Spear REIT completes private placement, raising R313.5m for Western Cape growth strategy

CEO of Spear REIT, Quintin Rossi.

Spear REIT has announced the completion of its private placement, resulting in commitments to subscribe for R313.5 million of new equity, resulting in a total of 37 553 852 new shares to be issued to public shareholders at an issue price of R8.35 per share.

The issuance reflects a premium of 0.36% to the volume-weighted average traded price of Spear shares over the thirty trading days immediately before the 6th of February 2024 with the listing and issuance of the new shares expected to commence at 09:00am on Friday, the 16th of February 2024.

We consider it a privilege that our shareholders and new investors have entrusted us with capital to deploy into our debt portfolio and Spear’s growth strategy. The Western Cape focus has allowed Spear to maintain and build a high-quality diversified South African real estate portfolio underpinned by strong lease covenants in prime locations whilst providing shareholders with a mission statement aligned return on investment,” states Spear REIT’s CEO, Quintin Rossi.

The provincial macroeconomic ecosystem is of such a nature that investment opportunities can be pursued across the Western Cape due to reliable infrastructure, ongoing infrastructure investment, and the growth in nodal developments due to the increasingly larger impact of semigration. To this end, Spear will continue to diligently seek out piecemeal incremental investment & development opportunities in addition to diversified portfolio opportunities within the province and in line with its capital allocation strategy.”

The reduction of Spear’s debt levels through the private placement will create increased headroom and capacity, enabling management to implement its strategy to grow its Western Cape property portfolio and pursue acquisition opportunities within the Cape Town Metropolitan area, particularly in industrial and retail assets.

Additionally, Spear’s loan-to-value (LTV) following the private placement will be within a range of 33% to 34%. This range excludes the disposal and anticipated transfer of the Liberty Life building in Century City, which will further reduce its LTV metrics.

Spear’s business strategy of being a fully internally managed REIT focusing on a singular region allows for focused asset management opportunities across its current portfolio assets and its acquisition and development pipeline.

Management remains optimistic that its targeted growth strategy through acquisitions and developments, which includes a clear and implementable renewable energy and water continuity strategy, will enable Spear to expand its portfolio within the Western Cape by more than R1 billion in value and with a further 100,000 m² or more of gross lettable area.

Spear remains the only regionally focused REIT on the JSE with assets under ownership of R4.46 billion. The portfolio consists of 28 assets spread across the commercial, industrial, and retail sectors. Spear invests in high-quality assets that generate strong and sustainable cash flows, all within the borders of the greater Western Cape, with a distinct focus on the Cape Town region.