Western Cape-focused Spear REIT Limited has posted its interim results for the six months ended August 2024, achieving a 6.34% increase in group revenue excluding smoothing, driven by strong leasing activity, a reduction in vacancies, and maintained in-force escalations.
“Within the context of the persistently tough trading environment, we are pleased with Spear’s performance in HY2025. The interim period has established a solid foundation to build on for the remainder of the financial year. Our Western Cape-focused strategy, coupled with our hands-on asset management approach, have allowed us to continue delivering value to our stakeholders as Spear delivers a mission statement-aligned financial and operational outcome for the reporting period,” comments CEO of Spear REIT, Quintin Rossi.
Spear’s net property operating profit for HY2025 saw an increase of 1.92% compared to HY2024 excluding smoothing.
The company reported like-for-like contractual income growth of 9.54% with its like-for-like net property operating profit increasing by 9.48%. These metrics were driven by decreased vacancies and strong in-force escalations with rental reversions having improved to +5.35%.
As at the interim period, Spear’s portfolio was valued at R4.22 billion comprising 27 assets with a total gross lettable area (GLA) of 405 709m2. Profitability was marginally impacted by the higher-than-normal repairs and maintenance interventions required due to the severe impact of storms and rainfall in Cape Town between June and August 2024.
Spear’s portfolio occupancy rate improved by 200 basis points to 95% with the commercial office sector being its standout performer. Over 9 000m2 of office space let during HY2025 resulting in a 616-basis point improvement in office occupancy.
As at the end of HY2025, its overall portfolio vacancy rate had decreased to 4.92%, down from 6.88% in FY2024 – well below the national average vacancy rate recorded by IPD and SAPOA.
The company’s contractual escalations averaged 7.47% with its weighted average lease expiry (WALE) remaining steady at 26 months.
With a balance sheet that remains robust, Spear’s loan-to-value (LTV) ratio reduced to 23.93% from 31.60% in FY2024, largely due to disposals including the Liberty Life Building in Century City and 142 Edward Street in Tygervalley. Spear has no immediate debt refinancing obligations.
Spear reported a rental collection rate of 98.05% for HY2025.
“Looking ahead, management is optimistic about the prospects of FY2025 as it integrates the newly acquired portfolio, valued at R1.146 billion, from Emira Property Fund. Following this acquisition, Spear’s total portfolio value has increased to R5.36 billion, with a market capitalisation of R3.2 billion,” he notes.
Spear forecasts growth of between 2% and 4% for its distribution income per share when compared to FY2024 with its payout ratio maintained at 95%. Its Board declared a gross interim dividend of 39.53 cents per share.
