Spear Reit announced an upgrade to its full-year distributable income growth target after a robust first half that combined rental increases, near-full occupancy and a R1.4 billion acquisition programme.
First-half performance lifts guidance
Distributable income per share climbed 8.02% to 47.29 c for the six months to the end of August, nudging the metric just above the top of the previous guidance range. Analysts observed that the rise reflects both higher rental rates and the impact of recent acquisitions.
Revenue and net operating income each rose by more than a quarter, while overall occupancy held at 96.6%, reflecting steady demand across industrial, commercial and retail assets. The strong occupancy level helped maintain cash flow stability despite rising operating costs.
The board kept its target payout ratio at 95% and the portfolio now includes 44 properties valued at roughly R8.8 billion after the latest purchases. This expansion adds significant scale to the REIT’s asset base.
Key additions are the Santam Precinct in Tygervalley, home to Santam and Sanlam, and the Watergate Centre in Mitchells Plain, which expands the group’s convenience-retail exposure. Both sites were transferred in late August, and their earnings contributions will be fully reflected after the reporting period, the company said.
Financing and balance-sheet strength
An oversubscribed equity raise of R1 billion in April, together with an extra R108 million retained through the dividend reinvestment programme, supplies fresh capital for further growth. The rapid subscription indicated strong investor confidence in the REIT’s strategy.
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At the end of August the loan-to-value ratio stood at 21.91%, while net asset value reached R13.33 per share and property valuations rose by R267 million during the half-year. The low loan-to-value figure keeps borrowing capacity comfortably high.
The industrial segment continues to drive earnings, with occupancy near capacity and double-digit rent growth as logistics and warehousing demand outpaces limited new supply. This segment’s performance underpins the overall profitability of the REIT.
Development pipeline and future acquisitions
Plans include R140 million of industrial developments over the next year, such as a multi-let park near George Airport and a distribution centre for Mambo’s Storage & Home in Blackheath, Cape Town, slated for completion next year.
In addition, the group bought commercially zoned land in Century City for about R53 million and will explore its development potential while expanding solar capacity across its holdings.
Portfolio manager Kopano Makhu of Mazi Asset Management said the numbers support a hyper-local strategy that can provide a durable edge and keep operations insulated from broader market pressures. He highlighted that this approach allows the REIT to spot opportunities that larger competitors might overlook.
The company expects rental demand to stay strong through the second half of the 2027 financial year and anticipates that earnings contributions from recent acquisitions will sustain performance.
