Last checked at 16 Aug 2021 07:00
GRIT REAL ESTATE INCOME GROUP LIMITED (Registered in Guernsey) (Registration number: 68739) LSE share code: GR1T SEM share code: DEL.N0000 ISIN: GG00BMDHST63 LEI: 21380084LCGHJRS8CN05 ("Grit" or the "Company" and, together with its subsidiaries, the "Group") |
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OPERATIONAL AND PORTFOLIO UPDATE TO 30 JUNE 2021
The board of directors (the "Board") of Grit Real Estate Income Group Limited is pleased to provide the following operational and portfolio update to 30 June 2021.
Bronwyn Knight, CEO of Grit Real Estate Income Group Limited, commented:
"The Group is continuing to focus on further enhancing its strong rent collections and delivering value from our proactive tenant and asset management initiatives, despite the uncertainty caused by Covid-19. This has resulted in improving the collection rate for the six months to 30 June 2021 to 93.6%, from 91.4% at 31 December 2020, and reducing our portfolio vacancy rate to 5.3% at 30 June 2021, from 8.0% at 31 December 2020. We expect improved leasing activity, particularly at the Group's retail assets, to result in continued vacancy improvements over the remainder of 2021.
Our corporate accommodation, industrial and office sector assets remain materially unaffected to date, which collectively represent over 51% of Grit's economic interest in property assets at 31 December 2020.
We are encouraged to see Mauritian borders partially opened from 15 July 2021 with remaining border restrictions planned to be lifted from 1 October 2021, upon which the island's hospitality sector is expected to return to normal operations. Both of Grit's Mauritian hospitality tenants have received strong government support, including liquidity support, from the Mauritian Investment Corporation, which is now supporting the resumption of lease payments to Grit. Club Med has been granted lease concessions pertaining to Cap Skirring, Senegal resort for the period 1 January 2021 to October 2021, upon which time the resort is expected to reopen with the resumption of regular international flight arrivals to Senegal.
The Board remains confident of delivering superior total returns for our shareholders in the medium to longer term and is well positioned to capitalise on the significant recovery potential across its unique high-quality portfolio of properties leased to multinational tenants with rents collected predominantly in US$, Euro or pegged currencies. We also see significant further potential value creation from the assets and development pipeline within Gateway Real Estate Africa, in which Grit has an 19.98% equity interest."
The Board expects to provide an update on its financials and dividend guidance in early September 2021. Grit will publish its annual results for the year ended 30 June 2021 on Friday, 15 October 2021. As a result of the extended impact of Covid-19, timing of the recovery in property valuations across the portfolio remains uncertain, with further weakness in retail sector valuations expected for the year to 30 June 2021, although this is expected to be tempered by the valuations across our corporate accommodation, industrial and office sector assets, as well as our increasing confidence in the outlook for the remainder of 2021 in our hospital assets.
Resilient portfolio performing well
As at the 30 June 2021, the Group's high-quality property assets have a weighted average lease expiry ("WALE") of 4.8 years (June 2020: 5.1 years), a weighted average contracted lease escalation of 3.7% p.a. (June 2020: 2.7% p.a.) and are underpinned by a wide range of blue-chip multinational tenants across a variety of sectors. Grit's property portfolio comprises a total of 54 assets (including 26 properties held in Letlole La Rona in Botswana) with rentals predominantly collected monthly, of which 92.7% are collected in US$, Euro or pegged currencies.
Rent collection
· 103.8% of Grit attributable contracted rental revenue collected for the month of June 2021, improving the collection rate for the six months to 30 June 2021 to 93.6% (to 31 December 2020: 91.4%).
· For the financial year to June 2021, the Group has collected 92.5% of the value of its contracted rental revenue. Over this same period, the Group has provided rent concessions, resulting in reduced revenues of 5.6% and rent deferrals of a further 2.3% of contracted rental revenue.
| Office | Retail | Corp. Accom. | Hospitality | Light Industrial | Total July 2020 to June 2021 |
Contracted rent | 100% | 100% | 100% | 100% | 100% | 100% |
Rent deferrals | 0% | (0.3%) | 0% | (11.2%) | 0% | (2.3%) |
Rent concessions | (2.3%) | (8.9%) | (5.5%) | (6.5%) | 0% | (5.6%) |
Expected collection rate * | 97.7% | 90.8% | 94.5% | 82.3% | 100% | 92.1% |
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Actual Collection rate (as % of contracted rent) | 100.0% | 90.2% | 99.2% | 77.2% | 100.3% | 92.5% |
Movement in debtors balances (excl. agreed deferrals) | (2.7%) | 0.6% | (4.7%) | 5.1% | (0.3%) | (0.4%) |
* Expected collection value after adjusting for agreed rent deferrals and rent concessions.
EPRA vacancy
The Group's vacancy rate reduced to 5.3% at 30 June 2021 (31 December 2020: 8.0%) predominantly as a result of two new leases to Total in Commodity House Phase 1 and a number of leases signed in AnfaPlace Mall ("AnfaPlace") and the three retail malls in Zambia
The retail segment still accounts for over 75% of the reported Group vacancy, of which AnfaPlace is the predominant contributor. Strong leasing activity is expected to result in continued vacancy improvements over the remainder of 2021.
Office, corporate accommodation and light industrial sectors
Corporate accommodation, industrial and office sector assets, which collectively represent over 51% of Grit's economic interest in property assets at 31 December 2020, remain materially unaffected to date.
Grit has experienced limited tenant turnover in its Ghanaian office portfolio and continues to work with Vale in relation to their corporate accommodation needs in relation to a possible divestment of their mining operations in Mozambique.
Hospitality sector
Hospitality assets constituted 24.7% of Grit's economic interest in property assets at 31 December 2020. The Company does not have direct occupancy and operational cost exposure in the hospitality sector as a result of its fully servicing triple net lease rental contracts with international leisure operators.
· Mauritian borders were partially opened from 15 July 2021 to resort restricted tourist travel. The Mauritian government announced that the remaining border restrictions are to be lifted from 1 October 2021 upon which the island's hospitality sector is expected to return to normal operations. Both of Grit's Mauritian operators have received strong government support including liquidity support from the Mauritian Investment Corporation, which is now supporting the resumption of lease payments to Grit.
o The Lux Group are up to date on current rentals and have repaid over c.50% of arrears (rent deferrals granted in 2020) in respect of the Tamassa resort.
o The remaining three Mauritian hotels in Grit's portfolio are tenanted to the New Mauritius Hotels Group (NMH), owned by a large Mauritian conglomerate, who have resumed partial rental payments. Grit has granted limited tenant support through:
§ Providing cashflow deferrals of c.50% of monthly rental value, retrospectively applied for the period 1 December 2020 until the earlier of, reopening of the Mauritian borders without major restrictions or 1 December 2021. Such cashflow deferral will be collected over the subsequent 48-month period.
· Club Med have been granted lease concessions pertaining to Cap Skirring, Senegal resort for the period 1 January 2021 to October 2021 upon which time the resort is expected to reopen.
Retail sector
Retail assets constituted 22.9% of Grit's economic interest in property assets at 31 December 2020 and are split between an enclosed shopping mall in Morocco (AnfaPlace) and convenience shopping and service orientated strip malls.
· Grit has provided a combination of concessions and rent deferrals to tenants in AnfaPlace in anticipation of the asset returning to normalised levels of trade post the 2019 redevelopment and the more recent Covid disruptions. Morocco has increasingly lifted domestic restrictions resulting in encouraging Anfa footfall statistics in May, June and July 2021, which are substantially higher than 2020 comparatives and c.20% higher than pre 2019 redevelopment levels
· Further progress on lease renewals in Mukuba Mall, Zambia have been made after 88% of the leases expired in March 2020. As at 30 June 2021 the mall is 98.51% let.
· Cosmo Mall (Lusaka, Zambia) and Mall de Tete (Tete, Mozambique) continue to experience elevated levels of vacancies, however the Group expects improved leasing activity through to 31 December 2021.
Gateway Real Estate Africa Developments
Through its 19.98% equity interest in Gateway Real Estate Africa ("GREA"), the private African property development company co-founded by Grit, the Group has a minority interest in and exposure to GREA's accretive pipeline of development projects, assets and returns and has access to its attractive completed assets. Strong progress has been made by GREA in the 12 months to 30 June 2021, including:
· OBO Ethiopia corporate accommodation: Near completion of a 112-unit diplomatic residential building predominantly tenanted to OBO, a division of the US state department, which is now being readied for occupation in mid-September 2021. Estimated total project cost of c.US$54 million.
· OBO Kenya diplomatic accommodation: The construction on a 90-unit diplomatic apartment and town house community predominantly tenanted to OBO, a division of the US state department, commenced at the end of 2020 with expected completion date in Q1 2022. Estimated total project cost of c. US$48.5 million.
· Metroplex Shopping Mall, Uganda: Redevelopment of the prime 13,000m2 gross lettable area ("GLA") shopping mall in a prime location in Kampala in Uganda was completed in May 2021 at a cost of US$19.9 million. The prime shopping mall is now anchored by Carrefour and is positioned as a primary shopping destination, dining and entertainment hub.
· The Precinct, Mauritius: Commencement of a landmark c.10 000m2 GLA grade-A office development in Grand Baie in Q2 2021. Targeted completion Q4 2022. Estimated total project cost of c. US$31 million.
The Group sees significant further potential value creation from the assets and development pipeline within GREA going forward.
By Order of the Board
16 August 2021
The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU no. 596/2014) (as amended) as it forms part of UK domestic law by virtue of the European union (withdrawal) act 2018 and other implementing measures. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Grit Real Estate Income Group Limited |
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Bronwyn Knight, Chief Executive Officer | +230 269 7090 |
Darren Veenhuis, Chief Strategy Officer and Investor Relations | +44 779 512 3402 |
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Maitland/AMO - Communications Adviser |
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James Benjamin | +44 7747 113 930 |
| Grit-maitland@maitland.co.uk |
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finnCap Ltd - UK Financial Adviser |
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William Marle / Teddy Whiley (Corporate Finance) | +44 20 7220 5000 |
Mark Whitfeld / Pauline Tribe (Sales) | +44 20 3772 4697 |
Monica Tepes (Research) | +44 20 3772 4698 |
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Perigeum Capital Ltd - SEM Authorised Representative and Sponsor |
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Shamin A. Sookia | +230 402 0894 |
Kesaven Moothoosamy | +230 402 0898 |
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Capital Markets Brokers Ltd - Sponsor Broker |
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Neetusha Aubeeluck | +230 402 0285 |
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NOTES:
Grit Real Estate Income Group Limited is the leading pan-African real estate company focused on investing in and actively managing a diversified portfolio of assets in carefully selected African countries (excluding South Africa). These high-quality assets are underpinned by predominantly US$ and Euro denominated long-term leases with a wide range of blue-chip multi-national tenant covenants across a diverse range of robust property sectors.
The Company is committed to delivering strong and sustainable income for shareholders, with the potential for income and capital growth. The Company is targeting net total shareholder return inclusive of NAV growth of 12.0%+ p.a.*
The Company holds its primary listing on the Main Market of the London Stock Exchange (LSE: GR1T and a secondary listing on the Stock Exchange of Mauritius (SEM: DEL.N0000).
Further information on the Company is available at http://grit.group/
* These are targets only and not a profit forecast and there can be no assurance that they will be met. Any forward-looking statements and the assumptions underlying such statements are the responsibility of the Board of Directors and have not been reviewed or reported on by the Company's external auditors.
Directors: Peter Todd+ (Chairman), Bronwyn Knight (Chief Executive Officer)*, Leon van de Moortele (Chief Financial Officer)*, David Love+, Sir Samuel Esson Jonah+, Nomzamo Radebe, Catherine McIlraith+, Jonathan Crichton+, Cross Kgosidiile+ and Bright Laaka (Permanent Alternate Director to Nomzamo Radebe).
(* Executive Director) (+ independent Non-Executive Director)
Company secretary: Intercontinental Fund Services Limited
Company secretary address: Level 5, Alexander House, 35 Cybercity, Ebene, 72201, Mauritius
Registered address: PO Box 186, Royal Chambers, St Julian's Avenue, St Peter Port, Guernsey GY1 4HP
Registrar and transfer agent (Mauritius): Intercontinental Secretarial Services Limited
UK Transfer secretary: Link Asset Services Limited
Mauritian Sponsoring broker: Capital Markets Brokers Ltd
SEM authorised representative and sponsor: Perigeum Capital Ltd
This notice is issued pursuant to the FCA Listing Rules and SEM Listing Rule 15.24 and the Mauritian Securities Act 2005. The Board of the Company accepts full responsibility for the accuracy of the information contained in this communiqué.