Wrap Text
Voluntary Operational And Financial Update For The First Quarter, Ending 31 May 2026, Of The 2027 Financial Year
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")
VOLUNTARY OPERATIONAL AND FINANCIAL UPDATE FOR THE FIRST QUARTER, ENDING
31 MAY 2026, OF THE 2027 FINANCIAL YEAR
1. SALIENT FEATURES
FY2027 Q1 FY2026 Q1 Variance
Distributable income per share (DIPS)* cents 24.55 23.13 6.14%
Distribution per share * cents 23.32 21.98 6.11%
Pay-out ratio % 95.00 95.00 N/A
Total distributable income R'000 121,827 74,238 64.10%
Revenue excluding smoothing R'000 245,543 191,240 28.40%
Basic earnings per share cents 24.63 23.20 6.16%
Headline earnings per share cents 24.63 23.18 6.26%
* Distributable income per share and distribution per share is disclosed to assist investors to compare
comparable information to the prior corresponding period and does not constitute a dividend declaration
for the period under review.
As at 31 May 2026 As at 28 Feb 2026
Loan to value % 8.28 22.94
Tangible net asset value per share R 13.05 12.91
Interest cover ratio Times 4.92 4.34
SA REIT Cost to Income % 43.39 45.36
SA REIT Administrative cost to income % 6.60 6.86
Weighted average cost of debt % 8.64 8.59
Weighted average cost of variable debt % 8.34 8.20
Weighted average cost of fixed debt % 8.75 8.75
Fixed debt ratio % 74.11 71.05
Weighted Average expiry of debt Months 29.54 34.07
Weighted Average expiry of fixed debt Months 27.65 30.67
Number of net shares in issue '000 496,251 416,397
2. KEY FINANCIAL HIGHLIGHTS
FY2026 - as at
FY2027 Q1 - as at 31 May 2026
28 Feb 2026
Industrial Commercial Retail Development Total FY2026 Total
Land
Number of properties 16 17 9 - 42 42
Value of properties 3,153,609 2,452,242 1,500,585 83,622 7,190,058 7,176,839
(R'000)
Value % 44% 34% 21% 1% 100% -
Property revenue excl 107,172 80,042 58,373 11 245,599 * 840,171 *
smoothing (R'000)
Revenue % 43.64% 32.59% 23.77% 0.00% 100% -
Net Solar income 6,448 1,040 3,570 - 11,058 21,809
(R'000)
Property cost to income 37.37% 37.93% 36.66% - 36.87% 38.55%
ratio
GLA m² 422,272 127,125 80,469 - 629,867 630,061
GLA % 67.07% 20.19% 12.78% 0.00% 100% -
Vacant area m² 7,715 10,226 2,577 - 20,517 17,120
Vacancy per sector % 1.83% 8.04% 3.20% 0.00% - -
Vacancy on total GLA 1.23% 1.62% 0.41% 0.00% 3.26% 2.72%
%
Reversion % YTD All 4.61% 17.32% -0.96% N/A 1.79% -2.28%
Reversion % Renewals 6.33% 5.53% 3.42% N/A 5.28% 6.11%
only
Weighted average 6.98% 7.19% 6.62% 0.00% 6.97% 7.04%
Lease escalation %
Weighted average 34.52 21.59 25.27 - 27.55 30.28
unexpired lease term
by revenue (months)
* The total property revenue excl smoothing excludes other revenue/income that is not directly property
related.
3. CEO COMMENTARY
During Q1 FY2027, the core portfolio performed in line with management's forecast despite the impact of
the recent conflict in the Middle East that placed pressure on certain tenants which were impacted by the
disruption in global supply chains, the increased cost of raw materials and rising fuel prices. Spear continued
to meet its operational and financial objectives during the period, with positive overall rental reversions
resulting in an increase of 1.79% on all renewals and relets and a robust increase of 5.28% on renewals
only for the period.
The minor increase in portfolio vacancies for the quarter compared to FY2026 was primarily driven by
portfolio churn and the timing of relets. Management expects portfolio vacancy rates to revert back to below
3% by the end of Q2 FY2027. Despite a minor occupancy rate decline, the overall portfolio occupancy rate
remained robust at 96.74%. Notwithstanding the reversal in the macro-economic momentum experienced
in FY2026, Spear's collections remained consistent with a 98.63% cash collection profile for Q1 FY2027.
Spear's hands-on and active management of all verticals within the operating business continues to yield
consistent outcomes.
Despite new headwinds such as the latest conflict in the Middle East, a shift in monetary policy from an
interest rate cutting cycle to an interest rate hiking cycle, rising inflation and rising operational costs, the first
quarter of FY2027 has delivered a forecast aligned outcome as Spear tracks within its DIPS growth guidance
band for FY2027 of 6% - 8% compared to FY2026. If the current peace talks between Iran and the United
States continue and result in a long-term peace agreement and the reopening of the Strait of Hormuz, it
seems likely that oil prices will continue to fall. The latter would assist in combating additional inflationary
pressures and rising fuel prices, which would potentially create the environment for the SARB to hold interest
rates unchanged at the next Monetary Policy Committee meeting.
Spear has navigated these challenges during the first quarter as best possible and have printed a DIPS
growth of 6.14% for Q1 FY2027 compared to Q1 FY2026. Management concluded a pre-let of Spear's
12 800 m2 Radnor Road, Parow distribution centre to Choice Clothing (a division of Pepkor Limited) prior to
the start of FY2027 on a zero months vacancy basis, with a 4 months beneficial occupation period that ends
on 30 June 2026, the latter was factored into management's FY2027 guidance provided to the market on
18 May 2026. This asset will start to contribute to the core portfolio's net rental income from 1 July 2026,
whereafter management expects an uptick in the FY2027 DIPS growth cadence compared to Q1 FY2027,
in line with its FY2027 guidance that DIPS is expected to be between 6% and 8% higher compared to
FY2026.
Management is laser focused on vacancy reduction and mitigation across the core portfolio. Continuous
marketing & leasing initiatives are being deployed to ensure Spear's assets remain in contention with
prospective tenants.
Spear's acquisitive growth strategy may yield further potential bolt on, and portfolio style investment
opportunities during the year as management weighs up further high-quality Western Cape investment
opportunities. Spear furthermore retains a healthy pipeline of NAV unlock opportunities across the core
portfolio with brownfield redevelopments and greenfield developments being unlocked during the year with
the commencement of the construction of the first 5 500 m2 top structure in George on 5 May 2026 and a
7 000 m2 distribution centre at Blackheath Bravo Park Phase 2 in August this year, collectively valued at
circa R150 million.
Spear has secured a healthy pipeline of income-producing assets that are in the process of transferring into
the core portfolio over the next couple of months. Management is confident that the announced strategic
acquisitions of Watergate Centre, Mitchells Plein and No.1 Sportica Crescent for a cumulative value of
R1,42 billion all ahead of Spear's cost of capital will deliver long-term sustainable income for Spear,
positioning Spear to capture sustained income growth and capital appreciation throughout FY2027 and
beyond.
Robust rental collections, consistent letting activity, positive overall rental reversions, and hands-on financial,
debtors and vacancy management have enabled Spear to trade successfully through Q1 of FY2027. Spear's
balance sheet remains well positioned for growth, with an LTV of 8.28% and an interest cover ratio well in
excess of its bank covenants.
Despite tougher trading conditions, operationally and financially Spear is well placed to successfully execute
on its mission and strategy over the balance of the current financial year, as the core portfolio tracks in line
with management's forecasts for FY2027 on a year to date basis.
SECTORAL PERFORMANCE
Industrial portfolio
Spear's industrial portfolio has maintained its robust performance within the operating business for the year
to date with a 98.17% occupancy rate, as demand for industrial rental stock in well located nodes remains
strong. The industrial portfolio had positive rental reversions during the period, with an increase of 4.61% on
renewals and relets for the period and an increase of 6.33% on renewals only for the period.
The industrial portfolio makes up 67.07% of gross lettable area (GLA) within the core portfolio. The defensive
composition of the industrial portfolio is made up of logistics, urban logistics, warehousing, manufacturing
and multi-let industrial parks in highly sought after nodes within the Cape metropole in addition to the
Drakenstein Municipality. All of Spear's industrial assets have performed in line with management's
expectation for the period and continue to make material contributions to the robust performance of Spear's
solar portfolio. Spear's development pipeline of high quality industrial assets has been activated which is set
to add further value to the core industrial portfolio with Building 1 of Phase 1 at GTX Park in George currently
under construction, comprising a multi industrial unit development of 5 500 m2, set for completion in
March 2027. In addition to the George construction, Spear has concluded a 10 year lease with a national
retailer and will be breaking ground on a new 7 000 m2 modern logistics distribution centre in Blackheath on
1 August 2026 with both new builds set to add +-12 500 m2 of additional high quality industrial GLA to the
core portfolio on completion.
Retail portfolio
Spear's retail portfolio makes up 12.78% of total portfolio gross lettable area (GLA) and has delivered
consistent operational and financial performance year to date with all of Spear's retail assets generating
strategy aligned outcomes. Positively, footfall at both Sable Square and Maynard Mall have been
consistently strong over the quarter on a cumulative basis with Sable Square and Maynard Mall footfall
attracting in excess of 2 100 461 shoppers for the period. None of Spear's retail assets are reliant on local
or international tourism together with predominant exposure to convenience and commuter driven spending
and limited exposure to discretionary spending. There have been no major stress points within the retail
portfolio during the quarter with all renewals aligning with managements forecasts with retail renewals and
relet rental reversions printing flat for the period and renewals only printed +3.42% for the period.
The retail portfolio has maintained robust occupancy rates of 96.80% and the positive rental reversion during
the period. Currently, 61.47% of Spear's retail tenant mix consists of national tenants, the latter mentioned
percentage will increase once Watergate Centre in Mitchell's Plein transfers into the portfolio which is
anticipated to be during the month of September 2026. The increased exposure to national tenants with the
addition of Watergate Centre acts as a key credit risk mitigant underpinning the retail portfolio. The retail
portfolio assets fulfil a dominant convenience and commuter retail function in their respective areas and are
located in high velocity trading nodes that service a broad range of LSM groups, supporting continued brand
expansion, footprint optimisation and new store roll outs by national retailers across the portfolio.
Commercial portfolio
Spear's commercial office portfolio is strategically positioned to capitalise not only on the supply constraint
within the high quality office segment of the Cape Town commercial office market but also in the rising
occupier demands in the established nodes driven by semigration to the Western Cape and occupier
expansion by various existing occupiers. Spear's commercial portfolio presents a compelling value
proposition, exceptional functionality, connectivity, and seamless access to all major arterial routes and key
transport hubs, enhancing their appeal to office occupiers.
Spear's commercial office portfolio makes up 20.19% of total portfolio gross lettable area (GLA) and remains
attractively positioned for long term occupiers. During the period total office renewals and relet rental
reversions printed +17.32% for the period and renewals only, printed +5.53% for the period.
Despite the rise of artificial intelligence and its potential impact on the commercial office sector, the ongoing
demand by occupiers such as BPO operators, financial services firms, fintech businesses, and renewable
energy companies has remained consistent during the quarter. Within the embedded portfolio encouragingly
the return-to-office momentum continues to drive organic footprint expansion from existing tenants. The
above demand, coupled with a clear shortage of new supply in established commercial nodes, creates a
conducive environment for positive rental growth on renewals and re-lets despite the operating cost creep
and municipal valuation increase. There has been office vacancy creep during the quarter which in most
instances is portfolio churn with minimal stubborn vacancy risk, however management remains committed
to executing targeted and innovative letting strategies aimed at maximising occupancy and unlocking long-
term value across the office portfolio.
4. OUTLOOK AND GUIDANCE
Despite the challenging trading environment, the outlook for the balance of the year is positive. Management
will maintain a focused approach to ongoing leasing execution to mitigate transient vacancy creep, pro-
active renewals that compliment top line revenue momentum, meticulous cost controls and active asset
management initiatives throughout FY2027.
Spear's expanded portfolio in the region is defensive by design across the industrial, retail and commercial
market, underpinned by strong lease covenants and high-quality tenants. The management team's proximity
to these assets and deep understanding of the local market continue to enhance decision-making and
operational execution.
Based upon the Q1 FY2027 performance and all relevant information that management has at its disposal
at the time of this Q1 FY2027 operational update, management wishes to reaffirm Spear's FY2027 market
guidance that DIPS is set to grow between 6% - 8% compared to FY2026.
Spear's guidance for the remainder of FY2027 remains subject to the following qualifications:
• Minimal loadshedding during FY2027;
• Vacancies reduce in line with management forecasts;
• Lease renewals are concluded in accordance with projections;
• No major tenant failures occur during the period;
• Tenants continue to absorb increases in utility charges, municipal rates, and other local authority costs;
• Shifts in monetary policy are absorbed during the year; and
• No civil unrest occurs in Cape Town, the Western Cape or South Africa.
For the avoidance of doubt none of the announced acquisitions for FY2027 have yet been factored into
Spear's FY2027 guidance provided to the market on 18 May 2026 and any changes to Spear's FY2027
market guidance will only be announced once all announced acquisitions have transferred into the core
portfolio. Spear's payout ratio is set to remain at 95% as approved by the board of directors.
Guidance disclaimers
Any deviations from the assumptions outlined above may impact management's forecast for the year ending
28 February 2027. The information and opinions provided herein have been recorded and expressed in
good faith and are based upon reliable data made available to management at the time of reporting.
No representation, warranty, undertaking or guarantee of whatsoever nature is made or given regarding the
accuracy and/or completeness of such information and/or the correctness of such opinions.
The forecast for the period ending 28 February 2027 remains the sole responsibility of the directors of the
Company and has not been reviewed or audited by Spear's independent external auditors.
Cape Town
26 June 2026
Sponsor
PSG Capital
Date: 26-06-2026 11:00:00
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