Spear REIT Limited. JSE: SEA

Spear REIT shares

Background of Spear REIT

  • Spear Limited is a Western Cape focused diversified property investment company with a Cape Town bias. Spear was established in 2011 as a private portfolio of investment properties (held through the Spear Property Trust), by three South African real estate industry leaders, namely, Mike Flax (chief executive officer), Quintin Rossi (managing director) and Abu Varachhia (non-executive chairman). Mike Flax and Quintin Rossi still lead the business today and Abu Varachhia has taken on the role of non-executive chairman. As a private portfolio, the Spear Property Trust invested across a variety of real estate sectors including office, retail, industrial, residential and hospitality, all of which were successful investments.

  • The Spear Property Trust achieved substantial organic growth in its property portfolio by consistently applying the principle of “value-addition” to all acquisitions made. The principle of “value-addition” entails that a property would only be acquired to the extent that management was able to enhance the value of the property through aggressive letting strategies or through value enhancing development or redevelopment, in a relatively short space of time and at an acceptable cost. By applying this strategy and through a combination of organic growth and new acquisitions, the Spear Property Trust saw its property portfolio grow from an asset base of R358 million in 2011 to R1.39 billion in 2016. Following a decision by the Founders to seek a listing on the Alternative Exchange as a real estate investment trust (REIT), the Spear Property Trust resolved to transfer its portfolio to the company. The founders hold substantial Spear REIT Limited shares in the company and intend to remain so after the listing, thereby aligning their interests with shareholders.

  • Today, Spear’s property portfolio history consists of 25 properties situated throughout the Western Cape, save for one property in Gauteng, with a total value of approximately R1.39 billion, a net asset value of approximately R568 million (prior to the Capital Raisings) and which generates a forward net property related revenue of approximately R128.1 million (based on actual contractual revenue). The property portfolio comprises a well-balanced mix of residential (5%), industrial (37%), retail (22%), office (27%), hospitality (7%) and other (2%) assets. The total gross lettable area of the property portfolio is 171 786 m² of which 28% is let to single tenants and 72% to multiple tenants, ranging from JSE listed entities to SMEs. After the listing, Spear will continue to invest across the real estate sectors, however it will maintain a strict Western Cape focus with a Cape Town bias. Although Spear will initially list as a REIT on the Alternative Exchange, over time it is the intention of management to migrate its listing to the main board of the JSE.“REIT” is a public company listed on the Johannesburg Stock Exchange (JSE) asa real estate investment trust.

Spear REIT Shares Growth Driver

  • Spear’s primary objective is to provide sustainable and growing distributable income as a listed REIT through yield accretive acquisitions and the execution of its Specific, Measurable, Achievable, Realistic and Timeous (SMART) strategy, as set out below: Spear REIT looks to galvanise all available resources, material, human and intellectual to ensure that it remains and grows as a specialist in the Western Cape real estate market. Spear will ensure that its investment portfolio strategy looks to only have investments in properties in the Western Cape due to the favourable economic and property fundamentals in the Western Cape and management’s belief that proximity to assets allows its management team to extract maximum value out of its properties from an asset management, property management and general oversight perspective. Spear REIT Limited’s management functions are conducted internally on all levels. The asset and property management capabilities of Spear are all conducted internally which is one of the key assets of the business, providing Spear with a significant competitive advantage over its competitors.

  • Spear also looks to ensure that any of its acquisitions are yield-accretive. This means that Spear will only acquire a property to the extent that the acquisition is yield-accretive or has value addition potential that will enhance the yield, or performance of that particular property. Redevelopments and active asset management is another key component of Spear REIT Limited’s business operation. Spear will look to create organic growth in its existing portfolio through redevelopments and active asset management. Timeous execution of tenant retention objectives is another major growth driver for Spear. This means that it has a core focus on retaining tenants in a timeous manner.

  • Spear Limited, as a Western Cape based diversified property investment company, investing in retail, industrial, office, hospitality and residential properties, needs to ensure that it offers investors access to a prime Western Cape focused real estate portfolio. A prime Western Cape portfolio located in South Africa’s best location for growth. Spear Limited must always ensure that it is internally managed with a low cost structure, that its management core is that which consists of a team led by industry veterans with solid and successful track records and that its property portfolio is tirelessly underpinned by high quality tenancies and lease covenants.All of this should basically underline that Spear Limited’s strategy of acquisition or acquisition strategy is in line with Spear’s strategy to invest into high quality assets within the Western Cape and to furthermore increase its industrial assets in Cape Town.

Spear REIT Group Investor Tip

  • While few details have been released, up to today Spear Limited’s share price will list at about R9 per share and anticipates an initial full year yield of 8.2%. The company has data forecasts that put its earnings growth in the region of 13.5%.

  • Its widely and deeply experienced manager base and its measured and deliberate strategic focus on the Western Cape markets, is an interesting take on acquisitions, its, “organic growth and new acquisitions”, which, “saw its property portfolio grow from an asset base of R358 million in 2011 to R1.39 billion in 2016” is its most encouraging achievement. How Spear REIT Limited’s share price does at listing will drive the buy sentiment from the live online trade markets most prudent stock purchasers.

Spear REIT Major Shareholders

  • Sector

    Real Estate

  • Industry

    Real Estate

How to buy Spear REIT Group Holdings Shares

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