TIDMGR1T
RNS Number : 3791W
Grit Real Estate Income Group
18 August 2020
GRIT REAL ESTATE INCOME GROUP LIMITED
(Registered by continuation in the
Republic of Mauritius)
(Registration number: C128881 C1/GBL)
LSE share code: GR1T
SEM share code: DEL.N0000
ISIN: MU0473N00036
LEI: 21380084LCGHJRS8CN05
("Grit" or the "Company " or the "Group")
RENT COLLECTION AND PORTFOLIO PERFORMANCE UPDATE,
DIRECTORS APPOINTMENT AND CONTINGENT LIABILITY UPDATE
The board of directors (the "Board") of Grit Real Estate Income
Group Limited is pleased to provide the following rent collection
and business update.
The Group's high-quality property assets have a weighted average
lease expiry ("WALE") of 5.14 years, a weighted average contracted
lease escalation of 2.7% per annum and are underpinned by a wide
range of blue-chip multi-national tenants across a variety of
sectors. Grit's property portfolio comprises a total of 47 assets
(including 20 properties held in Letlole La Rona in Botswana) with
rentals predominantly collected monthly, of which 94.1% are
collected in US$, Euro or pegged currencies.
HIGHLIGHTS
-- For the period March to July 2020, the Group has collected
85.4% of the value of its attributable contracted rental revenue,
which includes prepaid rent collected in the period.
-- Short term concessions, and hence loss of revenue, have been
agreed on 7.9% of Grit attributable contracted rental revenue over
this period, primarily in the retail segment.
-- Short term payment deferrals for the period of March to July
2020 have been agreed on 14.7% of Grit's attributable contracted
rental revenue and are now due in the Company's next financial year
and beyond, driven primarily by Mauritian government legislation in
respect of the hospitality sector assets.
-- David Love appointed as Senior Independent Director .
Bronwyn Corbett, CEO of Grit Real Estate Income Group Limited,
commented:
"The Group continues to focus on delivering the investment
strategy and further strengthening and defending its current
position. The JSE de-listing and primary listing and focus on the
London Stock Exchange listing will provide the Company deeper and
wider access to capital markets to execute on its attractive growth
pipeline to deliver further value to our shareholders.
Grit's earnings and dividends are underpinned by the Company's
secure, diversified and growing index-linked income streams as well
as attractive capital appreciation from across our high-quality
portfolio. Covid-19 caseload has been significantly lower in Africa
than the rest of the world but the full impacts, including
economic, remain uncertain. The Company is continuing to
successfully focus on strong rent collections and tenant
initiatives."
PORTFOLIO STABILISING AMIDST COVID-19 IMPACTS
-- The corporate accommodation, industrial and office sector
assets, which collectively represent approximately 48% of Grit's
total net asset value as at 31 December 2019, continues to see only
limited impact to date, with collection of over 100% of contracted
revenue since March 2020.
Hospitality sector
-- Hospitality assets constituted 18.8% of Grit's total net
asset value as at 31 December 2019. The Company does not have
direct hospitality exposure as a result of its fully servicing
triple net lease rental contracts with international leisure
operators and the lease contracts are underwritten by the holding
companies of the respective operators.
-- Rent collections in Mauritius were postponed by government
legislation for six months until September 2020, at which time
normal rentals resume and outstanding balances accumulated over the
period to September become collectible over the subsequent 16
months.
-- New Mauritius Hotels Group (Beachcomber) resumed rental
payments on 1 August 2020. By mutual agreement, payment terms under
the lease have been amended to payable three months in arrears.
-- The Lux Island Resorts Group is expected to resume rental
payments from 1 September 2020, and outstanding rental payments
will be collected through the period to December 2021.
-- The recent oil spill off the south east coast of Mauritius
has no direct impact on the Group's hospitality assets, which are
located on the north east of Mauritius.
-- The rental deferral agreed with Club Med remains in place up
to 31 December 2020 as previously communicated.
-- The Board remains confident in the creditworthiness of the
Group's hospitality partners and their respective holding companies
given their strong competitive positioning and as a result of
strong government support programmes in both Mauritius and
France.
Retail sector
-- Retail assets constituted 32.1% of Grit's total net asset value as at 31 December 2019.
o The most significant impact has been in AnfaPlace shopping
mall, which faced severe disruption as a result of its closure on
19 March 2020. Trading resumed on 25 June 2020 with promising
footfall statistics since that date. The mall is the largest asset
in the portfolio and makes up circa 10% of Grit attributable Group
revenue as at 31 December 2019.
o The three-month closure will result in lower revenues in the
Company's current financial year as a result of rental concessions.
To ensure the long-term success of the mall, Grit is providing a
combination of further concessions and rent deferrals to tenants
for the period through to 31 December 2020, as the mall returns to
normalised levels of trade.
o In February 2020, the Company announced that a small number of
non-performing tenants had been evicted. Covid-19 lockdowns have
resulted in delays in filling this space, and along with start date
delays of new incoming tenants, reported vacancy statistics as at
30 June 2020 will rise from the reported figures at 31 December
2019.
o The Board remains positive on the medium-term prospects for
the mall but now expects the recovery trajectory, post its relaunch
in September 2019, to be delayed through the Company's next
financial year.
o The Company announced on 12 February 2020 the conditional
acquisition of a new OPCI / REIT vehicle in Morocco, and its
intention both to introduce third party investors into its existing
assets, including AnfaPlace, and to reduce exposures to Moroccan
retail sector over the medium term.
SOLID BALANCE SHEET
-- Grit is continuing to engage with all of its lenders, who
have confirmed their continued support.
-- As a precautionary measure, the Company continues to engage
with its lenders on extension to LTV and interest cover covenants
and interest holidays on loans attached to Covid-19 impacted
properties, if required.
-- The Group's lowest currently imposed LTV covenant stands at
53%. The Board expects downward pressures on its 30 June 2020
property valuations, predominantly in its retail and hospitality
assets, but expects to maintain sufficient covenant headroom after
adjusting for these impacts.
DRIVE IN TRADING REFINANCING
-- By virtue of the Group's historic listing on the Johannesburg
Stock Exchange, and in conjunction with its largest shareholder,
the South African Government Employee Pension Fund ("GEPF")
represented by the Public Investment Corporation ("PIC"), the
Company facilitated its black economic empowerment and
transformation partner, Drive in Trading ("DIT"), in the
acquisition of 23.25 million Grit shares in June 2017.
-- DIT secured a loan facility, with an initial break clause on
14 August 2020, from the Bank of America N.A ("BoAML") with the PIC
providing a guarantee to BoAML in the form of a Contingent
Repurchase Obligation ("CRO"). Separately, Grit indemnified the PIC
for up to 50% of any potential losses suffered by PIC, capped at
US$17.5 million.
-- Although DIT is in advanced stages of refinancing its loan
facility, PIC is expected to assume the position of lender to DIT
following the expiry of the initial BoAML loan facility and
exercise of the CRO by BoAML. Whilst reserving their rights, the
PIC has advised Grit that it does not intend calling on the Grit
guarantee at this time, giving DIT the opportunity to conclude its
discussions with potential lenders. These discussions are
anticipated to conclude before the end of September 2020, but this
timeline may be extended. Further updates will be provided in due
course.
-- The contingent liability is accounted for in Grit's accounts
under "Other Financial liabilities" at a fair value of
USD$1,052,441 (31 December 2019). The movement in mark to market
valuation is expected to result in an additional charge for the 30
June 2020 financial year end.
CHANGES TO THE BOARD
After the passing of Ian Macleod in June 2020, the Board
assessed the various vacancies and suitability of existing members
. The following appointments have therefore been made:
-- On 24 July 2020 Catherine McIlraith, an Independent
Non-Executive Director ("INED"), was appointed to the Nomination
Committee;
-- On 4 August 2020 David Love was appointed as Senior
Independent Director and was also appointed to the Investment
Committee; and
-- On 4 August 2020 Catherine McIlraith was appointed as the
Chairman of the Remuneration Committee. Catherine McIlraith remains
chair of the Audit Committee.
Following these appointments, the Board is satisfied with the
composition of the various sub committees, however it is the
intention of the Board to appoint an additional INED to the Board
and will make a further announcement in due course.
JSE DE-LISTING AND LONDON STOCK EXCHANGE GBP QUOTE
-- On 29 July 2020, the Company completed its de-listing from
the Main Board of the JSE Limited (the "JSE") and is now primary
listed on the LSE, with a secondary listing on the Stock Exchange
of Mauritius Ltd ("SEM").
-- On 3 August 2020, the Company's LSE stock quote was changed
to Sterling, which is expected to provide broader access to
investors in the United Kingdom and should result in improved
liquidity over the medium term.
-- The Group is intending to move to the premium listing segment
on the LSE following the JSE de-listing and to facilitate the
Group's eligibility for inclusion in the FTSE UK Index Series, the
Group is further exploring the possibility of redomiciling its
corporate seat to Guernsey.
By Order of the Board
18 August 2020
FOR FURTHER INFORMATION, PLEASE CONTACT:
Grit Real Estate Income Group Limited
Bronwyn Corbett, Chief Executive Officer +230 269 7090
Darren Veenhuis, Head of Investor Relations +44 779 512 3402
Maitland/AMO - Communications Adviser
James Benjamin +44 20 7379 5151
Jason Ochere Grit-maitland@maitland.co.uk
finnCap Ltd - UK Financial Adviser
William Marle / Giles Rolls / Matthew Radley (Corporate
Finance) +44 20 7220 5000
Mark Whitfeld / Pauline Tribe (Sales) +44 20 3772 4697
Monica Tepes (Research) +44 20 3772 4698
Perigeum Capital Ltd - SEM Authorised Representative and
Sponsor
Shamin A. Sookia +230 402 0894
Kesaven Moothoosamy +230 402 0898
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), while its listing on the SEM is
termed as a secondary listing (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 Corbett (Chief Executive
Officer)*, Leon van de Moortele (Chief Financial Officer)*, Sir
Samuel Esson Jonah+, Nomzamo Radebe, Catherine McIlraith+, David
Love+ and Bright Laaka (Permanent Alternate Director to Nomzano
Radebe).
(* Executive Director) (+ independent Non-Executive
Director)
Company secretary : Intercontinental Fund Services Limited
Registered address : c/o Intercontinental Fund Services Limited,
Level 5, Alexander House, 35 Cybercity, Ebène 72201, Mauritius
Registrar and transfer agent (Mauritius) : Intercontinental
Secretarial Services Limited
UK Transfer secretary : Link Asset Services Limited
SEM authorised representative and sponsor : Perigeum Capital
Ltd
This notice is issued pursuant to the LSE Listing Rules, Article
19 of MAR, SEM Listing Rule 11.3 and Rule 5(1) of the Securities
(Disclosure Obligations of Reporting Issuers) Rules 2007. The Board
accepts full responsibility for the accuracy of the information
contained in this communiqué.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
UPDGZGMRRNZGGZM
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