Spear REIT forecasts 4% – 6% DIPS growth for FY2026
From left to right: COO, Cliff Toerin; CEO, Quintin Rossi; CIO, Kim Pfaff-Karg, and CFO, Christiaan Barnard.
Spear REIT Limited has issued a financial update for the three months ended 31st May 2025, reporting that its core portfolio continued to deliver a robust operating performance with forecasted 4% to 6% growth in Distributable Income Per Share (DIPS) for FY2026.
Its overall portfolio occupancy for Q1 FY2026 was 95% with “some vacancy creep” noted CEO, Quintin Rossi, due to the strategic pursuit of higher rental rates on renewals as well as a temporary vacancy linked to a sustainability-focused capex project at Mega Park in Bellville South.
“Management is confident that occupancy rates will move back to between 95.5% and 97% by the end of H1 FY2026. Given the constraint in supply within the region, emphasis has been placed on securing longer lease terms and higher escalation rates during renewal negotiations,” he said.
The Group’s industrial portfolio maintained a 98.11% occupancy rate with an in-force escalation rate of 7.38% and maintained a strong rental collection profile during the quarter of 99%. Solar installations on its industrial assets generated R4.14 million of revenue and a net operating income (NOI) of R2.60 million.
Spear REIT’s retail portfolio maintained its 99.1% occupancy rate with an in-force escalation rate of 7.37%. The portfolio’s rental collection profile during the quarter was 98% with solar installations on its retail properties generating R2.26 million of revenue and NOI of R2.01 million.
The commercial portfolio delivered a 97.7% occupancy rate for the quarter with an in-force escalation rate of 7.23%, producing a rental collection profile of 97% with solar installations generating R1 million in revenue and an NOI of R0.54 million.
75 236m2 of gross lettable area (GLA) was up for renewal and relet at a closing gross rental of R5.34 million with an average closing gross rental of R71.03 per square metre. During the same period, new lets and renewals of 72 894m2 were concluded at an opening gross rental of R5.31 million with a rental of R72.94 per square metre, printing a positive rental reversion for its core portfolio for Q1 FY2026 of 2.68%.
Cash collection for the period was 98.52%, tracking ahead of FY2025 Q1’s 97.12%. At period end, the Group had R736 million in cash availability in undrawn facilities with R200 million earmarked for capital projects.
Spear REIT’s fixed debt ratio at period end was 79.90%. Post the distribution payment in June 2025, its hedged ratio is estimated to be +- 73% with its loan-to-value (LTV) ratio sitting at 26.18% as at 31st May 2025.
