Cape Town, South Africa – 22 May 2025 Spear REIT Limited (SEA:SJ), the Western Cape-focused Real Estate Investment Trust (REIT), has announced its results for the financial year ended 28 February 2025.
Amid South Africa’s challenging macroeconomic landscape, Spear has demonstrated resilience, achieving significant milestones in asset value growth, financial and operational performance.
FY2025 Highlights:
- Distributable income per share (DIPS): Spear achieved DIPS growth of 3,08% aligning with the mid-range of management’s guidance for the year.
- Net asset value per share (NAV) growth: Spear NAV per share increased by 3.57% to R12.20.
- Completion of R1.15 billion transaction: Spear successfully completed the acquisition of 13 prime real estate assets within the Western Cape, valued at R1.15 billion at acquisition date. The transaction was completed ahead of schedule and under budget. This strategic acquisition expanded Spear’s asset base and positioned the company for long-term growth.
- Asset value growth: The portfolio grew by 54% from R4.6 billion in FY2024 to R5.5 billion in FY2025, highlighting the effectiveness of the company’s active management strategy.
- Market capitalisation: Spear’s market capitalisation increased by R1 billion, reaching a total of 3 billion at year-end, a testament to strong investor confidence and future growth prospects.
- Occupancy rate: The company saw an improvement in its occupancy rates, which increased by 388 basis points to 97% across its core portfolio by the end of FY2025 compared to FY2024. This increase was driven by strong leasing momentum and tenant demand surpassing supply.
- Rental reversion: Spear achieved a positive rental reversion of 4.18% across its portfolio in FY2025, a clear indicator of the company’s ability to drive value through hands-on asset management.
- Loan to value (LTV) ratio: Spear continues to maintain a robust balance sheet primed for growth, with a 27.09% LTV ratio and an Interest Coverage Ratio (ICR) exceeding three times.
Speaking at the results presentation, Chief Executive Officer Quintin Rossi, commented on the strategic achievements of the year.
“FY2025 has been transformative for Spear. Despite a challenging macroeconomic environment, we have shown resilience through our disciplined portfolio management and strategic acquisitions. The completion of the R1.15 billion acquisition ahead of schedule and under budget is a testament to our team’s commitment to operational excellence and long-term value creation. We are confident that these initiatives will continue to position Spear on a firm foundation to achieve the long-term strategy of the business.”
Chief Investment Officer Kim Pfaff-Karg further highlighted the company’s investment and long-term vision. “Looking ahead, we remain committed to expanding our portfolio within the Western Cape, South Africa’s highest performing property market. Our strategic objective is to grow our asset base to R15 billion over the next 7 to 10 years, while maintaining our disciplined value investment approach to continuously build a robust and defensive portfolio.”
Chief Financial Officer Christiaan Barnard provided an in-depth overview of the company’s financial performance.
“We are pleased to report a 12.21% increase in group revenue compared to FY2024, driven by the successful integration of the Western Cape Portfolio acquisition. This, combined with strong rental collections of 98.59%, demonstrates the stability and resilience of our income streams.” Our distributable income per share (DIPS) increased by 3.08% to 85.55 cents for the year, while the total distribution per share (DPS) also grew by 3.06% to 81.27 cents. This was made possible through proactive and hands-on financial management and effective debt portfolio management, including the refinancing of debt at more favourable terms.”
Spear maintained an annualised payout ratio of 95%, strongly conveying its commitment to returning value to shareholders while maintaining sufficient financial flexibility for continued growth.
Spear’s acquisition of the new Western Cape Portfolio for R1.15 billion in October 2024 marked a transformative milestone, adding 13 prime real estate assets, including industrial, retail, commercial, and mixed-use properties. Notably, it introduced medical and life sciences retail assets for the first time, broadening Spear’s investment horizons.
The transaction delivered an initial yield of 9.46%, which increased to 10.1% after factoring in a once-off transaction fee. This acquisition further enhanced Spear’s geographical diversification, with a strong focus on the Cape Town Metropole.
The success of the Western Cape can be attributed to its accountable and effective administration. The region consistently exemplifies strong governance, with the City of Cape Town receiving top honours in both the 2024 Municipal Financial Sustainability Index and the Governance Performance Index (GPI). This commitment to transparency and integrity has fostered a stable environment for investment and growth.
Additionally, the Western Cape Provincial Government and local authorities have made significant strides in driving economic development, with substantial investments in infrastructure, job creation, and energy security. These initiatives have not only enhanced the region’s appeal to investors but have also strengthened its resilience amidst challenging economic times.
Spear’s commitment to its Environmental, Social, and Governance (ESG) policy continues to gain momentum with its PV solar rollout. As of FY2025, Spear has successfully installed solar PV systems across 38% of its portfolio, with plans to increase this to 64% by the end of FY2026. Spear’s total commissioned solar capacity now exceeds 9.4MW, generating an impressive 10.1MW across its portfolio.
The company is actively investigating energy-wheeling projects, aimed at facilitating the transfer of electricity between its owned assets. These initiatives are expected to mitigate rising electricity costs while significantly bolstering energy security across Spear’s portfolio.
Chief Operating Officer, Cliff Toerien commended the invaluable contributions of the Spear team in driving the company’s success throughout the financial year. “The Spear team has demonstrated their ability to asset manage favourable operational outcomes, drive solid portfolio performance through proactive and early engagement leasing strategies and strategic asset management. Our leasing teams have capitalised on improved market conditions, leading to improved occupancy rates and tenant retention across the portfolio. Additionally, our proactive approach in enhancing our rental income and optimising operational efficiencies contributes to our stable financial metrics and positions us well for sustained growth.”
In a strategic step to further strengthen its leadership, Spear recently announced the appointment of Joan Solms, a highly regarded property and finance expert, as a non-executive director to its Board of Directors, effective 1 April 2025. This appointment reflects the company’s commitment to strengthening its governance and leveraging top-tier expertise to drive continued growth.
Outlook for FY2026
Looking to FY2026, Spear expressed confidence in the strength of its portfolio and its ability to generate consistent and predictable returns. The company’s continued focused strategy on the Western Cape positions it well for further growth, with a pipeline of both greenfield and brownfield developments.
In a separate announcement released via SENS on 21 May 2025, Spear announced the acquisition of Berg River Business Park in Paarl for R182.15 million. The 30,000m² multi-let industrial park, located in the Paarl Industrial node, will be acquired through a Section 42 asset-for-share transaction and is expected to deliver an initial yield of 9.35%. The acquisition aligns with Spear’s Western Cape-focused strategy and marks the REIT’s first entry into the Paarl real estate market.
Spear’s management forecasts a 4% to 6% growth in Distributable Income per Share (DIPS) for FY2026 subject to certain qualifications, while maintaining a dividend payout ratio of 95%.
“We are confident that our unwavering strategic focus on the Western Cape, together with our initiative-taking approach to portfolio management, will continue to generate and drive sustainable value for our shareholders in the years ahead. This will result in consistent asset value growth and sustainable, credible and predictable financial and operational performance,” Rossi concluded.
