Western-Cape focused Spear REIT Limited has posted its financial results for the year ended 28th February 2025, announcing its acquisition of the Berg River Business Park in Paarl, a 30 000m² multi-let industrial park in Paarl, for R182 million.

The Company achieved a distributable income per share (DIPS) of 85.55 cents and a total distribution per share (DPS) of 81.27 cents for FY2025, marking increases of 3.08% and 3.06% respectively when compared to FY2024 with its Board approving a payout ratio of 95% for the final six months, resulting in an annualised average payout ratio of 95% for FY2025.

Spear REIT’s core portfolio reported improved performance indicators, with rental collections of 95.59% and marking FY2025 the strongest overall core portfolio performance in its post-Covid-19 journey.

Its industrial portfolio, which accounts for 63% of the total Group gross lettable area (GLA) and 39% of total Group asset value, maintained high occupancy rates, ending the period at 98.85% with an in-force escalation of 7.30% compounding annually. The portfolio maintained a strong rental collection profile with 98.69% of rentals collection during the period. Additionally, 42 365m² of industrial GLA was renewed or relet during the year, achieving an average positive rental reversion rate of 1.13%.

Spear REIT’s retail portfolio also maintained a strong performance during FY2025, achieving occupancy rates of 96.05% with 9 622m² of retail GLA renewed or relet, resulting in a positive rental reversion rate of 8.53% and in-force average escalations of 7.25%.

The Company says its office portfolio benefited significantly from the constrained supply of high-quality office space in the Cape Metro area. Occupancy levels showed a marked improvement to 92.99% at yearend, compared to 84.37% in FY2024. During the period, 41 972m² of GLA renewed or relet, resulting in a marginal negative rental reversion of -3.17% and strong in-force average escalations of 7.24%.

“Reflecting on the entirety of FY2025, particularly its final six months, we are deeply grateful for the challenges we faced and the many successes we achieved. South Africa emerged stronger, Spear triumphed, demonstrating resilience, and our business concluded a truly transformative transaction, that has positioned the company firmly on a clear trajectory for strategic growth,” comments CEO of Spear REIT Limited, Quintin Rossi.

“Our focus on operational imperatives yielded tangible results, as evidenced by consistent improvement across key performance indicators. A standout achievement was Spear’s occupancy rate, which demonstrated steady growth quarter after quarter. This momentum was driven by strong leasing momentum and tenant demand surpassing supply, culminating in an impressive 97% occupancy rate by the end of the reporting period.”

“Spear’s mission statement is more than an abstract ideal; it is a guiding principle that the Spear team has consistently, credibly, and reliably upheld throughout FY2025, despite the challenges within the operating environment. Our strategic focus on the Western Cape, coupled with the ongoing diversification of our real estate portfolio has yielded outcomes that align with our long-term objectives. Furthermore, our hands-on approach to asset and property management remains the foundation of our success, enabling a seamless transition from one successful financial year to the next.”

Spear successfully completed the acquisition of 13 prime real estate assets from Emira Property Fund, valued at R1.15 billion at acquisition date. Its portfolio’s value grew by 19.54% from R4.6 billion in FY2024 to R5.5 billion in FY2025.

Spear REIT’s loan-to-value (LTV) currently sits at 27.09% with an ICR exceeding three times, supported by a debt portfolio benefiting from lower cost of debt.

The Company forecasts FY2026 DIPS growth of between 4% and 6% compared to FY2025 with the payout ratio expected to remain at 95%.