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Western Cape-focused real estate investment trust Spear Reit is stepping up its expansion, securing R1.4bn in acquisitions and raising R1bn in fresh equity as it enters the second half of its financial year.The transactions give the group additional capacity to expand its property portfolio, with more opportunities in the pipeline, Spear said in its pre-close update for the six months to August.Spear said earnings were tracking at the upper end of its guidance, with revenue rising 28.29% year to date and net operating income increasing 29.41%.It has retained its target of growing distribution per share by 6%-8% in the 2027 financial year, while maintaining a 95% payout ratio, it said.The growth comes as Spear doubles down on its regional strategy, focusing exclusively on property in the Western Cape.During the period, the group acquired Watergate Centre in Mitchells Plain and 1 Sportica Crescent in Tygervalley for a combined R1.4bn, adding about 48,169m² to its portfolio. Additionally, it raised R1bn through an accelerated bookbuild in April and a further R108m through its dividend reinvestment programme in June.“The capital raise has given Spear the flexibility to pursue growth without compromising the strength of the balance sheet,” the group said.Industrial property remained the standout performer, with near-full occupancy and strong rental growth. Retail remained resilient, while the commercial portfolio continued to face softer demand.The group invested R140m in new industrial developments during the period and secured a 10-year lease with Mambos Storage & Home for a 7,150m² warehouse.It is also stepping up its development pipeline, including industrial opportunities in George and Blackheath and a planned office precinct on a commercial land parcel in Century City, with estimated development costs of about R950m.The group’s balance sheet leaves room for further expansion, with low debt levels and about R800m in liquidity available after acquisition allocations, it said. The group is also increasing its investment in renewable energy, with solar installations across 28 properties generating more than 5.17-million kWh year to date, compared with 2.9-million kWh in the comparable period.Read: Is AI emptying offices? Spear says noSolar penetration has increased to 20.2% from 14.16% a year earlier, contributing R14.79m to net operating income.The group sold Hamilton & Chiappini House for R107m, generating a 33% premium to its original acquisition price and unlocking about 5c a share in net asset value. The proceeds will be recycled into acquisitions and developments.It is also advancing plans for a new R950m office precinct in Century City, while the transfer of Watergate Centre and the Santam Precinct has lifted the group’s portfolio to about R8.4bn, further strengthening its commercial presence in the Western Cape.The moves reinforce Spear’s strategy of concentrating on the province, where it continues to see opportunities across the retail, industrial and commercial property markets.CEO Quintin Rossi said the strategy was “deliberately regional and very focused”.“The Western Cape continues to offer strong property fundamentals, with our regional focus helping the portfolio navigate market volatility,” he said.Business Day
