March 10 2024
Spear Reit’s CEO Quintin Rossi said the group is focussed on being the leading Western Cape-focused real estate investment trust (Reit). The group wants to grow its distribution per share ahead of inflation and to operate within the top quartile of its peer group. Rossi said this during a presentation before Spear entered a closed period. Spear will in May release financial results to the year to end-February 2024.
Spear is the only Reit listed on the JSE that invests solely in the Western Cape. Having been listed since November 2016, the group has established is position as a reliable investment with a property portfolio worth about R4.47bn. This includes 28 properties with an average value of R157.5m. Its loan-to-value (LTV) was 40.18% at the end of January 2024. LTV is a measure of a company’s financial strength. Fund managers tend to want LTVs to be below 40% before investing in Reits. If the number goes above 40%, the argue that there may be financial stress in the company. The group’s tangible net asset value (NTAV) per share sat at R11.60 and its interest cover ratio was at 2.29 times.
The group recently raised R313.5m in new equity which resulted in 37 553 852 new shares being issued to public shareholders at an issue price of R8.35 per share. Spear’s share price closed at R8.16 on Friday March 10. It has market capitalisation of R2.3bn. It listed at R9.25 per share with assets worth R1.5bn and a market capitalisation of about R900m.
Rossi said Spear’s assets were performing better post the Cobid-19 pandemic as office workers had begun to return to work. There was renewed confidence in Cape Town’s businesses. Spear and other landlords were signing on business process outsourcing (BPO) companies such as call centres. Spear also announced late last year that it had invested R400m in the Airport Business Park, in George.
Rossi said this 19.5 ha development would provide a spectrum of industrial and commercial warehousing solutions geared towards agri-logistics, call centres, cold storage, oil and gas, and light industrial businesses. It will also have a filling station and associated retail offering. It lies adjacent to the airport on the corner of the R102 and R404.
Spear is the first of three developers investing in the Airport Business Park precinct. The company is investing R400m over five years into its GTX Park, which will be situated in the precinct. Upon completion, the GTX Park will encompass a total of 30 000 m² of modern light industrial units spread across nine sites.
Rossi also reported that Spear’s Paarden Eiland Urban Logistics Park was now fully let. He said it was good news that para-statal Transnet had announced that Michelle Phillips was its new head. Phillips has more than 20 years of experience at Transnet in various roles.
Rossi said 2024 could be a watershed year for South Africa. He encouraged Spear’s investors and the media to vote. The group forecast distributable income per share growth of between 0% and 1.5% for the financial year to end-February 2024 compared with the financial year to end-February 2023.
Spear would invest in multi-let industrial parks and other asset types going forward. Its focus nodes were the Cape Town CBD, Tiger Valley, Century city and Newlands.
The group is also rolling out Marine Place, a R1.5bn development in time. Rossi said given the size of the development, Spear would need to work with another developer to roll it out.
alistair@propertyflash.co.za
