SPEAR REIT LIMITED - Trading Update And Trading Statement

SPEAR REIT LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2015/407237/06)
Share Code: SEA
ISIN: ZAE000228995
LEI: 378900F76170CCB33C50
Approved as a REIT by the JSE
('Spear' or 'the Company')


TRADING UPDATE AND TRADING STATEMENT

Trading Update


Shareholders are referred to the various updates provided by the Company relating to the
impact of the COVID-19 pandemic on the business of the Company and to the pre-close
investor presentation dated Friday, 26 February 2021. Spear has successfully navigated the
Covid-19 pandemic during the financial year ending 28 February 2021 ('2021 Financial
Year'). Its regional focus and hands on asset management has allowed Spear to deliver on
its strategic objectives in the context of the current trading environment.


Further to the above, Spear provides the following additional trading update:


    -   Rental collections of revenue billed for the 2021 Financial Year was 97% (measured
        as at 21 April 2021). Rental collection consistency has been maintained within Spear's
        high road scenario for the 2021 Financial Year;
    -   Occupancy of 94% at financial year end;

    -   Audit review of property valuations have been concluded with no significant
        devaluation for the 2021 Financial Year;

    -   All LTV & ICR covenants have been met during the year and continue to be met;
    -   All solvency and liquidity tests have been passed successfully;
    -   187 610m2 of renewals and relets have been successfully concluded during the 2021
        Financial Year with a negative 3.7% average rental reversion;

    -   No.1 Beacon Way redevelopment of 16 170m2 has been completed (32 000m2 total
        site area) and the new 10-year lease agreement with Nova Marine, a Sturrock Grindrod
        group company, has commenced;

    -   No.11 Hewett Avenue, Epping has been renewed and a 10-year lease renewal (no
        negative rental reversion) on 12 500m2 has been concluded. Expansion site works are
        at an advanced stage for an additional 2 000m2 warehouse totalling 14 500m2 for
        Nampak Limited;

    -   As announced on SENS on 18 March 2021, management has concluded a fixed
        income lease agreement over its 15 on Orange property. The fixed lease will have a
        R1.6 million net rental (excl VAT) per month increase in Spear's rental revenue from
        1 August 2021 (total for 2021 Financial Year from the hotel operations was R1.8 million
        as a result of the Covid-19 pandemic). The fixed income lease significantly reduces
        Spear's exposure to variable hospitality income.

    -   R1.13 billion in debt was refinanced during the 2021 Financial Year with additional
        future dated extensions concluded at overall improved margins, further reducing
        Spear's average cost of debt to 7.26%

    -   R85 million of gross debt was settled during the year with positive progress on non-
        core asset disposals (sale proceeds to be deployed into the Company's debt portfolio,
        as part of Spear's LTV reduction strategy);

    -   Consistent demand for Spear's versatile and well located rental properties across
        Cape Town will contribute to further vacancy reductions as the year progresses; and
    -   Final distribution per share to be declared in May 2021 and paid in June 2021.

Trading Statement


Spear has adopted distribution per share ('DPS') as the applicable criteria for trading
statement purposes. In terms of the JSE Limited Listings Requirements, Spear is required to
publish a trading statement as soon as it becomes reasonably certain that its DPS for the next
period to be reported on will differ by 15% or more from the DPS for the previous
corresponding period.


The Company's board of directors ('the Board') will determine the magnitude of the DPS,
which would not be less than 80% of distributable income per shares ('DIPS'), for the financial
year.


Given the above minimum pay-out ratio being applied, the Company hereby advises that a
reasonable degree of certainty exists that for the financial year, the DPS will be between 55.3
cents and 62.1 cents, representing a decrease of between 32.20% and 39.70% compared to
the DPS of 91.66 cents reported for the financial year ended 29 February 2020 (based on a
100% pay-out ratio and including income generated on hospitality assets for the period).


The Company also advises that a reasonable degree of certainty exists that the DIPS
generated for the 2021 Financial Year will be between 69.9 cents and 76.8 cents, representing
a decrease of between 16.19% and 23.69% compared to the DIPS of 91.66 cents reported for
the financial year ended 29 February 2020 (based on a 100% pay-out ratio and including
income generated on hospitality assets for the period).


The financial information on which this trading statement is based has not been reviewed or
reported on by the auditor of the Company. The reviewed results for the financial year are
expected to be published on or about 14 May 2021.

Cape Town
28 April 2021

Sponsor
PSG Capital

Date: 28-04-2021 12:00:00

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