JSE-listed Spear Reit says leasing initiatives are paying off, with space being taken up, resulting in reduced vacancies particularly in its office portfolio.
In the year to date for the 2024 financial year, the company renewed and signed new leases on more than 72,000m2 of space, of which more than 57,000m2 is industrial, 11,160m2 offices and about 3,540m2 retail.
About 85% of the total 2024 financial year lease renewals were finalised during the half year.
During the pre-close presentation for the period ending August 31, CEO Quintin Rossi said the return to the office momentum remains strong, with a reduction in vacancies across Cape Town.
Spear office occupancies were nearly 86% due to improved lease conversions resulting in full occupancies of the No 1 Waterhouse and Bloemhof in Tygervalley buildings during the reporting period.
In the Upper Eastside building, occupancies increased from 60% during the 2023 financial year to 80%, while an offer to lease nearly 2,900m2 of vacant space at the Liberty Life building was received.
“Overall, we are seeing improved occupancies across our portfolio with year-to-date portfolio occupancy of 93.37%,” said Rossi.
He said portfolio average in-force escalations were at 7.4% with weighted average lease expiry of 27 months. Rental collections were more than 96% as of August 21.
The Western Cape-focused Spear owns a portfolio valued at R4.26bn, and includes 28 industrial, retail and office assets predominantly in Cape Town. Spear’s portfolio of assets is located in desirable localities underpinned by strong lease covenants and quality tenants.
The fund prefers to invest in assets including logistics, urban logistics and multi-let industrial parks, as well as convenience and destination retail.
Rossi said that despite a challenging operating environment the retail and industrial property portfolios continue to trade well. There is strong demand for multi-let industrial parks with in- force escalations sitting at 7.63%.
“Spear remains focused on its growth strategy into high-quality Western Cape assets that offer long-term sustainable cash flows and growing yields,” he said.
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