“A smooth sea never makes for a skilled sailor”

Franklin D. Roosevelt

March 2020 marks the beginning of the 2021 financial year for Spear. I would like to thank all our stakeholders & shareholders for your support in 2019 and I look forward to your ongoing support in the year ahead. 2019 was a year that presented very tough trading conditions compounded by low economic growth, socio economic challenges and failing SOE’s. Some of the silver linings that came out of 2019 for the Western Cape & Spear:

Premier Alan Winde and his team continue to make strides to increase both local and international awareness of the strong investment
case presented by the Western Cape which features the best provincial road, electrical and water infrastructure in South Africa

allowing for a province-wide investment proposition. Currently the Western Cape Government is making provision to becoming its own
power producer. The ability to provide certainty of electrical supply is critical for economic growth and investment.

Sustainability Strategy 

In collaboration with our tenants a back-up power generator roll out has taken place over the last 12 months with in excess of 50% of the Spear portfolio fitted with back-up power ability to assist with business continuity within the portfolio.

Spear adopted a ‘responsible corporate citizen’ approach in a bid to reduce the carbon impact our portfolio was making on the world around us. This inspired Spear to implement a PV solar strategy with the goal to have in excess of 50% of our portfolio installed with PV solar panels by the end of 2020. Our maiden project at Sable Square saw an 800kwh system installed which has been an overwhelming success with generated savings exceeding the initial estimates.

A key part of any due diligence process when considering any new investment for Spear is whether there is a feasible business and financial case to implement a PV Solar solution.

Redevelopment and Asset Management:

Given our acute understanding of the real estate market within the Western Cape, Spear remains well positioned to take advantage of redevelopment and active asset management opportunities presented both within the current portfolio and in instances where the assets have been identified as potential acquisition targets.

A prime example is the successful redevelopment of No.1 Waterhouse (11 000m2) located in Century City, Cape Town. The asset was acquired at well below replacement costs in the region of R 10 000/m2 with a 2-year rental income underpin from the seller. Management undertook an active role in the redevelopment and value addition process of this asset spending an additional R 8 500/m2 on the complete upgrade into a world class commercial asset. At the time of writing the property was 70% pre-let with numerous interested parties considering taking up portions of the remaining space. On a fully stabilised basis the completion yield on total cost will be in the region of 9,55%

Spear’s regional focus is one of the reasons that it is able to remain such hands-on managers of its assets and pursue further yield-enhancing opportunities in the Cape market.

Looking ahead

As we closed off the 2020 financial year on 29 February 2020, I am incredibly proud of the way every member of the team played his/her part in moving Spear forward. The full details will be announced on the 14th of May 2020 at our results presentation in Cape Town to which you are all invited.

At the time of writing Spear’s assets under ownership were R 4,1 billion with a vision of becoming a meaningful mid cap REIT with assets under ownership to the value of R15 Billion. We will continue to grow, conservatively placing specific emphasis on value investment, income growth and growing dividends annually to our shareholders. Our objectives will be achieved through Spear’s hands-on asset management, maintaining high occupancy rates and to focus on positive rental re-versions in a tough trading environment.

We remain committed to the strong investment case presented by the Western Cape in line with our stated strategic objectives.
I firmly believe that some of our greatest challenges prepare us for our greatest victories.

Best,