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Western Cape-focused Spear Reit beat its own guidance, with income and dividends per share rising 6.02% year on year, driven by resilient leasing demand, a solid tenant base and a high-quality Cape Town property portfolio anchored in sought-after nodes.The performance exceeded full-year guidance of 4%-6%, while the group also signalled further room for growth as it builds a pipeline of income-generating assets expected to add between R500m and R1.5bn to its core portfolio in the 2027 financial year.The investment by the Western Cape provincial government and local authorities in infrastructure, energy security, transport, healthcare and education is reinforcing the province’s appeal to semigration flows and strengthening its position as a leading investment destination, the group said in its results for the year to end-February. “The Western Cape’s real estate market is expected to continue outperforming the rest of South Africa across all segments, supporting a favourable outlook for Spear. This confidence is underpinned by the province’s strong economic fundamentals, including the lowest unemployment rate in the country at 18.1%, which places greater spending power in the hands of its residents,” the group said.The group’s revenue increased by 23.25%, while net property operating profit rose 20.53%. Spear concluded R1.074bn in new acquisitions during the year and generated R96m in free cash flow from operations in the 2026 financial year.The industrial portfolio maintained a strong rental collection profile, with 99.14% of rentals collected during the year. A total of 107,416m² of industrial gross lettable area was renewed or relet, achieving an average positive rental reversion of 2.14%, reflecting sustained demand and stability in the industrial segment.Meanwhile, the group’s retail portfolio showed meaningful asset-value growth during the 2026 financial year, driven by the acquisition of Maynard Mall in Wynberg. The 27,000m² commuter-convenience centre was acquired at an initial yield of 9.54%, reflecting strong investor appetite for retail assets in the Western Cape. “Maynard Mall has added meaningful scale to the retail portfolio, increasing total gross lettable area under ownership to 80,469m² and lifting retail portfolio value to R1.50bn. The acquisition has also broadened Spear’s income base, with 72% of tenants comprising national retailers and 82% of rental income generated from them,” the group said.The group’s retail portfolio recorded high occupancy levels and steady cash flows, supported by continued tenant demand for well-located retail space, while rental trends remained broadly stable through the year, it said.The group’s loan-to-value ratio remained at 22.94%. Portfolio value increased strongly year on year to R7.18bn, while tangible net asset value also recorded growth to R5.38bn. Spear’s office portfolio showed improved occupancy levels during the 2026 financial year, reflecting continued letting momentum and firmer demand for quality office space in key nodes. Leasing activity remained active, with more than 33,000m² of commercial space renewed or relet, while rental trends reflected some pressure, offset by healthy contractual escalations.“The office portfolio benefited from sustained demand for well-located Cape Metropolitan office space, supported by semigration, return-to-office trends and growing business activity in the Western Cape, while limited new supply continues to support demand and rental growth prospects despite cost pressures,” the group said.Looking ahead, the group said it expects distributable income per share to grow by between 6% and 8% in the 2027 financial year, anchored by prevailing market conditions and its ongoing portfolio momentum.“Spear’s geographical focus allows it to capitalise on the Western Cape’s comparatively resilient economic base, well-developed infrastructure and strong property fundamentals, driving sustainable long-term value creation for all stakeholders,” said Spear CEO Quintin Rossi.Business Day
