Spear REIT lifts half-year distributable income 8% as Western Cape portfolio hits R8.8bn

Half-year distributable income per share at Spear, the Western Cape-focused real estate investment trust, grew 8.02% to 47.29 cents after revenue for the period firmed up by 28.14% to R494.8 million, helped by a portfolio occupancy rate of 96.60% and stronger cash collections. Shares in Spear REIT fell 3.35% to R12.70 in mid-morning trade on the JSE on Thursday after it paid an interim dividend of 44.992 cents.

During the interim period to the end of August, Spear REIT raised R1 billion in new equity, with a further R108 million retained through its dividend reinvestment programme. It completed R1.4 billion in acquisitions, taking its Western Cape portfolio to 44 properties valued at a combined R8.8 billion and comprising more than 674,000 square metres of lettable space.

The acquisitions included the Santam Precinct in Tygervalley, with 28,488 square metres of premium office accommodation occupied by Sanlam as well as Santam, and the Watergate Centre in Mitchells Plain. "Against a backdrop of rising municipal charges, higher electricity costs and pressure on businesses from interest rates, our underlying portfolio has performed well," CEO Quintin Rossi said. "Strong occupancy, rental growth and collections have supported earnings, while our balance sheet gives us the flexibility to pursue further growth opportunities."

The company recorded rental growth of 13.49% on renewals and new lets and a portfolio occupancy of 98.22% on a like-for-like basis. Industrial property accounts for about 63% of total lettable area, which Spear said reflects sustained demand for logistics, warehousing, manufacturing and distribution space. "Demand for well-located industrial property in the Western Cape remains encouraging, particularly where available stock is limited and the cost of new development is high," Rossi said.

Construction is under way at the GTX Industrial Park next to George Airport, where the first 5,500 square metres of multi-let industrial space is scheduled for completion in March next year. In Blackheath, Cape Town, a new 7,150 square metre national distribution centre for Mambos Storage & Home is being built following a 10-year lease, with the R90 million development due for completion in July 2027.

The group's renewable-energy investments made a growing contribution to property income, with solar infrastructure now installed across 29 assets and generating approximately R19.45 million in revenue during the reporting period. Spear said it enters the second half of its 2027 financial year with a conservative balance sheet and additional capacity to pursue acquisitions and developments, although rising municipal charges, electricity costs and interest rates remain considerations.