Grit Real Estate Income Group Limited · LSE:GR1T
Grit Real Estate Income — FY2019 Earnings Presentation
43 slides from Grit Real Estate Income's earnings presentation, September 2019
Slide 1: FY2019 Results Presentation
FY2019 Results Presentation FOR THE YEAR ENDED 30 JUNE 2019
Slide 2: Proceedings
Proceedings Introduction Highlights BRONWYN CORBETT Chief Executive Officer Portfolio Overview BCom (Acc), CA(SA) Financial Review LEON VAN DE MOORTELE Outlook Chief Finance Officer Bcompt (Hons), CA(SA) Q&A Annexures Ι 2
Slide 3: Grit is a leading pan-African (ex South Africa) real estate company
Grit is a leading pan-African (ex South Africa) real estate company focused on investing in and actively managing a diversified portfolio of assets underpinned by predominantly US$ and Euro long-term leases with high quality multi-national tenants Grit has a full suite of on-the-ground capabilities
Slide 4: Evolution of the Grit Group Strategy
Evolution of the Grit Group Strategy A leading Pan-African (ex South Africa) real estate group focused on identifying, unlocking and delivering superior returns by focusing on three primary areas to achieve this: PROPERTY INVESTMENT Targeted 12% US$ total return* including secure and growing distrib
Slide 5: De-risked African Investment Strategy
De-risked African Investment Strategy talented people risk mitigants • Internal, strong & experienced executive • Sustainable hard currency income management • Political Risk Insurance • High quality new hires • Margins of safety • Continuous staff development • Proven ability to raise capital v qua
Slide 6: Grit Real Estate Income Group at a glance
Our High-quality Grit Real Estate Income Group at a glance FINANCIAL INVESTMENT HIGHLIGHTS Tenants HIGHLIGHTS Ongoing sectoral & geographic diversification to optimise returns & mitigate risk. Geographic Split (FY2019)1 40.6% c8.5% current US$ 3.8% PROPERTY LTV Mozambique dividend yield 6.8% Mauriti
Slide 7: Highlights
Highlights
Slide 8: FY2019 Highlights
FY2019 Highlights (as at 30 June 2019) Robust financial and operational performance Total Shareholder Return Net Property Income from Portfolio EPRA NAV2 Dividend Yield3 Performance1 growth4 12.4% US$1.471 SEM – 8.8% +25.97% JSE – 9.6% FY2018: US$1.457 LSE – 8.8% FY2018: +52.4% 1. Portfolio Performa
Slide 9: Peer Performance
Peer Performance Target of 12% total USD return for Grit for FY20 Dividend Yield (%) 12.0 10.0 9.5 8.7 8.0 6.0 3.9 4.1 3.9 3.7 4.0 2.0 0.0 Global Global Americas Americas Asia/Pacific AsiaPacific Europe Europe Middle MiddleEast /Africa East Africa Grit GRIT 2015 2016 2017 2018 2019 Source: National
Slide 10: Execution of Strategy
Execution of Strategy We Said We Delivered What’s Next Target a growing dividend Delivered 11th annual US$ Targeting faster NAV growth distribution > 8% yield distribution (>8.5% yield) (12% total return) Pursue Standard Listing on Main First Pan-African Real Estate Well positioned for Premium Marke
Slide 11: Portfolio Overview
Portfolio Overview
Slide 12: Asset Value Update
Asset Value Update Gross Income Producing Asset Value3 900 • Gross Income Producing Asset Value 825.23 • US$825.23 million (+28.5%) 800 • Acquisitions completed: 1 696.8 • Acacia Estate (Mozambique) Aug 18 700 • CADS II (Ghana) Sep 18 • 5th Avenue (Ghana) Dec 18 600 • Additional 25% shareholding in
Slide 13: Portfolio Characteristics
Portfolio Characteristics Ongoing sectoral & geographic diversification to optimise returns & mitigate risk KEY METRICS Geographic Split (FY2019)1 Sectoral Split (FY2019)1 EPRA Occupancy 0.4% 0.4% 0.4% 97.1% 3.8% 3.5% 6.8% Multinational Tenants1 15.2% 93.6% 34.5% 15.6% 37.7% 1. Forbes 2000, Other Gl
Slide 14: Portfolio Key Metrics – Geographic
Portfolio Key Metrics – Geographic * at 30 June 2019 Morocco Mozambique Ghana Mauritius Kenya Zambia Botswana Total Number of Properties/ Investments 1 9 3 5 3 3 1 25 Grit attributed Asset Value (USD '000) 1 106,148 287,841 51,824 167,096 28,899 118,750 3,100 763,657 Weighted Average Property Cap ra
Slide 15: Portfolio Key Metrics – Sectoral
Portfolio Key Metrics – Sectoral * at 30 June 2019 Corporate Held for Other Retail Office Light Industrial Hospitality Total Accommodation Development Investments Number of Properties/ Investments 7 8 2 4 2 1 1 25 Grit attributed Asset Value (USD '000) 1 263,379 198,471 26,973 152,784 115,700 3,250
Slide 16: Top 15 Tenants
Top 15 Tenants (as at 30 June 2019) Majority of portfolio income generated from strength of multinational tenancies Rank1 Key Tenant Industry Income (% of Group Total) Tenant Grading Lease Covenant Lease Currency 1 Beachcomber Hospitality 11.8% Other Global Triple Net EUR 2 Anadarko Oil & Gas Explor
Slide 17: Leasing Update – Key Tenants
Leasing Update – Key Tenants * At 30 June 2019 • New 5-year lease in Commodity House Phase 2 in Maputo, Mozambique • c.1873m2 office space lease while residual space in building (995m2) currently under active asset management activity • Exxon Mobil granted first option on any further Grit controlled
Slide 18: Portfolio Highlight: Morocco
Portfolio Highlight: Morocco • Significant redevelopment of the Company’s flagship retail asset • Total capital cost of US$25.09 million (inclusive of VAT) Anfa Place Mall • 30 June 2019 (pre-launch) valuation of US$106.1m – double-digit value uplift (+15% vs. Dec ‘18) • 30 June 2019 (pre-launch) va
Slide 19: Financial Review
Financial Review
Slide 20: FY2019 Highlights
FY2019 Highlights (as at 30 June 2019) Robust performance Adjusted EPRA EPRA NAV growth2 WACD3 Debt refinance4 earnings1 US$9.92 cps +1.0% 6.44% US$140 million facility post year-end FY2018: US$9.96 cps (-0.4%) FY2019: US$1.471 FY2018: 5.75% FY2018: US$1.457 1. Includes adjustments for deferred 2. E
Slide 21: EPRA NAV Bridge – FY19
EPRA NAV Bridge – FY19 Corporate Activity Portfolio Performance * EPRA NAV cum dividend Ι 21 # Other non-cash items include non-distributable profits/(loss), non-controlling interest share in profit, movement in foreign currency translation reserve & treasury shares
Slide 22: Distributable Income
Distributable Income 14 +0.1% 30 June 2019 +2.7% +1.0% US$’000 +4.1% 12.20 12.07 12.19 Basic Earnings attributable to the owners of the parent 28,035 11.75 12 11.29 6.12 6.95 Add Back non-cash items: 6.12 6.17 - Straight-line leasing (non-cash rental) & right of use amortization 853 6.64 - Total fai
Slide 23: Key Financial Metrics
Key Financial Metrics PROPERTY LOAN TO VALUE KEY RATIOS WEIGHTED AVE. COST OF DEBT 3.0 2.6 7.0% 45.0% 1.8 2.1 6.6% 6.44% Interest Cover 2.0 1.6 6.22% 44.0% 43.7% 6.2% 1.0 5.78% 5.75% 5.8% 43.0% 0.0 5.4% 41.9% FY16 FY17 FY18 FY19 42.0% 5.0% 30.0% 28.4% 22.9% FY16 FY17 FY18 FY19 Post Opex to Income in
Slide 24: Debt Financing Overview
Debt Financing Overview DEBT EXPIRY PROFILE (FY2019) MULTI BANK STRATEGY (FY2019) 90.0 76.4 80.0 69.4 70.0 36.7% 60.0 US$ (‘000s) 50.0 45.1 40.0 32.6 30.1 25.4 27.2 30.0 13.9 17.0 28.2% 20.0 11.1 10.0 0.4 - Jun 2019 Sep Oct 2019 Mar May Dec May Sep Feb Apr 2022 Post 14.4% 2019 2020 2020 2020 2021 20
Slide 25: Statement of Comprehensive Income
Statement of Comprehensive Income GROUP 30 June 2019 30 June 2018 For the 12 months ended 30 June 2019 Movement (US$’m) (US$’m) Gross rental income 43.6 32.1 35.6% Straight-line rental income accrual -0.8 1.1 -174.2% Revenue 42.7 33.2 28.6% Property operating expenses -10.4 -7.6 37.3% Net property i
Slide 26: Condensed Statement of Financial Position
Condensed Statement of Financial Position INCOME PRODUCING ASSETS 30 June 2019 30 June 2018 30 June 2019 31 Dec 2018 Movement As at 30 June 2019 (US$’m) (US$’m) (US$’m) (US$’m) Assets Non-current assets Investment properties 573.7 383.1 573.7 383.1 49.8% Deposits paid on investment properties 8.5 11
Slide 27: Outlook
Outlook
Slide 28: Summary
Summary Key Takeaways Progressive Existing Portfolio Robust Platform Dividend Policy 11 Performing Strongly Substantial investment consecutive distribution and expected to continue in in market-leading team and payments made FY2020 platform Listing Structure Economies of Scale Pipeline Premium Listi
Slide 29: Pipeline Characteristics
Pipeline Characteristics Identified near term acquisition targets valued at c. US$ 470 million spread across multiple sectors with existing and new global tenants Sector Exposure (%) 40.00% 35% 35.00% 29% 30.00% 26% 25.00% 23% 22% 20% 20.00% 15% 15% 15.00% 10.00% 8% 5.00% 4% 3% 0% 0.00% Industrial O
Slide 30: Medium Term Policies & Guidance
Medium Term Policies & Guidance Group focus areas Target Total Return Dividends Payout Ratio Focus 12%¹ Progressive Dividend Target a reduced ratio to Minimum with the potential for below 90% over the incremental development returns Policy medium term over medium term Share Buyback Development LTV t
Slide 31: Annexures
ANNEXURES
Slide 32: Property Portfolio
Property Portfolio Commodity House Phase 1 Hollard Building Vodacom Building Location Maputo Location Maputo Location Maputo Anchor Global Oil & Gas Anchor KPMG, Hollard & Anchor Vodacom tenant Corporate tenant BP tenant Sector Office Sector Office Sector Office Land title Freehold (50+50) Land titl
Slide 33: Property Portfolio
Property Portfolio VDE Housing Estate Zimpeto Square Acacia Estate (80.1% ownership*) Location Tete Location Maputo Location Maputo Anchor Vale & Anchor Anchor US State VIP Spar tenants Barloworld tenant tenant Department Sector Corp. Accomm Sector Retail Sector Corp. Accomm Land title Freehold Land
Slide 34: Property Portfolio
Property Portfolio Tamassa Resort Barclays House Kafubu Mall (50% ownership*) Location Bel Ombre Location Ebene Location Ndola Anchor Anchor Lux Island Resorts Anchor tenant Barclays Bank Shoprite tenant tenant Sector Hospitality Sector Office Sector Retail Land title Leasehold Land title Leasehold
Slide 35: Property Portfolio
Property Portfolio Imperial Phase 1 Anfa Mall Capital Place (47.5% ownership*) Location Nairobi Casablanca, Location Accra Location Morocco Anchor Imperial Health Anchor tenant Sciences Anchor Carrefour, M&S, Hollard tenants H&M, LC Waikiki tenants Sector Light Industrial Sector Offices Sector Retai
Slide 36: Acquisition Timeline
Acquisition Timeline JUL 2014 MAR 2017 Acquired Leaseback AUG 2017 Commodity House APR 2016 acquisition of Acquisition AUG 2018 JUN 2019 Phase Las its ist Acquisition of Tamassa Resort _of Imperial Acquisition of Acquisition of asset for US$32.5m 450% stake in (Mauritius) from Distribution 80.1% sta
Slide 37: Executive Members of the Board
Executive Members of the Board Bronwyn Corbett Bronwyn is a founding member and CEO of Grit Real Estate Income Group, the largest pan-African focused real estate group listed on the LSE, JSE and SEM (stock exchanges in London (UK), Johannesburg (South Africa) and Port Chief Executive Officer Louis (
Slide 38: Non-Executive Members of the Board
Non-Executive Members of the Board Peter Todd Peter is a qualified attorney and began his career as the senior tax manager at Arthur Andersen and Associates in Johannesburg. He joined TWS Rubin Ferguson in 1993 as a tax partner and was instrumental in listing several Independent Non-Executive compan
Slide 39: Non-Executive Members of the Board
Non-Executive Members of the Board David Love David Love is a Fellow Chartered Accountant, qualifying with Deloitte, and holds a BCom and LLB (Hons First) in Land Law, Equity and Trusts. He has over 19 years’ experience in the real estate investment sector. Independent Non-Executive Director He has
Slide 40: Non-Executive Members of the Board
Non-Executive Members of the Board Sir Samuel Esson Jonah, Sir Samuel Jonah is one of Africa’s leading businessmen and internationally recognised as a leading business executive. He obtained a Master’s degree in Management from Imperial College, London following which he KBE, OSG worked for Ashanti
Slide 41: Non-Executive Members of the Board
Non-Executive Members of the Board Bright Laaka Bright has 16 years’ experience in Business Development, Sales and Marketing. He holds a BSc (Agric), MSC Production Physiology and an MBA in Entrepreneurship. Independent Non-Executive Director (Permanent Bright is the founder and CEO of Rural Develop
Slide 42: Disclaimer
Disclaimer This report has been prepared by Grit Real Estate Income Group Limited ("Grit" or the “Company”) solely for your information and should not be considered to be an offer or solicitation of an offer to buy or sell or subscribe for any securities, financial instruments or any rights attachin
Slide 43: Thank You
Thank You Grit Real Estate Income Group Reg. No. C128881 3rd floor, La Croisette Shopping Centre, Grand Baie 30517, Mauritius Level 3, Alexander House, 35 Cybercity Ebene 72201, Mauritius T +230 269 7090 E communications@grit.group
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