Spear, a Real Estate Investment Trust (REIT) focused on investing in real estate within the Western Cape region, has announced the successful completion of an equity capital raise of R 457,75 million via a vendor consideration placement. This announcement follows the recent unconditional status of the acquisition of the Emira Western Cape portfolio, adding further impetus to its Western Cape-only-focused growth strategy.
The vendor consideration placement will allow the issuance of 50,302,197 new shares to public shareholders at an issue price of R9.10 per share. This equity placement was completed at a 1% discount to Spear’s 30-day VWAP, (volume-weighted average price), being R9.19 per share before 13 September 2024. The listing and issuance of the new shares are expected to commence at 09:00 on Monday, 23 September, 2024.
Spear REIT CEO Quintin Rossi affirmed,
“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 has stood out as the most desirable real estate investment and development market in South Africa as Provincial and Municipal investment fundamentals outpace the balance of South Africa, resulting in improved economic activity, boding well for real estate valuations and rates of return.
Spear is on the cusp of implementing its R1,146 billion acquisition of a 13-asset Western Cape-only portfolio from the Emira Property Fund, which will see its assets under ownership increase to R5,3 billion on the implementation date. The acquired assets constitute a diversified portfolio of 93 500m² comprising high-quality industrial, medical retail and commercial offices in attractive and well-established Cape Town nodes. Following the new portfolio acquisition, management will continue to seek incremental investment and development opportunities, while also exploring diversified portfolio options within the Western Cape, that are in line with its investment strategy.
The proceeds of the vendor consideration placement will be utilised to settle short-term debt obligations and replenish the revolving credit facility emanating from the Category 1 transaction once implemented.
Spear’s loan-to-value following the vendor consideration placement and the implementation of the new portfolio acquisition by the end of October 2024 will be between 33% and 34%. Beyond the transfer date of the new portfolio acquisition Spear’s strong balance sheet will provide sufficient headroom for transactional opportunities for management to act as and when the need arises.
Spear’s regionally focused operating strategy and the fact that it is a fully internally managed REIT allow for focused asset management opportunities to be unlocked across its current portfolio assets and its acquisition and development pipeline.
Management remains optimistic that its growth strategy through acquisitions and developments, including a clear and implementable renewable energy and water continuity strategy, will enable Spear to grow its portfolio value in an income-accretive manner within the Western Cape towards becoming a meaningful mid-cap SA REIT.
Spear recently held its pre-close presentation for HY2025 which showed its consistent Western Cape performance, a contraction in vacancies thanks to strong leasing momentum, and positive rental reversion rates on a portfolio level. Spear will announce its HY2025 operational and financial results for the six months ending August 2024 on 24 October 2024 at 11:00 via an in-person presentation in Cape Town and a live stream via the company’s YouTube channel.
About Spear REIT
Spear was founded in 2011 as a private equity real estate investment business focusing on owning Western Cape assets with a Cape Town preference. The founders of Spear, industry stalwarts Mike Flax, Abu Varachhia and Quintin Rossi have propelled Spear from a private equity fund to a JSE listed REIT as the only regionally focused REIT on the JSE that exclusively focuses on owning high-quality assets within the Western Cape. Quintin Rossi is Group Chief Executive Officer supported by a highly competent executive team being Chief Financial Officer Christiaan Barnard, Chief Investment Officer Kim Pfaff-Karg and Chief Operations Officer Cliff Toerien.
Spear achieves specialisation through its focused regional investments, while its diversification strategy is driven by investing across a variety of asset types. Since being listed on the JSE in November 2016 with assets valued at R1.4 billion, Spear has grown significantly. Year-to-date, excluding assets pending transfer, Spear’s current portfolio is valued at R4.19 billion, comprising a mix of commercial, industrial, retail, and mixed-use properties.
Spear is a fully internally managed REIT conducting all asset, property, financial and development management in-house. Spear owns the iconic No.2 Long Street in Cape Town which is currently where its head office is located.
