Spear Reit, the Western Cape-focused property fund, has reported a 3.8% rise in its full-year distribution per share as the Reit sector in SA struggles to make a full recovery and continues to be traded below net asset value levels.
Distribution per share for the year ended February rose to 78.86c from 75.97c a year ago, it said in a statement on Wednesday.
Distributable income per share increased by 1.04% to 82.99c.
The final distribution per share for the six months ended February increased by 4.37% to 40.53c.
During the period, management successfully renewed or re-let 153,383m2 at an average negative reversion of 0.37%.
The group’s net asset value per share increased by 2.79% to R11.80. Revenue increased 6.57% to R619m. It reported a portfolio occupancy rate of 93.12%. Loan-to-value decreased to 31.6%, from 36.3% a year ago.
Spear Reit continues to re-evaluate its core business, making disposals where assets no longer meet its long-term investment criteria.
Its sustainability initiatives have continued in 2024, with more than 60% of its assets having solar PV installed.
“While quality asset prices in the Western Cape are high given the outlook of the local economy, we are excited to embark on the development of GTX Park in George, which will add 30,000m2 to the GLA of our portfolio,” it said.
Despite quality assets in the Western Cape being much sought after and trading at significant premiums, the executive team will continue to search for investment opportunities that are value-accretive to the current portfolio, it said.
This may come in the form of specialised asset classes, such as data centres or similar brick-and-mortar assets related to the fourth industrial revolution, or portfolios of assets through which we will be able to extract value through our entrepreneurial operational approach.
Spear’s portfolio includes 28 industrial, retail and office assets in desirable localities underpinned by strong lease covenants and quality tenants.
In February the group successfully completed a private placement of R313.5m worth of new equity. The proceeds were used to settle certain variable rate debt obligations. The increased headroom resulting from the reduction of debt levels, will allow management to implement internal strategic growth initiatives and pursue acquisition opportunities.
Post year-end, the group entered into acquisition agreements with Emira Property Fund to acquire 13 Western Cape real estate assets valued at R1.146bn as a diversified portfolio acquisition. The acquisition is in line with Spear’s strategy of increasing its real estate portfolio within the Western Cape and provides a strategic opportunity to meaningfully increase its market share in the province, it said.
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