Cape-focused Spear delivers strong performance

SPEAR Reit, which only invests in high-quality real estate in the Western Cape, believes the continued strong performance of the province’s property sector and its regional specialisation partly insulated the company from the current weak economic climate.

The company yesterday said its focus on the province and management’s proximity to assets would continue to stand the company in good stead well into the future, given the continued and successful implementation of the strategy to only invest in high-quality assets along with its healthy pipeline of greenfield and brownfield development opportunities.

Spear Reit listed on AltX JSE in November, but moved to the main board of the JSE this month.

The company yesterday reported that demand for quality rental properties across the various sectors within the Western Cape would continue as the effects of emigration created additional demand for rental properties.

Rossi said the company should achieve a full-year distribution for the forthcoming year of between 76c and 78c a share. He said this was ahead of the forecast 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,” he said.

Spear has a market capitalisation in excess of R1 billion and assets under ownership valued at more than R1.45bn. Vacancies decreased from 1.5 percent to 1 percent at end-February.

The company raised R250 million at listing through the placement of 30.22m shares at an average price of R8.26 a share and an additional R119m through a share for cash issue in February through the placement of 12.8m shares at R9.30 a share.

Its gearing level end-February was 33.09 percent and it had fixed borrowings of 59 percent of total borrowings at an average fixed rate of 9.78 percent. The company obtains its diversification through investment across the commercial, retail, industrial, hospitality and residential sectors.

Spear took transfer of two properties after year-end, Selective House in Tygervalley for R13.2m and Werkmans, also in Tygervalley, for R17.13m.

Spear Reit shares closed flat on the JSE yesterday at R10.20.