Spear REIT weathers the drought


Spear REIT weathers the drought


Published Date: 2019-05-16 | Source: Stephen Gunnion | Author: Stephen Gunnion

Spear REIT weathers the drought

The Cape-focused real estate investment trust has delivered on its distribution guidance for its 2019 financial year.

The Western Cape has had a tough time, dealing with the weak economy at the same time as a devastating drought that hurt the tourism industry. So for Western Cape-focused Spear REIT it's been a tough period, with the hospitality sector underperformed the rest of its portfolio last year. Still, it's managed to deliver on its distribution guidance thanks to its focus on high-quality income generating properties across all sectors. It also attributes its 2019 financial performance to strong contractual income and recoveries, together with cost containment and savings on finance costs.

The REIT's current R3.81 billion property portfolio consists of 30 assets with an average value per asset of R127 million. It said its income stream was underpinned by average contractual escalations of 8.07% and a weighted average lease expiry of 30 months. Vacancies across the portfolio are below the national average, with an overall vacancy of 1.98% at the end of February.

It grew revenue by 37% to R435 million in the year to end-February. Like-for-like income grew by 26%, boosted by the inclusion of R1 billion worth of assets for the full year versus an average of 7 months in its 2018 year. It's declared a final distribution of 44.69c for the six months to end-February, taking its total distribution for the year to 86.42c, up 10% from last year. Its net asset value per share increased by 4.71% to R12.12.

Its shares gained 6.2% to R10.35 yesterday.


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