- Distribution per share of 23.51 cents, an increase of 16.75% over the budgeted distribution.
- NAV per share increased from R9.37 to R10.03 – a 7.01% increase.
- R250 million capital raised at listing on 11 November 2016.
- R119-million capital raised through a cash for share issue on 28 February 2017.
- Gearing reduced from 42.11% to 33.09%.
- Move to JSE main board on 22 May 2017.
- Healthy pipeline of significant transactions to increase distributable earnings.
Spear REIT Limited has declared a first dividend of 16.75% over their forecast in the company’s first set of financial results since listing on the Johannesburg Stock Exchange in November last year.
The provisional consolidated condensed financial results for the four months ending 28 February 2017 were achieved after what was a successful listing for the Western Cape based property investment group, due to excellent market support backed by the company’s focused strategy.
Following a strong four months to period end, growth in distributable earnings increased as a result of a higher than budgeted hotel related income, a yield accretive acquisition being concluded and lower than budgeted finance costs due to budgeted interest rate increases not being implemented by the South African Reserve Bank.
Commenting on the overall result, CEO Mike Flax said: “The continued strong performance of the Western Cape property sector and the regional specialization of Spear insulates the company to a degree from the current weak economic climate. Our Western Cape focus coupled with management’s proximity to assets will continue to stand the company in good stead well into the future, given the continued and successful implementation of our strategy to only invest in high quality assets in the province along with our healthy pipeline of greenfield and brownfield redevelopment opportunities.’’
The board declared a first dividend of 23.51 cents per share on 11 May 2017. This is an increase of 16.75% over the forecasted dividend of 20.14 cents per share as per the PLS dated 21 October 2016. Regarding net asset value, the tangible net asset value per share increased by 7.01% from the forecasted R9.37 per the PLS to R10.03 per share. The increase is driven by an increase in fair value of investment property of 3.79% and lower debt levels of 8.36%.
Quintin Rossi, Managing Director of Spear REIT Limited adds, ‘’The board is confident that demand for quality rental properties across the various sectors within the Western Cape will continue as the effects of semigration create additional demand for rental properties. Along with the strong property fundamentals, the company should achieve a full year distribution for the forthcoming year of 76c – 78c. This is ahead of the forecasted distribution in the pre-listing statement. This viewpoint is premised on a number of factors including a relatively stable macro-economic environment prevailing, lease renewals being concluded as per the company forecast and no major tenant failures taking place. Tenants must also successfully absorb rising costs associated with utility consumption charges and municipal rates.”
The group took transfer of the following properties after year-end:
- Selective House, Tygervalley on 14 March 2017
- 142 Edward Street, Tygervalley on 1 March 2017
The group entered into agreement to acquire the following properties, amounting to a total value of over R1 billion:
- 2 Long Street, Cape Town
- 15 on Orange, Cape Town
- Mega Park, Bellville
- Virgin Active George, George
The expected transfer date for these properties is 1 July 2017, with the exception of Mega Park which is expected on 1 June.