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Grit continues it’s expansion and targets West Africa

Grit's team on the occasion of the listing of Grit on the London Stock Exchange

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Grit continues it’s expansion and targets West Africa

Peter Todd,
Chairman of Grit Real Income analyses the Group’s financial performance for the
year ending 30 June 2018. He also looks at the expansion and diversification projects
of the Group, particularly in West Africa.

Grit
continued to deliver against its stated growth objectives of creating a
diversified property portfolio of hard currency based assets across carefully
selected African countries. A month after the close of the June financial year‐end,
Grit distinguished itself as the first Mauritian‐listed company to list on the
main market of the London Stock Exchange (“LSE”), thus providing access to
additional capital to fund the group’s growth aspirations. The Company now
holds primary listings on both the LSE and the Johannesburg Stock Exchange (“JSE”),
with a secondary listing on the Stock Exchange of Mauritius (“SEM”).

LSE
Listing and US$132.2 million Capital Raise

The Board
initiated a process more than a year ago to identify an optimal platform that
would position Grit for its next growth phase. The objective was to diversify
sources of equity funding and introduce new long‐term shareholders to the
Company.

This strategy was successfully executed as our LSE‐listing culminated with a gross equity raise of US$132.2 million, introducing fresh capital and strong support from a number of new international institutions. In preparation for the LSE admission, a number of adjustments to the historical financial information arose, mainly due to variations in the established practice of applying IFRS in different jurisdictions and aligning to international best practice.

Peter Todd, Chairman of Grit

In
compliance with best practice, as defined by the European Public Real Estate
Association (EPRA), Grit will now be disclosing EPRA NAV, earnings and metrics
(which include Company specific adjustments) in its financial results.

The EPRA underlying principle is that NAV reported in the financial statements under IFRS does not provide stakeholders with the most relevant information on the fair value of the assets and liabilities, within an ongoing real estate investment company, with a long‐term investment strategy. The objective of adjusted EPRA NAV is to therefore highlight the fair value of net assets held on an ongoing and longterm basis.

Financial
Performance

The Group continued to perform in line with market guidance, delivered a dividends return on the last issue price of US$1.43 of 8.5% (annualised) and a EPRA NAV growth of 6%. The LSE listing and successful capital raise will positively impact on the gearing with an expected reduction in loan to value (“LTV”) ratio from 51.4% to approximately 40% by June 2019. It should be pointed out that although Grit distributes income similar to a Real Estate Investment Trust (“REIT”) it does not have REIT status and is therefore taxed in each jurisdiction. Therefore, the use of gearing in certain jurisdictions is of paramount importance to provide appropriate tax shielding.

The overall
portfolio remains well‐tenanted at a 96.7% occupancy rate, with Anfa Place
Shopping Centre (Anfa) in Morocco, the Company’s largest asset by value,
providing significant upside potential following the completion of its
refurbishment and tenant optimisation initiatives.

Expansion
and Diversification

The Group continued making accretive acquisitions, further diversifying its asset base and regional exposure. During the period, Grit successfully expanded its portfolio into Ghana, the Company’s first expansion into West Africa when it acquired interests in Capital Place Building and secured the acquisitions of the 5th Avenue and CADS II building in the capital city, Accra. These acquisitions will complete in the 2019 year.

These
commercial office buildings are held under long‐term leases with multi‐national
companies and, in line with Grit’s strategy of forming strategic partnerships,
Grit’s interest has been part financed through the issue of equity at net asset
value. On completion, the Ghana portfolio will account for 16% of the enlarged
portfolio. The Company also expanded its portfolio in Mozambique, further
diversifying its asset base with the acquisition of an interest in an A‐grade
corporate residential estate. Acacia Estate, with state‐of‐the‐art security
features, leased to an international embassy and international oil company. The
asset is located in Costa do Sol, Maputo and has been completed following
financial year end.

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