reinforces the company’s hyper-local investment strategy focused exclusively on the Western Cape.

“This acquisition is a pivotal extension of our retail footprint in Cape Town’s established Wynberg node,” said Quintin Rossi, CEO of Spear REIT.
“It deepens our exposure to resilient consumer retail trade and enhances our income stability profile, supported by a weighted average lease expiry of 57 months.”

The deal aligns with Spear’s goal of expanding its portfolio of high-quality, well-situated convenience retail assets in fast-growing urban nodes.

Located in the heart of Wynberg, Maynard Mall is anchored by Shoprite and features a robust tenant mix, with 70% of space occupied by national retailers.

Tenants include Ackermans, Absa, Clicks, Capitec, KFC, Hungry Lion, Nedbank, Pep, Sportscene, and Zone Fitness, along with essential services such as the Department of Home Affairs and local traders.

The centre serves both daily and weekly shopping needs, drawing from a large residential catchment area and commuter traffic, with an annualised footfall of 6 million shoppers.

Deal Structure & Financials

The transaction is expected to close on 1 January 2026, funded through a mix of cash from Spear’s recent R749 million capital raise and secured debt facilities.

The acquisition is set to yield an initial return of 9.55%, with an additional R20 million earmarked for asset enhancements over the next three to five years.

Spear said the capital expenditure will focus on:

  • Expanding the self-storage component
  • Extending the PV solar installation
  • Modernising lifts, escalators, HVAC systems, and mechanical equipment

Once these improvements are factored in, the post-capex stabilised yield is projected to be between 9.15% and 9.3%.

“Spear has actively pursued growth opportunities in Cape Town’s convenience retail sector, on terms that aligned with its strategic and financial criteria; requiring management to remain patient, selective, and firmly committed to its investment strategy,” Rossi said.

The acquisition is still subject to Competition Commission approval.

The Maynard Mall deal follows Spear’s recent acquisition of Consani Industrial Park for R437 million and builds on the successful integration of Spear’s R1.15 billion Western Cape portfolio acquired in October 2024.

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.