Spear REIT Limited has published its financial results for the year ended February 2023 with an 11.31% growth in its distribution per share resulting in 75.97 cents per share and a final distribution per share of 38.84 cents for the six months ended February 2023.
The company reported annual revenue of R581.2 million, up from R574.8 million in FY2022. CEO, Quintin Rossi, says that management held firm on its key strategic objectives at being Western Cape-focused specialists in industrial, commercial, retail, and mixed-use property assets.
Spear generated consistent positive net cash flows from its operations with its revenue growth for the reporting period 3.48% complemented by a 5.43% net property operating profit growth. Expenses were prudently managed with a 1.15% increase in operating expenses and a 1.13% decrease in administrative expenses.
“These attributes, as simplistic as they may seem, continue to form the foundation of our core business. We remain dedicated to delivering value and driving growth in alignment with the interests of our shareholders,” remarked Rossi.
The REIT further reported a 1.50% increase in Tangible Net Asset Value Per Share to R11.47. With a portfolio of 28 assets valued at a total of R4.22 billion, Spear achieved a FY23 cash collection rate of 98.61%. It has strategically reduced the size and value of its core portfolio through close to R500 million of assets sold. The disposal of non-core assets and assets in the hospitality sector bolstered its balance sheet which led to a reported loan-to-value (LTV) ratio of 36.30%. “The proceeds from these disposals have been strategically reinvested to strengthen the balance sheet, positioning Spear for future growth as opportunities arise amidst shifting interest rate cycles.”
Management reported improved in-force escalation metrics of 7.4% for FY2023, an uptick from 6.3% in FY22. For FY23, the reported portfolio occupancy rate was 92.18%.
“We do expect our portfolio to generate some growth in the year ahead, but the extent of the growth is currently difficult to quantify given the myriad of headwinds South Africa is currently experiencing. But despite the headwinds already experienced and overcome, Spear’s FY23 financial performance has delivered impressive results, reflecting a focused, nimble, and consistent business approach. Spear remains a business that is acutely and actively managed to effectively counter negative market forces, and this strategy will continue moving forward,” he concluded.