September 16 2024 15:30
Spear, the real estate investment trust (Reit) focused on investing in real estate within the Western Cape, completed an equity capital raise of R 457.75m via a vendor consideration placement. This announcement follows the recent unconditional status of the acquisition of Emira Property Fund’s Western Cape portfolio.
The vendor consideration placement will allow the issuance of 50,302,197 new shares to public shareholders at an issue price of R9.10 per share. This equity placement was completed at a 1% discount to Spear’s 30-day VWAP, (volume-weighted average price), being R9.19 per share before September 13 2024. The listing and issuance of the new shares are expected to commence at 09:00 on Monday, September 23.
“Spear has remained laser-focused on building a high-quality, regionally centred real estate portfolio that consistently generates sustainable cashflows and profitability,” said CEO Quintin Rossi.
The proceeds of the placement would “be put to work to generate a mission-statement-aligned return for all stakeholders after the implementation of the new portfolio acquisition along with seeking out attractive portfolio growth opportunities within the region”, according to Rossi.
“The Western Cape has stood out as the most desirable real estate investment and development market in South Africa as provincial and municipal investment fundamentals outpace the balance of South Africa, resulting in improved economic activity, boding well for real estate valuations and rates of return.” he said.
Rossi said the Western Cape was standout province given its exceptional performance.
“The province has the lowest unemployment rate in South Africa at about 24%. When people are looking to deploy capital here, they look at the Western Cape first. Our city is also set to spend R43bn on infrastructure over the next three years while Johannesburg is spending R21bn over the same period. The story of capital is that it is lazy. It goes along the path of least resistance,” Rossi said.
Spear is on the cusp of implementing its R1.146bn acquisition of a 13-asset Western Cape-only portfolio from Emira which will see its assets under ownership increase to R 5.3bn on the implementation date. The acquired assets constitute a diversified portfolio of 93 500m2 comprising high-quality industrial, medical retail and commercial offices in attractive and well-established Cape Town nodes.
“Following the new portfolio acquisition, management will continue to seek incremental investment and development opportunities, while also exploring diversified portfolio options within the Western Cape, that are in line with its investment strategy,” Rossi said.
The proceeds of the placement will settle short-term debt obligations and replenish a revolving credit facility connected to the Emira deal.
Spear’s loan-to-value following the placement and the implementation of the new portfolio acquisition by the end of October will be between 33% and 34%.
“Beyond the transfer date of the new portfolio acquisition Spear’s strong balance sheet will provide sufficient headroom for transactional opportunities for management to act as and when the need arises,” said Rossi.
Rossi said management was optimistic that its growth strategy through acquisitions and developments, including a renewable energy and water strategy, would enable Spear to grow its portfolio value in an income-accretive manner within the Western Cape towards becoming a highly-rated mid-cap SA Reit.
alistair@propertyflash.co.za
