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.