Grit Real Estate Income Group Limited · LSE:GR1T
Grit Real Estate Income — FY2018 Earnings Presentation
54 slides from Grit Real Estate Income's earnings presentation, September 2018
Slide 1: Annual Results Presentation
Annual Results Presentation FOR THE 12 MONTHS ENDED 30 JUNE 2018 Ι 1
Slide 2: Proceedings
Proceedings Introduction Highlights Financial Overview Portfolio Overview Looking Ahead Q&A Annexures Ι 2
Slide 3: Grit is a multi-listed real estate income group in Africa
LSE - GR1T:LN JSE - GTR:SJ SEM - DEL.N0000 Grit is a c.$450m MULTI-LISTED REAL ESTATE INCOME GROUP operating in carefully selected AFRICAN COUNTRIES excluding South Africa We optimise our structural investments which are underpinned by SOLID PROPERTY FUNDAMENTALS to achieve SUPERIOR US DOLLAR RETURN
Slide 4: Strategy
Strategy talented people consistent performance • Internal, strong & experienced execu$ve • AGrac$ve & sustainable hard currency management income stream • Passion & commitment • 8 consecu$ve dividend payments • Con$nuous staff development • Proven ability to raise capital v quality por5olio rela*ons
Slide 5: Investment Case
Investment Case Compelling USD returns Robust risk mitigation Blue-chip multinational tenants Strong & broad African management exposure High quality long-term hard currency income Ι 5
Slide 6: Risk Mitigation
Risk Mitigation 01 02 03 Margins 04 05 06 Poli*cal risk Hard currency Repatria*on of funds & macro- economics of Land tenure Ability to raise debt Counterparty Safety Ι 6
Slide 7: Investment Jurisdictions
Investment Jurisdictions (post FY18 year end) * AFRICA THE LAST FRONTIER 25 assets 1 (3 post period end acquisitions) * 7 countries * 5 asset classes 1. Includes 1 equity investment & 1 land parcel held for development * Investment Grade Countries Ι 7
Slide 8: Differentiating Grit from Global REITs
Differentiating Grit from Global REITs Grit targets a dividend yield in excess of 8.5%* vs. a global REIT dividend yield of 4.0% in USD terms Dividend Yield (%) Target of min. 10,0 9.2 12% total USD 9,0 return for Grit for 8,0 FY19 7,0 6.9 6,0 5,0 4.2 Target of min. 4.0 3.8 4,0 3.6 8.5%* dividend 3,0
Slide 9: Highlights
HIGHLIGHTS Ι 9 Capital Place - Ghana
Slide 10: Highlights
Highlights EPRA NAV EPRA NAV2 Dividend Yield3 WALE4 Total Return1 US$1.457 EPRA NAV growth Adjusted EPRA EPS SEM – 8.7% 6% JSE – 9.2% 7.4 years Dividend yield 8.5% US$ 11.32 cps LSE – 8.3% 1. Dividend return on last issue price of 2. EPRA NAV excludes deferred tax on 3. Share prices as at 19 Septemb
Slide 11: London Called… We Answered
London Called…We Answered Listed on the Main Market of the LSE in July 2018 First & only Pan-African Real Estate stock listed on the LSE Intention to convert to a Premium Listing on the Main Market of the LSE Shares fully-fungible across all 3 exchanges (LSE, JSE & SEM) Successful capital raise of U
Slide 12: Execution of Strategy for the Period
Execution of Strategy for the Period Grit is committed to delivering on its strategy, turning strategic imperatives into proven results Strategic Imperatives Proven Results Positive Outcomes (pre-Listing LSE) (post-Listing LSE) (current & future) Pursue Standard Listing First Pan-African Real Well p
Slide 13: Shareholder Base
Register % Anchor shareholders (>5%) % Shareholder Base South Africa 50 Government Employees Pension 28% Fund (PIC) Mauri$us 38 • New ins$tu$onal shareholders from UK1 12 New UK Ins*tu*onal Investors 12% the UK following LSE lis$ng TOTAL 100 Drive In Trading Limited 8% Delta Property Fund 8% • Incre
Slide 14: Completed Acquisitions since LSE Listing
Completed Acquisitions since LSE Listing Property Name 5TH AVENUE CADS II ACACIA ESTATE Sector COMMERCIAL COMMERCIAL CORP. ACCOMM Location ACCRA ACCRA MAPUTO GLA 5.070m² 7.262m² 18.400m² Investment Value US$14.4M US$18.0M US$23.4M Acquisition Yield 10.13% 8.46% 8.25% Ownership 100% stake 50% stake 8
Slide 15: Liquidity & Index Inclusion
Liquidity & Index Inclusion Index Status Volume Traded Included in October SEM-10 Index (Mauritius) 35,0 2017 30,0 S&P Africa Frontier (Global) Included in 2018 25,0 Million Shares 20,0 Cloud Atlas AMI series BIG Included in underlying 50 EX-SA ETF index 15,0 (South Africa) in January 2018 10,0 5,0
Slide 16: Liquidity & Index Inclusion (cont.)
Liquidity & Index Inclusion (cont.) Liquidity of Grit shares 4 000 000 3 500 000 3 000 000 Number of shares traded 2 500 000 2 000 000 1 500 000 1 000 000 500 000 0 Ι 16 JSE Volume SEM Volume LSE Volume
Slide 17: Financial Review FY18
FY18 FINANCIAL Financial REVIEW Review FY18 Ι 17 Mukuba Mall – Zambia
Slide 18: EPRA NAV Bridge
EPRA NAV Bridge * EPRA NAV cum dividend Ι 18
Slide 19: Distributable Income
Distributable Income Year ended 30 June 2018 US$’m 14,00 +2.7% +1.0% Basic Earnings aGributable to the owners of the parent 28 561 +4.1% Add Back non cash items: 12,07 12,19 - Straight-line leasing (non-cash rental) (1 110) 11,75 12,00 11,29 - Total fair value adjustment on investment proper$es (5 0
Slide 20: Statement of Comprehensive Income
Statement of Comprehensive Income GROUP Condensed consolidated statement of comprehensive income Year ended 30 June 2017 Year ended 30 June 2018 Movement For year ended 30 June 2018 RESTATED US$’m US$’m % Gross rental income 22.9 32.1 40.2% Straight-line rental income accrual 1.1 1.1 0.0% Revenue 24
Slide 21: Statement of Financial Position
Statement of Financial Position INCOME PRODUCING ASSETS 30 June 2017 30 June 2018 30 June 2017 30 June 2018 Movement Condensed consolidated statement of financial posi*on RESTATED RESTATED As at 30 June 2018 US$’m US$’m US$’m US$’m % Assets Non-current assets Investment proper$es 307.8 383.1 307.8 38
Slide 22: Key Financial Metrics
Key Financial Metrics Metrics show impact of income growth and enhanced cost control PROPERTY LOAN-TO-VALUE KEY RATIOS WEIGHTED AVE. COST OF DEBT 3,0 46,0% 45,4% 8,0% 2,1 1,6 1,8 Interest Cover 2,0 1,6 6,94% 7,0% 44,0% 43,7% 1,0 6,22% 0,0 6,0% 5,78% 5,75% 41,9% FY15 FY16 FY17 FY18 42,0% 30,0% 25,6%
Slide 23: & Bf ceoz Aine
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Slide 24: Debt Summary
Debt Summary DEBT CURRENCY EXPOSURE INVESTMENT CURRENCY EXPOSURE* NET EUR EXPOSURE 0,9% 80 000 70 000 -22,3% 60 000 35,5% 39,2% 50 000 EUR 40 000 59,9% 64,5% 30 000 20 000 10 000 0 US$ Euro € MZN US$ Euro € FY17 FY18 * Includes Pegged Currencies Ι 24
Slide 25: Multi-bank Strategy
Multi-bank Strategy 35,0% 31,9% 30,0% 25,0% 23,2% 20,0% 19,2% 15,9% 15,0% 10,0% 8,8% 5,0% 0,9% 0,0% Bank of China Standard Bank State Bank of Investec Barclays Banco Unico Nedbank Vendor Finance Afrasia Mauri$us FY17 FY18 Ι 25
Slide 26: Portfolio Overview FY18
Hollard Building - Mozambique PORTFOLIO Portfolio Overview OVERVIEW FY18 Ι 26
Slide 27: Portfolio Key Metrics
Portfolio Key Metrics Light Corporate Held for Other Retail Office Hospitality Total Industrial Accommoda*on Development Investments Number of Proper*es/ Investments5 7 6 2 4 1 1 1 22 Property Value/Acquisi*on Price3 224.8 153.5 25.3 140.7 37.3 3.4 3.1 588.10 (US$ m) Weighted Average Capitalisa*on Rat
Slide 28: Property Portfolio Value Update
Property Portfolio Value Update Gross Income Producing Asset Value3 900 • Gross Property Value 829,5 • US$696.8m1 (+42.1%) 800 696,8 • Acquisi$ons completed: 700 • Capital Place acquisi$on 600 (Ghana) May 18 (47.5%) • 5th Avenue acquisi$on 500 490,4 (Ghana) Sept 18 400 • CADS II (Ghana) Aug 18 (30%)
Slide 29: Valuations Update
Valuations Update Retail Office Hospitality Like for Like Property Valuation Movement (%) +0.2% -0.1% +10.4% WALE (years)2 3.9 years 5.5 years 12.6 years Occupancy (%) 3 92.4% 98.7% 100.0% Rental Escalation (%) 3 4.0% 5.2% 1.5% EPRA NIY (%) 6.1% 7.9% 7.1% 1. Based on full ownership 2. Based on GLA Ι 2
Slide 30: Valuations Update
Valuations Update Corp. Accomm. Light Industrial LightTotal Industrial Like for Like Property Valuation Movement (%) +8.7% +7.6% +4.0% WALE (years)2 2.1 years 6.9 years 7.3 years Occupancy (%) 3 100.0% 100.0% 96.9% Rental Escalation (%) 3 3.2% 2.1% 3.4% EPRA NIY (%) 7.7% 9.0% 7.0% 1. Based on full o
Slide 31: Portfolio Diversification – Geographical
Portfolio Diversification – Geographical Existing Portfolio Enlarged Portfolio 3% 9% Mauri*us* Mauri*us* 4% Morocco* Morocco* 3% Botswana* 27% Botswana* 31% 21% Mozambique Mozambique 19% Zambia Zambia Kenya Kenya 9% 11% Ghana Ghana 30% 33% 0% 0% *45% of Grit’s por\olio is in Investment Grade African
Slide 32: Portfolio Diversification - Sectoral
Portfolio Diversification - Sectoral Existing Portfolio Enlarged Portfolio 0.4% 0.4% 0.3% 0.3% Retail Retail 3% 3% Office Office 11% 16% Hospitality Hospitality 32% 37% Corp. Accomm Corp. Accomm Light Industrial 29% Light Industrial 26% Other Investment Other Investment Property Held for 19% 23% Develop
Slide 33: Strength of Counterparty
Strength of Counterparty % Rental Contribution to Portfolio by Tenancy Classification 89.1% multinational tenants1 4% 7% 35% 51.2% income Top 10 Tenants 20% 93.0% income hard currency 33% weighted ave. annualised 3.1% lease escalation Forbes Other Global Pan African National Local 1. Includes Forbes
Slide 34: Key Tenants Schedule
Key Tenants Schedule Income (% Key GLA (% of Tenant Lease Lease Rank Industry of Group Tenant Group Total) Grading Covenant Currency Total) 1 Hospitality 29% 9% Other Global Triple Net EUR 2 Telecommunica$ons 4% 8% Forbes 2000 Double Net USD 3 Hospitality 7% 8% Other Global Triple Net EUR 4 Mining 5
Slide 35: Targeted NAV uplift on existing portfolio
Targeted1 NAV uplift on existing portfolio Country Asset NAV uplift Anfa Place Refurbishment, implementation and approval Shopping Centre stages Imperial Development of vacant land Warehouse Expansion of existing tenants Refurbishment and negotiations with potential Zimpeto Square high calibre ancho
Slide 36: Pipeline
Pipeline1 Retail Portfolio - Acquisition of a Light industrial - Development of stake in a real estate company, a generic warehouse facility on which intends to convert to the vacant land adjacent to existing Moroccan equivalent of a REIT, asset and to list on the Casablanca Stock Exchange Hospitali
Slide 37: Looking Ahead
LOOKING Looking Ahead AHEAD Ι 37 5th Avenue Commercial Offices - Ghana
Slide 38: Looking Ahead
Looking Ahead Target Total Target Dividend Access to Pipeline Return Focus Growth 3 - 5%¹ Accretive 12.0%¹ annually Blue-chip minimum tenancies Existing Reduction in Cost Liquidity & Indices Geographies of Funding Focus Leveraging off Boosting liquidity current footprint Debt and accessing for growth
Slide 39: Thank You
Thank You Grit Real Estate Income Group Reg. No. C128881 3rd floor, La CroiseGe Shopping Centre, Grand Baie 30517, Mauri$us Level 5, Alexander House, 35 Cybercity Ebene 72201, Mauri$us T: +230 269 7090 E: communica*ons@grit.group Ι 39
Slide 40: Annexure
ANNEXURE Ι 40 Imperial Warehouse – Kenya
Slide 41: Key Events
Ww JULY 2014 Completion of inward listing on the JSE Limited's ALT-X board it APRIL 2015 eS 9 Key Events |e a & JULY 2017 Introduction of the JUNE 2017 ‘Shareholders ° Public Investment AUGUST 2015 OCTOBER 2016 Distribution — approved Grit's Corporation as Paid distribution of | MARCH 2016 Paid dist
Slide 42: Acquisition of Assets
Acquisition of Assets Bi Mozambique ® morsiceo - JULY 2014 P » DP mawritius BI setswana Acquired f; Kexya ‘ fe alah Mozambique Kenya Commodity House [i Mozambique Phase Las its Ist MARCH 2017 AUGUST 2017 asset for US$32.5m_ ,—] Zambia APRIL 2016 Leaseback acquisition | Acquisition of f it yr (Mozamb
Slide 43: Property Portfolio
Property Portfolio Commodity House Phase 1 Hollard Building Vodacom Building Loca*on: Maputo Loca*on: Maputo Loca*on: Maputo Anchor Global Oil & Gas Anchor KPMG, Hollard & Anchor tenant: Corporate Vodacom tenant: BP tenant: Sector: Office Sector: Office Sector: Office Land *tle: Freehold (50+50) Land *tle
Slide 44: Property Portfolio (Cont.)
Property Portfolio (Cont.) VDE Housing Estate Zimpeto Square Acacia Estate (80.1% ownership*) Loca*on: Tete Loca*on: Maputo Loca*on: Maputo Anchor Vale & Anchor Anchor US State tenants: Barloworld S2 Africa Limited tenant: tenant: Department Sector: Corp. Accomm Sector: Retail Sector: Corp. Accomm L
Slide 45: Property Portfolio (Cont.)
Property Portfolio (Cont.) Tamassa Resort Barclays House Kafubu Mall (50% ownership*) Loca*on: Bel Ombre Loca*on: Ebene Loca*on: Ndola Anchor Lux Island Resorts Anchor Anchor tenant: Barclays Bank Shoprite tenant: tenant: Sector: Hospitality Sector: Office Sector: Retail Land *tle: Leasehold Land *tle
Slide 46: Property Portfolio (Cont.)
Property Portfolio (Cont.) Imperial Phase 1 Anfa Place Mall Capital Place (47,5% ownership*) Loca*on: Nairobi Casablanca, Loca*on: Accra Loca*on: Morocco Anchor Imperial Health Anchor Anchor Carrefour, M&S, Hollard tenant: Sciences tenants: tenants: H&M, LC Waikiki Sector: Light Industrial Sector: O
Slide 47: Executive Members of the Board
Executive Members of the Board Bronwyn Corbek 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 Louis Chief Execu*ve Officer (Maur
Slide 48: Non-Executive Members of the Board
Non-Executive Members of the Board Peter Todd Peter is a qualified aGorney and began his career as the senior tax manager at Arthur Anderson and Associates in Johannesburg. He joined TWS Rubin Ferguson in 1993 as a tax partner and was instrumental in lis$ng several Board Chairman companies on the JSE
Slide 49: Non-Executive Members of the Board
Non-Executive Members of the Board Paul Huberman Paul is a Chartered Accountant and Chartered Tax Adviser. He currently advises companies in the real estate and finance sectors and has over 30 years’ experience. Paul is a non-execu$ve director at Town Centre Securi$es plc (TCS), Independent Non-Execu
Slide 50: Non-Executive Members of the Board
Non-Executive Members of the Board Matshepo More Matshepo is a Chartered Accountant and holds a Cer$ficate in Theory of Accoun$ng and a Bachelor of Business Science in Finance. Matshepo served her ar$cles at DeloiGe, specialising in financial ins$tu$ons, before being Non-Execu*ve Director seconded to
Slide 51: Executive Team
Executive Team Heidi Rix Heidi joined Grit as Chief Opera$ng Officer in May 2016. She has 19 years’ commercial and real estate experience and is an admiGed aGorney holding BComm and LLB degrees in addi$on to specialised real estate sector qualifica$ons. Heidi Group General Manager has recently taken on
Slide 52: Executive Team
Executive Team Eric Weirich Eric joined Grit as Finance Director of Delta Interna$onal Mauri$us Limited on 1 September 2018. Eric joins from Gazprom Marke$ng & Trading (GM&T) London, where he was the Global Head of Business Planning and Repor$ng and Financial Director acted as Head of the Global Con
Slide 53: Executive Team
Executive Team Jaco holds a BCom Degree from the North-West University, a BCompt Honours Degree from the University of South Africa and is a qualified Chartered Accountant. Aler comple$ng ar$cles he moved to Federal Airlines as Financial Jaco van Zyl Manager and ul$mately assumed responsibility of th
Slide 54: Disclaimer
Disclaimer This report has been prepared by Grit Real Estate Income Group Limited ("Grit" or the “Company”) solely for your informa$on and should not be considered to be an offer or solicita$on of an offer to buy or sell or subscribe for any securi$es, financial instruments or any rights aGaching to su
Grit Real Estate Income Group — FY2018 Earnings Presentation on 6ix