Wrap Text
Voluntary Operational And Financial Update For The Ten Months Ending 31 December 2025 And Upward Revised Guidance
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 TEN MONTHS ENDING
31 DECEMBER 2025, OF THE 2026 FINANCIAL YEAR AND UPWARD REVISED GUIDANCE RANGE
1. SALIENT FEATURES
YTD Dec 2025 YTD Dec 2024 Variance
Distributable income per share* cents 74.88 70.84 5.71%
Distribution per share* cents 71.14 67.29 5.71%
Pay-out ratio % 95.00 95.00 -
Total distributable income R'000 302,767 204,895 47.77%
Revenue excluding smoothing R'000 674,481 554,696 21.59%
Revenue including smoothing R'000 683,977 557,943 22.59%
Basic earnings per share cents 103.80 78.59 32.08%
Headline earnings per share cents 74.94 72.92 2.77%
* Distributable income per share and distribution per share is disclosed to assist investors to compare
comparable information to the prior period and does not constitute a dividend declaration for the period
under review.
YTD Dec 2025 HY2026 FY2025
Loan to value % 25.04 13.85 27.09
Tangible net asset value per share R 11.90 12.10 12.20
Interest cover ratio Times 4.45 4.05 3.34
SA REIT Cost to Income % 45.27 45.61 44.37
SA REIT Administrative cost to income % 6.64 6.39 6.79
Weighted average cost of debt % 8.66 9.02 9.08
Weighted average cost of variable debt % 8.36 8.84 9.29
Weighted average cost of fixed debt % 8.80 9.08 9.01
Fixed debt ratio % 69.25 74.99 77.53
Weighted Average expiry of debt Months 25.67 28.67 25.97
Weighted Average expiry of fixed debt Months 32.61 28.07 20.01
Number of net shares in issue '000 416,409 414,887 320,400
2. KEY FINANCIAL HIGHLIGHTS
Develop- YTD Dec
Industrial Commercial Retail ment Land 2025 FY25 Total
Number of properties 16 17 9 - 42 39
Value of properties
(R'000) 2,872,474 2,406,655 1,446,785 78,864 6,804,778 5,532,267
Value % 42% 35% 21% 1% 100% -
Property revenue excl
smoothing (R'000) 283,106 264,075 127,264 22 674,467 681,704
Revenue % 41.97% 39.15% 18.87% 0.00% 100% -
Net Solar income 7,292 1,106 5,036 - 13,434 16,330
Property cost to income
ratio 39.43% 37.37% 37.36% 11.73% 38.67% 37.64%
GLA m² 419,231 127,433 80,469 - 627,133 487,418
GLA % 66.85% 20.32% 12.83% 0.00% 100%
Vacant area m² 9,385 7,174 1,276 - 17,835 14,634
Vacancy per sector % 2.24% 5.63% 1.59% 0.00% - -
Vacancy on total GLA
% 1.50% 1.14% 0.20% 0.00% 2.84% 3.00%
Reversion % YTD All 4.11% -6.95% -4.84% - 1.08% 4.18%
Reversion % Renewals
only 7.85% 4.13% 5.38% - 6.16% -
Reversion % on
vacancies and relets 1.30% (17.09%)* (9.39%)** - (2.13%) -
Weighted average
Lease escalation % 7.04% 7.22% 6.57% 0.00% 6.99% 7.27%
Weighted average
unexpired lease term
(months) 37.94 21.80 29.26 - 29.55 24.58
* Driven by vacate of 4 000 m2 office user end December 2025. Current re-tenanting in progress.
** Driven by vacates at Viking Business Park & No.1 Paarden Eiland which have all been re-let in line with
management's budgets for FY2026.
3. CEO COMMENTARY
On a year-to-date basis Spear has remained relentlessly focussed on the day to day execution of its hands-
on property management strategy. Spear remains the only regionally focussed REIT listed on the JSE that
invests in and manages high quality real estate assets exclusively within the Western Cape. Management
has remained disciplined in its pursuit of sustainable revenue generation within the core portfolio through its
active asset management approach and value-add initiatives, in addition to seeking out investment
opportunities that meet management's strict investment criteria. Spear's geographical focus allows it to
capitalise on the Western Cape's comparatively resilient economic base, superior infrastructure and strong
property fundamentals, underpinning sustainable long-term value creation for all stakeholders.
Spear's portfolio has continued to grow in a strategy aligned and defensive manner with the addition of
137 090 m2 of yield enhancing assets on a year-to-date basis. The core portfolio remains well diversified
across high-quality industrial, convenience retail, commercial, and mixed-use real estate assets, each
managed with the focus on delivering long term sustainable and growing rental cash flows. By design,
Spear's industrial assets are the cornerstone of its portfolio across asset value, gross lettable area and
revenue generation, offering defensive income streams and exposure to well diversified multi-let industrial
and single tenanted industrial assets. Spear has maintained an underweight position in retail assets within
the Western Cape, given the high price demands of these assets, however management's patience and
timing were rewarded with the addition of Maynard Mall in Wynberg in October 2025. This new commuter
focussed convenience retail asset compliments Spear's existing retail assets, which are strategically located
convenience retail centres in well-established areas that are well supported by a broad range of consumer
demand. The balance of the core portfolio is comprised of premium commercial offices, and mixed-use
developments.
The Spear management team has remained acutely focused on taking advantage of the improved trading
environment and capitalising on the rising tide of tenant activity and strengthening market fundamentals,
which has resulted in Spear's overall occupancy rate being at its highest since the onset of the COVID-19
pandemic. For the year to date a key focus has been on further vacancy reduction, cost containment and
improving Spear's overall cost of debt, given the consistently improving quality of the core portfolio. Spear's
improved financial cadence is a testament to the wholesale buy-in and execution of our operational and
asset growth strategies by the entire Spear team – this is a cultural value we are extremely proud of and
celebrate daily.
During the year to date Spear acquired additional real estate assets to the value of R1,074 billion at an
average acquisition yield of 9.54% which is in excess of Spear's weighted average cost of capital. The new
acquisitions have all transferred successfully into the portfolio by end of December 2025 and have been on-
boarded onto the Spear asset and property management platform. The core portfolio remains well placed
to deliver consistently on its strategic focus with the key drivers to such delivery being strong return-to-office
and letting momentum, semigration, localisation, commencement of an interest rate cutting cycle in South
Africa and a constraint in supply of real estate assets in certain sub-sectors within the Western Cape.
Robust rental collections, growing letting activity, tenant retention, and hands-on financial, debtors and
vacancy management remain the key building blocks for the entire Spear team in FY2026 and beyond.
Spear's balance sheet remains well positioned for growth, with an LTV of 25.04% after the implementation
of the most recent acquisitions and an interest cover ratio well in excess of its bank covenants.
Spear is well placed to successfully execute on its mission and strategy over the balance of FY2026, as
both the operational and financial performance of the core portfolio remains aligned with management's
forecasts for the financial year.
SECTORAL PERFORMANCE
Industrial portfolio
Spear's industrial portfolio has maintained its robust performance within the operating business during the
year to date, as demand for industrial rental stock in well located nodes remains unabated. The industrial
portfolio makes up 67% 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 operated in line with management's expectation for the
period and have equally made material contributions to the financial performance of Spear's solar portfolio.
Spear's development pipeline of high quality industrial assets is set to add further value to the core industrial
portfolio with the GTX Development in George set to add 30 000 m2 of industrial GLA, Bravo Park
Extension 2 in Blackheath set to add 7 500 m2 of industrial GLA and The Anchorage in Paarden Eiland set
to add 2 000 m2 of industrial GLA.
Retail portfolio
Spear's retail portfolio has delivered strong operational and financial performance for the year to date, as
consistent inroads were made on re-tenanting initiatives, vacancy mitigation and the on-boarding of Maynard
Mall in Wynberg. The addition of the Maynard Mall has successfully added another high yield quality retail
asset to the retail segment of the portfolio. The overall improvement in the macro-economic environment,
declining interest rates and the effects of two-pot withdrawals have boded well for Spear's retail tenants and
assets. The majority of Spear's tenants have reported positive trading feedback over the festive season as
footfall and basket sizes trended in line with expectations, Currently, 58.70% of Spear's retail tenant mix
consists of national tenants, with management focused on increasing this proportion over time as a key
credit risk mitigant factor. As previously stated, none of Spear's retail assets are dependent on local or
international tourism but instead benefit from their positioning within strong residential, commuter and
commercial nodes. The retail portfolio is concentrated in high-growth areas that service a broad range of
LSM groups, supporting continued brand expansion by national retailers across the portfolio.
Commercial portfolio
Spear's commercial office portfolio is strategically positioned to capitalise on the limited availability of quality
office space within Cape Town's established commercial nodes. Benefiting from exceptional connectivity,
these assets offer seamless access to all major arterial routes and key transport hubs, enhancing their
appeal to office occupiers. The ongoing acceleration of the return-to-office trend in Cape Town and the
normalisation and rise in demand from small to medium office occupiers has translated into rising demand,
driving improved occupancy levels across Spear's office portfolio and a sustained reduction in vacancies.
On a year-to-date basis, the South African economy has shown improvement which has benefitted business
confidence and expansion activity of occupiers. This demand, coupled with a scarcity of new supply, creates
a conducive environment for rental growth on renewals and re-lets despite the ongoing operating cost creep
particularly within the commercial portfolio. The overall vacancy rate within the commercial portfolio has
contracted to 5.63% which is a 3.37% improvement from the vacancy rate of 9.00% at HY2026. Management
remains committed to executing targeted, innovative letting strategies aimed at maximising occupancy and
unlocking long-term value across the office portfolio.
4. OUTLOOK AND GUIDANCE
Given Spear's consistently improving operational and financial performance for the ten months ending
December 2025 and the information management has at its disposal at the date of this update,
management's full year DIPS guidance is herewith revised upwards and is forecasted to deliver a growth
rate of between 5% and 6% compared to FY2025.
The contributing factors to the improved and increased FY2026 guidance range are as follows:
• Robust letting momentum resulting in an improved portfolio occupancy percentage of 97.16%
• Improved net income generation from Spear's solar assets
• The successful onboarding of new operational solar systems has increased Spear's solar generation
capacity and net income capacity
• Improved cost to income ratio's on a gross basis
• Improved bank margins on debt facilities
• 100 bps reduction in the South African interest rate
The payout ratio is set to be maintained at 95% by the board of directors.
Guidance assumptions
Spear's guidance for the remainder of FY2026 remains informed and influenced by the following factors:
• No loadshedding occurs for the remainder of FY2026.
• Vacancies are reduced in accordance with management's forecast.
• Lease renewals are successfully concluded as per management's projections.
• No major tenant failures occur during the period.
• Tenants continue to successfully absorb rising costs associated with utility charges, municipal rates
and other expenses.
• No civil unrest arises in Cape Town, the Western Cape, or South Africa.
Guidance disclaimers
Any deviations from the assumptions outlined above may impact management's forecast for the year ending
28 February 2026. 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 2026 remains the sole responsibility of the directors and has not
been reviewed or audited by Spear's independent external auditors.
Cape Town
26 January 2026
Sponsor
PSG Capital
Date: 26-01-2026 10:00:00
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