Popular shopping mall in South Africa sold for R422 million
Spear REIT has acquired the Watergate Centre, a shopping centre located in Mitchells Plain, for R422 million.
This centre features major retailers such as Shoprite, Capitec, PEP, and Mr Price. This purchase is part of Spear’s recent acquisitions in the Western Cape, which total R1.4 billion.
The transaction has generated R1 billion in new equity for the group and demonstrated strong rental growth over the six months leading up to July.
Spear REIT owns 42 properties across its portfolio, all located in the Western Cape, with the vast majority in the Greater Cape Town metropole.
Some of these locations include 2 Long Street in the Cape Town CBD, which is a high-rise office building near the City’s financial and business centre.
Another location is Sable Square Shopping Centre in Century City/Milnerton, a retail and outlet hub situated along Bosmansdam Road.
The group also owns Maynard Mall in Wynberg, which is a regional shopping centre in the Southern Suburbs.
Spear’s growth strategy included two significant transactions during this period: the acquisition of the Watergate Centre in Mitchells Plain and 1 Sportica Crescent in Tygervalley.
Together, these properties were acquired for a total of R1.402 billion and have recently been transferred, adding 48,169 m² to the portfolio, with an average acquisition yield of 8.99%.
The Watergate Centre spans 19,681 m² and is anchored by renowned national retailers.
The investment offers an initial yield of 8.37%, a 24-month average lease duration, and a 6.70% scheduled rent increase.
The recent acquisition of 1 Sportica Crescent for R960 million adds 28,488 m² of prime commercial space in Tygervalley.
This property is fully leased, has a 28-month average lease duration, and provides an initial yield of 9.67%.
These two transactions significantly enhance the group’s profile, especially in the Western Cape, where it aims to expand its presence.
As of July 2026, Spear’s asset portfolio is valued at R7.1 billion and includes 40 properties in the Western Cape, totalling about 625,610 m² of lettable space.
Since acquiring the Watergate Centre and the Santam Precinct, the portfolio’s value has grown to R8.4 billion, with approximately 670,000 m² of property.
These transactions are expected to boost earnings, but their impact is not yet reflected in the current earnings guidance.
Spear’s financial results in good shape
Spear aims to increase its distribution per share (DIPS) by 6%-8% for fiscal year 2027 compared to fiscal year 2026, while maintaining a payout ratio of 95%.
This success is driven by 6.78% rental increases, 6.92% average lease escalations, a 96.37% occupancy rate, and 99% cash collections.
So far this year, the group’s revenue has grown by 28.29%, and net operating income has risen by 29.41%.
Spear CEO Quintin Rossi noted that the strong first-half performance demonstrates the resilience of their portfolio and the strength of their Western Cape strategy.
“We have continued to grow through acquisitions while maintaining strong operational metrics and a conservative balance sheet.”
“We enter the second half with considerable momentum and a clear pipeline for further value creation.”
Spear’s balance sheet is strong for future growth, with a loan-to-value ratio of 7.48% and an interest coverage ratio of 6.02 times at the end of July.
After setting aside funds for acquisitions, the group has about R800 million in available liquidity.
In April, Spear raised R1 billion through a rapid fundraising effort, and in June, it raised an additional R108 million through its dividend reinvestment program.
“The capital raise has given Spear the flexibility to pursue growth without compromising the strength of the balance sheet,” said Spear REIT’s CFO, Christiaan Barnard.
“Our focus remains firmly on acquisitions and developments that are earnings accretive and aligned with our Western Cape strategy.”
Spear’s industrial portfolio is performing well, with an occupancy rate of 97.98% and a 14.32% rent increase.
Retail occupancy is 97.17%, up 7.88%, while commercial occupancy is 90.24%, up 4.26%.
The group invested R140 million in new industrial developments and signed a new 10-year lease with Mambos Storage & Home for a 7,150 m² warehouse.
There are also new development opportunities in George and Blackheath.
Spear also sold Hamilton & Chiappini House for R107 million, achieving a 33% premium to its original acquisition price in 2024.
Photos of Watergate Centre
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