Spear Reit to hike its capital spending
The Western Cape specialised group will invest R400m in development projects in its 2020 financial year
Spear Reit, which is the only Western Cape-focused property group listed on the JSE, will spend as much as R400m in the 2020 financial year, twice as much as it has in 2019, as the company focuses on competing with other mid-sized real estate companies.
The group has grown aggressively since being listed in late 2016 by South African commercial real estate veteran, Mike Flax.
Flax has since become chair while his understudy Quintin Rossi has become Spear’s CEO.
Rossi said Spear was on track to be “a meaningful mid-cap company” that owned R15bn worth of assets in the next five years and had a market capitalisation of about R9bn.
“We will be able to call Spear Reit a success if we can say we grew from a company with R1.4bn in assets and a market cap of about R800m when we listed in November 2016 to a fund worth 10 times that in both aspects, in less than a decade,” he said.
Rossi said to achieve this the next step was to spend R400m in the financial year to February 2020, which was slightly more than 10% of its current R3.81bn asset base.
Spear released results for the year to February 2019 on Wednesday, reporting dividend growth of 10.1% to 86.42c per share, in line with its earlier forecasts.
But it would only grow its dividend per share by 6%-8% in the year to February 2020.
“We believe that the 2019 financial year has been a success for us and that 2020 will also be a success. We may not reach double digit growth like we did in previous reporting periods but compared with our peers our forecast is strong,” said Rossi.