Grit Real Estate Income Group annual financial results for the year ended 30 June 2018

Posted On Friday, 28 September 2018 16:31 Published by
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Grit, the only listed Africa-focused income distribution group to offer international property investors access to high growth opportunities in thriving African economies,  outside of South Africa, continued on its strong growth trajectory, reporting solid financial results for the year ended 30 June 2018.

 Bronwyn-Corbett-CEO-Grit

Grit significantly diversified its shareholder base following its successful listing on the London Stock Exchange on 31 July 2018 in which it raised US$132.2 million. New UK investors now hold 12% of the Company’s issued share capital via the London Stock Exchange. Investors on the Stock Exchange of Mauritius hold 38% and investors on the JSE account for the remaining 50%.

The Company declared a final distribution of US$6.12 cents per share, bringing the total dividend for the year to US$12.19 cents per share. This represents an 8.5% annualised dividend return (based on last issue price). The Company’s EPRA* NAV increased by 6% as a result of positive independent revaluations across the portfolio. *(See note on EPRA below)

“This is our ninth consecutive dividend in line with guidance. The perception around property investment on the continent outside of South Africa is continuously gaining positive momentum, both internationally and on the JSE.”

“The additional transparency and benchmarking against EPRA reporting guidelines as a result of the London listing has significantly raised our profile internationally, allowing us to introduce several large, long-term international shareholders to the Company. We will in due course seek a conversion to a ‘premium listing’ on the LSE, which is regarded as the international gold standard for governance, to which investors attach a premium,” commented CEO and founder member Bronwyn Corbett.

Proceeds of the capital raised were primarily deployed towards the Company’s acquisition pipeline in Ghana and Mozambique. Post period end, the portfolio increased by 41.1% from US$490.4 million to US$696.8 million following the successful acquisition of interests in several office assets in Accra, Ghana as well as the conclusion of the acquisition of Acacia Estate, a corporate accommodation asset leased to an embassy in Maputo, Mozambique. The Company targets a portfolio value of US$829.5 million for its 2019 financial year, subject to conclusion of anticipated pipeline transactions.

“Our entry into Ghana further diversifies the regional exposure of our portfolio and the additional economies of scale allow us to significantly reduce operating costs,” explained Corbett. “We also mitigated our Euro exposure by decreasing Grit’s net Euro position through refinancing the group debt facilities in Euro. This not only provides a hedge to our Euro income generating assets, but also lowers the average cost of debt,” she added.

Grit’s operational expenses as a percentage of income reduced significantly during the period to 16.5%, down from 28.4% reported in the prior financial year. The Company continued with its multi-banked strategy, reducing its weighted average cost of debt from 5.78% in the prior year to 5.75%. Interest cover increased from 1.8% to 2.1%.

Debt currency exposure is 59.9% to the US Dollar, 39.2% to the Euro and 0.9% to Mozambican Meticals. 64.5% of investment currency exposure (including pegged currencies) is US Dollar denominated and 35.5% are Euro based. 

During the reporting period, Grit has reached a market capitalisation and liquidity levels that have already resulted in its inclusion in certain indices. The equity raise as part of the LSE listing places it well for additional index inclusion, which is expected to play a role in the rerating of the share price. 

The Company is a constituent of the SEM-10 Index as well as the S&P African Frontier (Global) Index. It is well positioned to achieve the benchmark for inclusion into the FTSE/JSE All Share Index that will qualify it for the FTSE/JSE All Property Index and Listed Property Index.

In London, Grit expects to qualify for the FTSE Frontier Index Series and the MSCI Frontier Markets and Emerging Frontier Markets indices over time.

“We have significant headroom for further growth and to reduce debt,” concluded Corbett. “Going forward, our focus will be on restructuring debt to obtain a lower blended rate, as well as on leveraging our existing operational footprint to access yield accretive acquisitions underpinned by blue-chip tenancies.”

-  8.5% annualised dividend return (based on last issue price)
-  6% growth in EPRA NAV
-  Weighed average cost of debt reduced to 5.75% from 5.78% in prior financial year
-  Operational expenses as percentage of income reduced to 16.5% (FY17:28.4%)
-  London main board listing brings additional transparency and benchmarking against EPRA standards

Last modified on Friday, 28 September 2018 16:41

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