Cape Town - Some of the Western Cape’s top properties are set to debut on the JSE with local real estate investment trust, Spear Reit, preparing to list early in November this year.
Spear, with property experts Mike Flax as chief executive officer, Quintin Rossi as managing director and Abu Varachhia as non-executive chair at the helm, boasts ownership of a quality Western Cape focused portfolio of diversified retail, industrial, office, hospitality and residential properties.
Located in the country’s highest growth area and with high quality tenancies and lease covenants, Spear aims to provide investors access to a prime real estate portfolio that will deliver sustainable dividend growth ahead of inflation and in the top quartile of its peer group.
Spear will be coming to the market with 25 properties that have a gross lettable area of 171 000m², valued at R1.4bn. A further 141 000m² of undeveloped bulk is available in the portfolio to unlock additional value. Spear is looking to raise R300m with the listing, of which R187.5m has already been committed via a preplacement of shares. The expected market capitalisation at listing is R830m.
The purpose of the listing is to grant Spear access to the capital markets in order to accelerate growth, enhance the deal making abilities of the company, reduces debt and to utilise scrip for acquisitions. Naturally the tax benefits from obtaining the Reit status are also attractive to shareholders.
The company differentiates itself from other diversified Reits by being a focused Reit that specialises in the Western Cape and is able to leverage off of its regional knowledge to drive growth. Strong relationships grant Spear access to regular accretive deal flow. It is an internally managed Reit with a low overhead cost structure and a strong management team with a long and established track record.
According to Flax, management’s hands-on approach is key to operations and to ensure growth in shareholder value and returns.
“We have strong lease covenants across all sectors in which we are involved with, as well as low portfolio vacancy rates. Furthermore, rental rates are well below overall market rates per sector. Low portfolio valuation per m2 display a strong investment value proposition and this is supported by a relatively low loan to value ratio.
“Key to our success and good prospects is that we are focused on the Western Cape with its highly favourable economic and property fundamentals. It has the fastest growth in GDP in South Africa with an excellent track record of good governance and value adding infrastructure spending.
“Most of all, management is Cape Town based and thus in proximity to our assets for a truly hands on way of doing things,” Flax said.Read Fin24's top stories trending on Twitter: Fin24’s top stories