Voluntary Operational and Financial Update for Three Months Ending 30 November 2021 SPEAR REIT LIMITED (Incorporated in the Republic of South Africa) (Registration number: 2015/407237/06) Share code: SEA ISIN: ZAE000228995 (Approved as a REIT by the JSE) (“Spear” or “the Company”) VOLUNTARY OPERATIONAL AND FINANCIAL UPDATE FOR THREE MONTHS ENDING 30 NOVEMBER 2021; UPDATE REGARDING THE DISPOSAL OF ISLAND BUSINESS PARK AND BLACKHEATH PARK 1. INTRODUCTION We are pleased to provide a high-level update for the three months ending 30 November 2021 (“Q3”) for the financial year ending 28 February 2022. Management has continued to successfully navigate Spear through the pandemic environment and continued executing its hands-on and active asset management approach. Spear’s Western Cape specialisation has been key to its financial and operational achievements for the year to date. Proximity to portfolio assets has been a strategic and competitive advantage during the year ensuring tenant and rental preservation. As announced on SENS the disposal of the Double Tree by Hilton, Cape Town is unconditional and will result in Spear having zero exposure to variable income producing assets by the financial year ending 28 February 2022, ahead of what was announced during the interim results presentation for the 6 month period ended 31 August 2021. Whilst the macro-economic conditions remain extremely challenging, management remains intently focussed on the execution of its strategic asset management objectives focussed on maintaining high levels of rental recoveries and occupancy percentages across the various asset types. Spear’s core portfolio remains of a high-quality, defensive, and positioned to take advantage of growth opportunities in the Western Cape. Operational performance across the portfolio has been robust and in line with management’s forecast and in certain instances exceeded management’s expectations, in particular in the letting up of vacant space within the portfolio. Renewal negotiations and finalisations have continued to remain in line with management’s expectations, limiting significant negative rental reversions at portfolio level. The trading environment has shown a noticeable improvement since Spear’s interim results announcement for the 6 months ended 31 August 2021 irrespective of the 4th infection wave muting a growing hospitality and tourism recovery path. Management believes that the Western Cape, and Cape Town Metropole in particular, will lead the recovery of demand for rental & hospitality units compared to the rest of South Africa, given the pre-pandemic low vacancy levels across the real estate sector in the Western Cape, scarcity of supply and the pending business on the books for hotel accommodation once unrestricted travel recommences. Management welcomes the news that South Africa has once again been removed from travel red lists permitting international tourism to flow into South Africa. Both the balance sheet and income statement of Spear remain in a healthy state as trade receivables continue to reduce on a consistent basis and management’s loan to value (“LTV”) reduction roadmap starts to bear fruit together with the Company’s hospitality exit. Spear’s consistent and sustainable cashflows across the portfolio have continued to underpin the financial and operational performance of the business, as Spear navigates back towards pre-pandemic rental recovery rates, occupancy rates and financial performance. 2. OPERATIONAL UPDATE FOR THREE MONTHS ENDING 30 NOVEMBER 2021 Sectoral Update: Industrial: Spear’s industrial portfolio has continued to show resilience with rental demand outstripping supply as portfolio assets are located in highly attractive nodes and rental levels are in line with market demand. The lion’s share of the industrial portfolio remained unaffected by the pandemic environment for the year to date. Lease renewals have remained robust for the year to date with limited rental reversions being absorbed. Convenience Retail: Spear’s convenience retail portfolio has met every milestone set by management for the year to date. None of Spear’s retail assets are reliant on any form of local or international tourism to support its trading success. 41% of the retail portfolio’s gross lettable area (“GLA”) is occupied by national tenants on long dated leases and have traded successfully for the year to date despite the variety of alert level adjustments. Spear’s open air convenience retail assets have reported month on month improvements in footfall and tenant turnovers. Commercial: Spear’s commercial portfolio was negatively affected by the pandemic, giving rise to vacancy creep. Management deployed aggressive marketing strategies to mitigate against further vacancy creep since the interim results for the 6 months ended 31 August 2021. Notable and very positive inroads have been made in letting up a variety of office units post 31 August 2021. Spear’s commercial assets remain attractively positioned in the market from a locality and overall value proposition perspective. Management remains confident that further inroads will be made in vacancy compression as more and more businesses commence return to office programs. Renewal activity has been positive during the period despite the current trading environment. Hospitality: Spear’s hospitality exit has commenced with the disposal of the Double Tree by Hilton, Cape Town. Trading conditions have improved both in the form of accommodation and events. The Capital, 15 on Orange, which is now under a fixed income lease has reported positive trading across all revenue centres since opening the hotel under the new brand. The Double Tree by Hilton, Cape Town has been the beneficiary of increased demand for business and travel accommodation together with improved food and beverage and conferencing business. Industrial Commercial Retail Hospitality Total Total GLA 260 229 134 346 48 695 28 048 471 318 m² Vacancy % 1.75 4.19 0.58 - 6.52 of total Sector 3.17 14.70 5.65 - - vacancy % Reversion (2.98) (6.26) (1.17) 221.27 14.51* % YTD Nov 2021 WALE 21.37 27.15 27.08 49.66 25.76 (months) Average 6.74 6.27 6.22 5.00 6.37 escalation % Revenue 46 462 64 525 21 412 8 406 141 043 Billed Q3 (R’000) Revenue 136 344 192 165 63 158 19 846 411 750 Billed YTD Nov 2021 (R’000) Collections 96.55 97.67 96.51 98.29 97.34 YTD Nov FY22 % *Reversions excluding hospitality is negative 5.85% for November 2021 across the portfolio 3. FINANCIAL UPDATE Group funding R257 000 000 of variable group debt has been refinanced in Q3 for the financial year ending 28 February 2022. Fixed debt to the value of R225 000 000, expiring in the financial year ending 28 February 2023 was extended for a further 12 months to the financial year ending 29 February 2024 with 68 basis points saving on the current fixed rate at the extended date. A further R51 000 000 of variable debt expiring in FY23 is in final stages of being renewed and will be renewed on fix terms, effective during the first quarter of the financial year ending 28 February 2023. R100 000 000 of the refinanced debt relates to the disposal of Doubletree by Hilton, Cape Town, as announced on SENS 15 November 2021 and will effectively be settled through the share sale on the effective date of the transaction. The net proceed of the disposal will be used to settle variable debt to the value of R30 000 000. Post the implementation of the disposal of Doubletree by Hilton, Cape Town, the expected group LTV at the financial year ending 28 February 2022, before any year end valuations, will be 44.84% with a fixed debt ratio of 59.88% with a weighted average fix expiry of 31 months. As at November As at 31 August 2021 2021 Weighted average variable Months 27 31 expiry Weighted average fix expiry Months 34 34 Weighted average interest % 7.06 7.01 rate Weighted average variable % 5.72 5.62 rate Weighted average fixed rate % 8.34 8.34 Covenants As at November 2021 As at 31 August 2021 Loan to value 46.56%* 45.91% Interest cover ratio 2.16 times 2.15 times *Group LTV increased post the payment of interim distributions from cash reserves as disclosed on page 28 on the interim results for the 6 months ended 31 August 2021 but is lower than the forecast per the LTV forecast provided in the interim results for the 6 months ended 31 August 2021. Cash Collections and Cash Availability Spear group’s collections remain strong and post the distribution payment for the interim 6 month period ended 31 August 2021, the group has R158 000 000 cash availability. The positives collections and the increasing cash availability will support the group pay- out ratio of between 85% and 95%. Group Expense Ratio As at 30 November 2021 the SA REIT – cost to income ratio was 43.55% (HY22 43.13%) and the SA REIT administrative cost to income ratio was 6.06% (HY22 6.86%). 4. UPDATE REGARDING THE DISPOSAL OF ISLAND BUSINESS PARK AND BLACKHEATH PARK Shareholders are referred to the announcement released by Spear on SENS on 27 May 2021, advising shareholders that Spear had concluded two sale of letting enterprise agreements (“Sale of Letting Enterprise Agreements”) with Inospace 5 Proprietary Limited (“Purchaser”) in terms of which Spear agreed to dispose of the properties known as Island Business Park and Blackheath Park, respectively (“Properties”) to the Purchaser, for a combined disposal consideration of R160 000 000 (“Disposal”). Shareholders are hereby advised that, notwithstanding the successful conclusion of the due diligence investigation, the Purchaser was unable to fulfil the conditions precedent relating to obtaining pre-sales of sectional title units to be created over the Properties, equal to 30% of the Purchaser’s projected sales value in respect of each Property. As such, all the conditions precedent to the Disposal have not been met and, accordingly, the Sale of Letting Enterprise Agreements have lapsed. 5. DPS GROWTH REMAINS ON TRACK Spear remains on track to achieve management’s guidance set out in the interim results of the 6 month period ended 31 August 2021. Management’s guidance remains a distribution per share growth of 6% – 8% for FY2022 based on an 80% pay-out ratio. Management will closely monitor the cash collections scenario closer to financial year end to determine the final pay out ratio for the FY22. All forward looking statements in this announcement have been based on the following assumptions: • continuous recovery of the macroeconomic environment post- pandemic; • no further extensive and deeply prohibitive lockdowns; • lease renewals are concluded per the Company forecast; • no major tenant failures occur for the balance of the financial year; • tenants will maintain their ability to settle current rental, historical deferments together with rising cost of occupancy; • South Africa remains off travel red lists resulting in inbound travel recovery; • return-to-office momentum increases as vaccination percentages increase nationally; • no significant periods of load shedding or national grid failures; and • no major civil unrest within the Western Cape and South Africa. Shareholders are advised that the information in this announcement has not been audited, reviewed or otherwise reported on by the Company’s external auditors. Any changes in the above assumptions may affect management’s expectations Cape Town 17 December 2021 Sponsor PSG Capital Date: 17-12-2021 04:50:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.