GRIT REAL ESTATE INCOME GROUP LIMITED (Registered in Guernsey) (Registration number: 68739) LSE share code: GR1T SEM share codes (dual currency trading): DEL.N0000 (USD) / DEL.C0000 (MUR) ISIN: GG00BMDHST63 LEI: 21380084LCGHJRS8CN05 ("Grit" or the "Company" or the "Group") | |
ABRIDGED UNAUDITED CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2023
Grit Real Estate Income Group Limited, a leading Pan-African real estate company focused on investing in, developing and actively managing a diversified portfolio of assets underpinned by predominantly US Dollar and Euro denominated long-term leases with high quality multi-national tenants, today announces its results for the six months ended 31 December 2023.
Bronwyn Knight, Chief Executive Officer of Grit Real Estate Income Group Limited, commented:
“Grit’s strategy continues to focus on quality real estate assets with strong ESG credentials and long leases in hard currency to a resilient and diverse multinational customer base across the African continent. Evidence of the Grit 2.0 strategy and asset recycling, away from non-core sectors and into resilient and impact focused real estate, is increasingly becoming visible in our results and is expected to accelerate in the coming years. We are delivering on our cost control targets and are demonstrating disciplined capital allocation through our debt reduction targets and selected risk mitigated development opportunities and are today pleased to announce the resumption of dividends paid from cash operating earnings.”
Financial and Portfolio highlights
| 6 Months ended 31 Dec 2023 | 6 Months ended 31 Dec 2022 | Increase/ Decrease |
Adjusted EPRA earnings per share2 | US$1.03 cps | US$1.02 cps | +1.0% |
Distributable earnings per share1 | US$2.07 cps | US$2.56 cps | -19.1% |
Dividend per share | US$1.50 cps | US$2.00 cps | -25.0% |
Property portfolio net operating income from continuing operations (proportionate9) | US$29.7m | US$25.7m | +15.6% |
EPRA cost ratio (including associates) 3 | 14.5% | 12.7% | +1.8 ppts |
Net finance costs | US$18.2m | US$16.5m | +10.3% |
Revenue earned from multinational tenants7 | 79.0% | 85.9% | -6.9 ppts |
Income produced in hard currency8 | 95.0% | 92.4% | +2.6 ppts |
| As at 31 Dec 2023 | As at 30 Jun 2023 | Increase/ Decrease |
EPRA NRV per share2 | US$68.1 cps | US$72.8 cps | -6.4% |
Group LTV | 47.6% | 44.8% | +2.8 ppts |
Total Income Producing Assets4 | US$847.9m | US$862.0m | -1.6% |
Contractual rental collected | 93.9% | 108.4% | -14.5 ppts |
WALE5 | 4.7 years | 4.4 years | +0.3 years |
EPRA portfolio occupancy rate6 | 95.5% | 93.6% | +1.9 ppts |
Grit proportionately owned lettable area (“GLA”) | 301,306m2 | 298,962m2 | +2,344m2 |
Weighted average annual contracted rent escalations | 3.1% | 3.0% | +0.1 ppts |
Summarised results commentary:
• | The Board is pleased to announce the resumption of the payment of dividends and has today declared US$1.50 cents per share ordinary dividend from cash operating earnings (Distributable earnings). |
• | We benefit from having built a business focused on quality real estate assets with strong ESG credentials and long leases to a resilient and diverse customer base that comprises more than 79% of strong multinational and investment grade tenants. Contractual lease escalations, which are predominantly inflation-linked, and new assets producing income, have contributed to growth in NOI in this reporting period and into the future. We now have 33 assets across 7 sectors with 95.0% of our leases in hard currency providing a strong foundation to our income generation and a resilient platform from which to pursue growth opportunities through active management, sector focused development substructures and external revenue generation from our professional services. |
• | For the purposes of these interim financials, Gateway Real Estate Africa Limited (“GREA”) and Africa Property Development Managers Limited (“APDM”) have been accounted for as joint ventures. Post recent amendments to the shareholders’ agreements, which now result in Grit exercising control over both GREA and APDM, the Board considers 1 January 2024 the most appropriate date to commence consolidation. |
• | EPRA net reinstatement value (“NRV”) per share of US$68.1 cents per share (30 June 2023: US$72.8 cents per share), is predominantly driven by a -2.7% fair value adjustment made on investment properties during the period, which was partially offset by increased capex and asset investment. This culminated in an overall decrease of 1.0% in the group’s proportionate share of property values (including GREA associates). |
• | Property portfolio net operating income (Grit proportionate ownership) increased 0.6%. Excluding the impact of disposals (Beachcomber and LLR from the prior year), NOI from continuing operations increased 15.6% and the Grit 2.0 recycling strategy is becoming increasingly evident within the composition of Group NOI. Diplomatic housing, healthcare and data centre segments have replaced earnings disposed of in the hospitality segment. |
• | Group Administrative costs reduced 15.4% in the six months to 31 December 2023 and remains on track to achieve the US$4.0 million cost reduction target (-19%) for the full year to 30 June 2024. |
• | Group WACD increased to 9.62%, resulting in a US$1.5 million increase (+8.2%) in finance costs for the six-month period. The Group has interest rate hedges amounting to US$200 million worth of notional debt. In addition, the Company is targeting to reduce the most expensive debt balances, and post consolidation, amalgamate individual GREA facilities within the current syndication. |
• | Final regulatory approvals for the unwinding of the Drive in Trading Black empowerment structure (“DiT”) have been received (see prior announcements). The Company will take direct ownership of its proportionate number of DiT Security Shares in exchange for making the US$17.5 million Guarantee Agreement payment to the GEPF by 30 March 2024, the implementation of which is currently under review. |
Post period end
• | On 16 February 2024, shareholders approved the disposal of interests in Bora Africa and Acacia Estates to GREA, which will form part of Grit’s equity contribution to the GREA $100 million recapitalisation that is expected to conclude in March 2024. The disposal of properties at or close to book value achieves the Board’s strategy of additional asset recycling and further reinforces the Group’s audited net asset value. By concluding the GREA capital raise with these proceeds, the Group (including GREA) receives a cash injection of US$48.5 million from the PIC’s subscription at NAV. This equity will initially be utilised to reduce the Group’s higher cost debt. Over the medium term these funds are expected to be redrawn and invested by GREA, upon careful capital allocation assessment, into risk mitigated and accretive development projects that are expected to meaningfully contribute to ESG impact, accelerated NAV growth and fee income generation to the Group as is contemplated under the Grit 2.0 strategy. |
Notes
1 | Various alternative performance measures (APMs) are used by management and investors, including a number of European Public Real Estate Association ("EPRA") metrics, Distributable Earnings, Total Income Producing Assets and Property portfolio net operating income. APMs are not a substitute, and not necessarily better for measuring performance than statutory IFRS results and where used, full reconciliations are provided. |
2 | Explanations of how EPRA figures and Distributable earnings per share are derived from IFRS are shown in note 16. |
3 | Based on EPRA cost to income ratio calculation methodology which includes the proportionately consolidated effects of associates and joint ventures. |
4 | Includes controlled Investment properties with Subsidiaries, Investment Property owned by Associates and Joint Ventures, other assets owned by associates and joint ventures, deposits paid on Investment properties and other investments, property plant and equipment, intangibles, and related party loans. |
5 | Weighted average lease expiry (“WALE”). |
6 | Property occupancy rate based on EPRA calculation methodology - Includes associates and joint ventures. |
7 | Forbes 2000, Other Global and pan African tenants. |
8 | Hard (US$ and EUR) or pegged currency rental income. |
9 | Property net operating income (“NOI”) is an APM’s and is derived from IFRS revenue and NOI adjusted for the results of associates and joint ventures and further includes the results of the GREA associates. A full reconciliation is provided in the financial review section below. In deriving the property net operating income from ongoing operations, the net operating income related to Beachcomber hotels and the LLR (which were disposed of in FY2023) were excluded from the comparative number in order to provide a comparative for only the ongoing operations. |
FOR FURTHER INFORMATION, PLEASE CONTACT:
Grit Real Estate Income Group Limited | |
Bronwyn Knight, Chief Executive Officer | +230 269 7090 |
Darren Veenhuis, Investor Relations | +44 779 512 3402 |
| |
CavendishCapital Markets Limited – UK Financial Adviser | |
James King/Teddy Whiley (Corporate Finance) | +44 20 7220 5000 |
Justin Zawoda-Martin / Daniel Balabanoff / Pauline Tribe (Sales) | +44 20 3772 4697 |
Perigeum Capital Ltd – SEM Authorised Representative and Sponsor | |
Shamin A. Sookia | +230 402 0894 |
| |
Capital Markets Brokers Ltd – Mauritian Sponsoring Broker | |
Elodie Lan Hun Kuen | +230 402 0280 |
NOTES:
Grit Real Estate Income Group Limited is the leading Pan-African real estate company focused on investing in, developing 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 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 www.grit.group.
Directors:
Peter Todd (Chairman), Bronwyn Knight (Chief Executive Officer) *, Gareth Schnehage (Chief Financial Officer) *, David Love+, Catherine McIlraith+, Jonathan Crichton+, Cross Kgosidiile, Lynette Finlay + and Nigel Nunoo+.
(* Executive Director) (+ independent Non-Executive Director)
Company secretary: Intercontinental Fund Services Limited
Registered office 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
SEM authorised representative and sponsor: Perigeum Capital Limited
UK Transfer secretary: Link Assets Services Limited
Mauritian Sponsoring Broker: Capital Markets Brokers Limited
This notice is issued pursuant to the FCA Listing Rules, 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.
A Company presentation for all investors and analysts via live webcast and conference call
The Company will host a live webcast and conference call on Wednesday, 28 February 2024 at 13:00 Mauritius time / 09:00 UK time / 11:00 SA time via the Investor Meet Company platform, with the presentation being open to all existing and potential shareholders.
Pre-registration is advised via:
https://www.investormeetcompany.com/grit-real-estate-income-group-limited/register-investor
Investors who already follow Grit Real Estate Income Group Limited on the Investor Meet Company platform will automatically be invited. A playback will be accessible on-demand within 48 hours via the Company website: https://grit.group/financial-results/
CHIEF EXECUTIVE OFFICER’S STATEMENT
Introduction
Grit is a prominent, woman-led real estate platform providing property investment and associated real estate services across the African continent. The Group recognises its role in transforming the design of buildings and developments for long-term sustainability and focuses on impact, energy efficiency and carbon reduction across the portfolio. Additionally, the Group prides itself on achieving more than 40% of women in leade
