Spear's R1.4bn acquisition drive powers next growth phase

• Spear has deployed R1.4bn into two major acquisitions while maintaining low gearing and strong operational performance.
• Revenue increased 28.29% and NOI 29.41%, supported by 96.37% occupancy, positive rental reversions and approximately 99% collections.
• Its portfolio has grown towards R8.4bn, while further industrial, commercial and renewable-energy investment is already under way.

Western Cape strategy gathers momentum

‍Spear REIT is entering the second half of FY2027 with considerably more scale, fresh capital and acquisition firepower as its tightly focused Western Cape property strategy continues to deliver growth.

The Western Cape-focused real estate investment trust has secured R1.402 billion in major acquisitions, raised more than R1 billion in fresh equity and delivered strong rental and operating metrics during the six months to July 2026.

That combination has allowed Spear to reaffirm its FY2027 guidance for distribution per share (DIPS) growth of 6% to 8% over FY2026 while maintaining a 95% payout ratio.

The underlying portfolio numbers provide the foundation. Revenue increased 28.29% year to date, while net operating income (NOI) climbed 29.41%. Occupancy across the core portfolio reached 96.37%, cash collections were approximately 99%, and positive rental reversions came in at 6.78%. Weighted average contractual lease escalations were 6.92%.

For investors, however, the more significant story is what Spear has been doing with its balance sheet. The REIT is moving from portfolio resilience towards a more aggressive growth phase, deploying capital into acquisitions and developments while retaining relatively low gearing.

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“The first half has demonstrated the resilience of our portfolio and the strength of our Western Cape strategy. We have continued to grow through acquisitions while maintaining strong operational metrics and a conservative balance sheet.”

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CEO Quintin Rossi says Spear enters the second half with “considerable momentum and a clear pipeline for further value creation”.

R1.4bn deployed into two major acquisitions

‍At the centre of that expansion are two significant transactions: Watergate Centre in Mitchells Plain and 1 Sportica Crescent in Tygervalley.

Together, the properties were acquired for R1.402 billion, adding 48,169m² to Spear's portfolio at an average acquisition yield of 8.99%.

Watergate Centre | R442 million

‍The 19,681m² convenience retail centre in Mitchells Plain was acquired for R442 million. The property is anchored by major national retailers including Shoprite, Capitec, PEP and Mr Price and provides Spear with greater exposure to convenience retail in one of Cape Town's large residential markets.

Key investment metrics include:

• Purchase price: R442 million
• GLA: 19,681m²
• Initial yield: 8.37%
• WAULT: 24 months
• In-force escalation: 6.70%
• Additional solar capacity: 1.2MW

1 Sportica Crescent | R960 million

‍The considerably larger R960 million 1 Sportica Crescent transaction adds 28,488m² of prime commercial space in Tygervalley. The property is fully occupied and delivers an initial yield of 9.67%, with a 28-month weighted average lease expiry.

Both acquisitions are expected to be earnings accretive. Importantly, their contribution has not yet been included in Spear's existing DIPS guidance. Management intends providing shareholders with an updated position when it releases its half-year results. That creates a potentially important catalyst for investors to watch.

R1bn capital raise provides acquisition firepower

‍Spear's expansion has not come at the expense of its balance sheet.

The REIT raised R1 billion through an accelerated bookbuild in April, followed by another R108 million through its dividend reinvestment programme in June.

At the end of July, loan-to-value stood at just 7.48%, while interest cover was 6.02 times. Spear also had approximately R800 million in liquidity available, net of acquisition allocations, leaving it with meaningful capacity to pursue further opportunities.

CFO Christiaan Barnard says the capital raise has been central to creating that flexibility.

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“The capital raise has given Spear the flexibility to pursue growth without compromising the strength of the balance sheet. Our focus remains firmly on acquisitions and developments that are earnings accretive and aligned with our Western Cape strategy.”

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That discipline is important. Spear is growing quickly, but management's investment proposition remains deliberately concentrated rather than geographically expansive. As Rossi puts it: “Spear's strategy is deliberately regional and very focused.”

Industrial portfolio delivers strongest rental growth

‍The existing portfolio is also producing encouraging operational numbers. Spear's industrial portfolio recorded occupancy of 97.98% and particularly strong positive rental reversions of 14.32%.

Retail occupancy stood at 97.17%, accompanied by positive reversions of 7.88%. Commercial property remains the softer segment, but occupancy nevertheless reached 90.24%, with positive rental reversions of 4.26%.

Industrial is also attracting further development capital. Spear invested R140 million in new industrial developments during the period and concluded a new 10-year lease with Mambos Storage & Home for a 7,150m² warehouse. Additional industrial development opportunities are progressing in George and Blackheath.

Solar becomes a meaningful property income stream

‍Renewable energy is emerging as another increasingly important contributor. By July, Spear had solar infrastructure installed across 28 assets, generating more than 5.17 million kWh year to date, compared with 2.90 million kWh in the corresponding period.

Solar penetration increased from 14.16% to 20.20%, with the renewable-energy portfolio contributing R14.79 million in NOI. The Watergate Centre acquisition brings another 1.2MW solar installation into the portfolio.

For property investors, this illustrates how renewable-energy infrastructure is moving beyond being simply an ESG or operating-cost consideration and becoming part of the income-generating economics of commercial property portfolios.

Selling assets to recycle capital

‍Spear has also demonstrated that its growth strategy is not exclusively about buying. The REIT sold Hamilton & Chiappini House for R107 million, representing a 33% premium to its original 2024 acquisition price.

The disposal unlocked approximately 5 cents per share in net asset value, with the proceeds being redirected towards new acquisitions and developments. That capital recycling mirrors a broader theme emerging across South African property: investors and funds are becoming increasingly deliberate about which assets they retain, which they dispose of and where capital can generate stronger future returns.

Meanwhile, Spear has secured a commercial land parcel in Century City for a proposed new office precinct with estimated total development costs of approximately R950 million.

Spear's growth dashboard

‍For investors assessing the trajectory of the business, the key numbers tell the story:

• R1.402bn - Watergate and Sportica acquisitions
• R1bn accelerated bookbuild
• R108m dividend reinvestment capital
• 28.29% year-to-date revenue growth
• 29.41% NOI growth
• 96.37% portfolio occupancy
• Around 99% cash collections
• 6.78% positive rental reversions
• 7.48% loan-to-value at July
• R800m available liquidity, net of acquisition allocations
• 6% - 8% targeted FY2027 DIPS growth

From R7.1bn towards an R8.4bn portfolio

‍At July 2026, Spear's portfolio stood at R7.1 billion, comprising 40 Western Cape properties and approximately 625,610m² of gross lettable area.

Following subsequent transfers including Watergate Centre and the Santam Precinct, the portfolio has increased to approximately R8.4 billion and 670,000m² of real estate assets. The significance is not simply that Spear is getting bigger.

It is doing so while reporting positive rental reversions, high occupancy and collections, substantial liquidity and low gearing. That gives management something particularly valuable at this point in the property cycle: optionality.

Spear can acquire, develop or recycle assets without having to pursue growth simply to increase scale. Its Western Cape concentration also means the investment case remains closely tied to the economic and property fundamentals of one province. That concentration carries risk, but it is also the strategy that has differentiated the REIT.

With R1.4 billion of acquisitions secured, fresh equity deployed, industrial development accelerating and further projects in the pipeline, the second half of FY2027 now becomes the test of how effectively Spear can convert that additional scale into earnings and distribution growth.

For investors, the next numbers to watch will therefore be less about how much property Spear can buy and more about how much value its newly enlarged portfolio can produce.

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