Spear REIT, the only regional-focused REIT on the JSE, said yesterday its portfolio of properties in the Western Cape had, for the most part, traded consistently through the year to February 28, 2024, in line with management's expectations.
The company said in an operational update that its lease renewal strategy had been successfully executed as renewals were concluded timeously and, in some instances, well ahead of expiry dates. Portfolio occupancy rates remained within the mid-90 percentile.
More than 153 383 square metres of gross lettable area (GLA) was either renewed or relet, versus the 142 770 square metres that was classified as GLA that would either reach expiry or become vacant during the 2024 financial year.
Spear's balance sheet and income statement remained healthy and the fixed debt ratio had remained at just under 50% - the strategic target was for 65% to 75% of Spear's debt to be fixed for 24 to 36 months - and overall group loan to value was at 31.6% as at the year-end.
Cash collection was steady at 98.43%, with sustainable cash flows across the portfolio. Management believed these cash flows would be maintained into the new financial year.
“The trading environment remains tough, despite the Western Cape's appeal and performance, and it therefore remains imperative that management continues to successfully implement its active, hands-on asset and property management strategies,” the company’s directors said in a statement.
Operational metrics within the industrial portfolio remained in line with management's expectations. Industrial portfolio vacancies were low at 1.76%.
The retail assets performed at high occupancy rates of 95.54% in 2024. The retail portfolio was defensively positioned, in location and tenant mix composition in a trading environment where tenant credit risk may be more prevalent, with 41% of Spear's retail portfolio by GLA being occupied by national tenants on long-dated leases with excellent payment records. Pick n Pay leased some 0.93% of the total Spear portfolio GLA.
Slower than anticipated progress was made in vacancy contraction in the office sub-sector, but momentum had improved since year-end. Office occupancy levels were at 84.37%.
BUSINESS REPORT