Grit Real Estate Income Group Limited · LSE:GR1T

Grit Real Estate Income — H1 2020 Earnings Presentation

50 slides from Grit Real Estate Income's earnings presentation, February 2020

  1. Slide 1: HY2020 Results Presentation

    HY2020 RESULTS PRESENTATION FOR THE SIX MONTHS ENDED 31 DECEMBER 2019 COMMODITY HOUSE II

  2. Slide 2: Proceedings

    Proceedings Introduction BRONWYN CORBETT Chief Executive Officer BCom (Acc), CA(SA) Existing Portfolio • 2019 EY Entrepreneur of the Year Award Winner (Exceptional Category, Southern Africa) Financial Review • 2015 Top CA(SA) under 35 Award Winner Growth & Pipeline Outlook LEON VAN DE MOORTELE Chief

  3. Slide 3: Introduction

    Introduction IMPERIAL WAREHOUSE KENYA iS

  4. Slide 4: Grit is a leading pan-African real estate company

    Grit is a leading pan-African (excluding South Africa) real estate company focused on investing in and actively managing a diversified portfolio of assets underpinned by predominantly US$ and Euro denominated long-term leases with high quality multi-national tenants Grit has a full suite of on-the-g

  5. Slide 5: The African Opportunity

    The African Opportunity 1.2 Bn+ 2.4 Bn+ 54 50% 3.6% 2nd Why Africa urbanisation SSA GDP Growth largest continent in population population by 2050 countries by 2030 2020(e) the World RISING STRONG POPULATION INCREASING GROWING Key Trends GROWTH ECONOMIC GROWTH MIDDLE CLASS INFRASTRUCTURAL DEVELOPMENT

  6. Slide 6: Grit Group Strategy

    Grit Group Strategy De-risked approach to capturing significant parts of the value chain TENANT PROPERTY INVESTMENT Targeted 12% US$ total return* underpinned by hard currency leases, guarantees QUALITY and contracted rental escalations with multinational tenants. DIVERSIFIED PROPERTY DEVELOPMENT AF

  7. Slide 7: Grit Real Estate Income Group at a glance

    Our High-quality Grit Real Estate Income Group at a glance FINANCIAL INVESTMENT Tenants Geographic & sectoral diversification HIGHLIGHTS # HIGHLIGHTS Mozambique Geographic Split (HY2020)1 41.9% c8.5% current US$ Mauritius* PROPERTY LTV dividend yield 6.4% Morocco* Zambia *36% of Grit’s 38.6% Ghana 1

  8. Slide 8: Business Approach

    Business Approach Strong relationships combined with comprehensive risk control 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 developme

  9. Slide 9: De-risked Investment Strategy

    De-risked Investment Strategy 01 02 03 Margins 04 05 06 Political risk of Repatriation Ability to Hard currency of funds & macro- economics Safety Land tenure raise debt Counterparty CURRENCY TENANCY REPATRIATION COUNTRY OPERATIONAL OVEREXPOSURE POLITICAL RISK RISK RISK RISK RISK RISK RISK Prioritis

  10. Slide 10: HY2020 Highlights (31 December 2019)

    HY2020 Highlights (31 December 2019) Robust financial and operational performance. Total Income Growth in Profit from EPRA NAV2 Dividend Yield3 Producing Assets1 operations4 SEM – 9.6% US$ 860.1 mln US$1.447 +47.3% JSE – 10.3% HY2019: US$796.4mln HY2019: US$1.431 HY2019: +75.7% LSE – 9.6% 1. A 7.9%

  11. Slide 11: Strategic Objectives

    Strategic Objectives 1. Operational cost efficiency improvement 2. Pipeline Conversion & Funding 3. Redomicile & Premium Listing 4. Review of Listing Locations 5. Morocco REIT (Anfa) 6. Advancement of AM Strategy (LLR)/Paradise Ι 11

  12. Slide 12: Existing Portfolio

    ting Portfolio 5™ AVENUE CORPORATE OFFICES GHANA

  13. Slide 13: Portfolio Characteristics

    Portfolio Characteristics KEY METRICS Geographic Split (HY2020)1 Sectoral Split (HY2020)1 EPRA Occupancy 2.6% 2.6% 0.8% 0.8% 97.4% 3.5% 3.4% 6.4% Multinational Tenants1 92.8% 17.2% 32.1% 14.0% *36% of portfolio 38.6% 1. Forbes 2000, Other Global & pan African tenant is in Investment (by revenue) Gra

  14. Slide 14: Portfolio Key Metrics – Geographic

    Portfolio Key Metrics – Geographic * at 31 December 2019 Botswana Other Morocco Mozambique Ghana Mauritius Kenya Zambia Total (LLR) 5 Investments6 Number of Properties/ Investments 1 9 3 5 2 3 20 3 46 Grit attributed Asset Value (USD '000) 1 109,201 312,028 51,503 166,245 27,965 113,275 21,112 6,393

  15. Slide 15: Portfolio Key Metrics – Sectoral

    Portfolio Key Metrics – Sectoral * at 31 December 2019 Corporate Other Retail Office Light Industrial Hospitality LLR5 Total Accommodation Investments6 Number of Properties/ Investments 7 8 2 4 2 20 3 46 Grit attributed Asset Value (USD '000) 1 `259,622 201,980 27,839 151,543 139,233 21,112 6,393 80

  16. Slide 16: Top 15 Tenants

    Top 15 Tenants (as at 31 December 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 11.4% Other Global Triple Net EUR 2 Vodacom Telecommunica

  17. Slide 17: Portfolio Update – AnfaPlace Mall (Morocco)

    Portfolio Update – AnfaPlace Mall (Morocco) OPERATIONAL UPDATE ➢ Repositioning and tenant mix well-received, mall stabilising and trading in line with expectations ➢ Increasing average rents, WALE, GLA and valuation, continually reducing vacancies ➢ Exit of problematic tenant underway, freeing up 1,

  18. Slide 18: Portfolio Update – Moroccan REIT

    Portfolio Update – Moroccan REIT MOROCCAN REIT STRATEGY ➢ Conditional agreement for the acquisition of a Moroccan-REIT (OPCI) vehicle that owns the Massira Corner mixed use property ➢ OPCI’s to target further acquisitions of between EUR300m to EUR400m starting with: • Exclusivity over an A-grade ind

  19. Slide 19: Portfolio Update – VDE Housing Estate (Mozambique)

    Portfolio Update – VDE Housing Estate (Mozambique) PORTFOLIO UPDATE – FIRST PRE-FUNDING DEVELOPMENT ➢ Grit contracted, on a turnkey basis, for the delivery of 60 additional units to the scheme ➢ Grit provided forward funding to the developer in exchange for profit-share participation and a mechanism

  20. Slide 20: Portfolio Update: Club Med Senegal

    Portfolio Update: Club Med Senegal (post-period) ACQUISITION UPDATE ➢ Transfer of shares and ownership taken on 27 January 2020 ➢ Large-scale renovation project will re-position the resort ➢ Lease term is renewed on a 12-year triple net Euro lease* REDEVELOPMENT PROJECT OVERVIEW ➢ Construction of 12

  21. Slide 21: Asset Management Opportunity – LLR (Botswana)

    Asset Management Opportunity – LLR (Botswana) LLR CURRENT STATUS QUO ➢ Grit now owns 30% stake in LLR (up 23.75% from 6.25% initial stake) ➢ LLR Portfolio includes 20 assets, with an LTV of <35% (FY2019) & a strong cash position – US$20.6m* ➢ Opportunities for Asset Management initiatives GRIT VALUE

  22. Slide 22: Financial Review

    ial lew OQ = © — LL. Revi VODACOM BUILDING

  23. Slide 23: HY2020 Highlights (at 31 December 2019)

    HY2020 Highlights (at 31 December 2019) Robust performance Adjusted EPRA EPRA NAV growth2 WACD3 Debt refinance4 earnings1 US$5.67 cps +1.1% 6.07% US$140 million Mozambique facility HY2019: US$5.36 cps (+5.8%) HY2020: US$1.447 FY2019: 6.44% HY2019: US$1.431 1. Includes adjustments for deferred 2. EPR

  24. Slide 24: EPRA NAV Bridge – HY20

    EPRA NAV Bridge – HY20 Portfolio Performance * EPRA NAV cum dividend Ι 24 # Other non-cash items include non-distributable profits/(loss), non-controlling interest share in profit, movement in foreign currency translation reserve & treasury shares

  25. Slide 25: Distributable Income

    Distributable Income 14 31 December 2019 +2.7% +1.0% +0.1% US$’000 12.20 12.07 1 12.19 Basic Earnings attributable to the owners of the parent 13,130 12 11.75 6.12 6.95 Add Back non-cash items: 6.17 6.12 - Straight-line leasing (non-cash rental) & right of use amortization 1867 - Total fair value ad

  26. Slide 26: Loan to Value

    Loan to Value LTV impacted by acquisition of the additional VDE units which were debt funded. LTV is expected to reduce towards the targeted 40% by the end of the financial year. 60.0% 51.0% 49.2% 50.0% 43.4% 43.9% 35.0% - 40.0% 40.0% TARGET LTV 30.0% 20.0% 35-40% 10.0% 0.0% HY17 HY18 HY19 HY20 Post

  27. Slide 27: Weighted Average Cost of Debt

    Weighted Average Cost of Debt WACD declined to 6.07% (June 2019: 6.44%) as a result of active treasury management activities and downward movements in LIBOR over the reporting period. 7.0% 6.8% % Interest Rate 6.6% Hedged 6.4% 6.31% 68.80% 6.2% 6.07% 6.0% 5.80% 5.8% 5.69% HEDGE MATURITY 5.6% 3.79 5.

  28. Slide 28: Key Financial Metrics

    Key Financial Metrics INTEREST COVER OPEX TO INCOME INCL. ASSOCIATES 3.0 19.0% 18.6% 2.3 2.5 1.8 2.1 18.0% 2.0 17.0% 1.6 17.0% 1.5 15.6% 1.0 16.0% 0.5 15.0% 0.0 14.0% HY17 HY18 HY19 HY20 HY19 FY19 HY20 NET EUR EXPOSURE ADMIN COST TO ASSET VALUE 70.0 62.3 66.3 2.5% 1 60.0 54.9 2.1% 43.9 2.0% 50.0 1.6

  29. Slide 29: Debt Financing Overview

    Debt Financing Overview The Group has continued to develop strong relationships with financiers. The multi-bank approach adopted by Grit has continued, with the main banking partners being Bank of China, Standard Bank, ABSA Bank and SBM (Mauritius) Ltd. DEBT EXPIRY PROFILE (HY2020) MULTI BANK STRATE

  30. Slide 30: Statement of Comprehensive Income

    Statement of Comprehensive Income GROUP 31 Dec 2019 31 Dec 2018 Condensed consolidated statement of comprehensive income - For the 6 months ended 31 Dec 2019 (US$’m) (US$’m) Gross rental income 24.3 18.7 Straight-line rental income accrual (0.2) 0.6 Revenue 24.1 19.4 Property operating expenses (6.3

  31. Slide 31: Condensed Statement of Financial Position

    Condensed Statement of Financial Position INCOME PRODUCING ASSETS Condensed consolidated statement of financial position 30 Dec 2019 31 Dec 2018 30 Dec 2019 31 Dec 2018 Movement As at 31 Dec 2018 (US$’m) (US$’m) (US$’m) (US$’m) Assets Non-current assets Investment properties 596.0 552.8 596.0 552.8

  32. Slide 32: Growth & Pipeline

    rowth & Pipeline CADS I! BUILDING GHANA

  33. Slide 33: Asset Value Update

    Asset Value Update Total Income Producing Asset Value3 • Total Income Producing Asset Value 1000 • US$860.13 million (+4.2%) 950 900 2 • Acquisitions completed: 2 860.1 850 825.2 • Additional 23.75% interest in Letlole 800 La Rona (LLR) (Botswana) Nov 2019 750 • 60 additional units at VDE Housing Es

  34. Slide 34: Pipeline - Summary

    Pipeline - Summary Medium term pipeline in excess of US$470 million, spread across multiple sectors with existing and new global tenants. ANNOUNCED PIPELINE ACQUISITION SUMMARY Property Provisional * NAV Name Sector Country Type Anchor Tenant Deal Value Share % Yield Valuation increase PwC Head Offi

  35. Slide 35: Announced Pipeline Acquisitions Update

    Announced Pipeline Acquisitions Update Target Closing April 2020 Size (GLA): 5,176m2 Property Yield: 8.5% Date: PWC Location: Accra, Ghana Acquisition $20.3m Avg Annual Escalation: 1.64% Costs BUILDING PwC - (79% of GLA); Anchor Tenant lease Sector: Office WALE: 12.93 years 15years; Triple Net, term

  36. Slide 36: Announced Pipeline Acquisitions Update

    Announced Pipeline Acquisitions Update Target Closing April 2020 Size (GLA): 5,727m2 Property Yield: 10.5% Date: ST. HELENE Development US$13.3m European Harmonised HOSPITAL Location: Floréal, Mauritius Costs Development Avg Annual Escalation: CPI, min. of 2.0% (DEVELOPMENT) Anchor Tenant lease PDL

  37. Slide 37: Pipeline Characteristics

    Pipeline Characteristics Near term acquisition targets spread across multiple sectors with existing and new global tenants. Sector Exposure (%) 35.0% 33.1% 30.0% 25.8% 26.5% 25.0% 23.2% 20.5% 19.4% 20.0% 17.8% 15.0% 12.4% 10.0% 7.4% 7.2% 5.0% 4.0% 2.8% 0.0% 0.0% 0.0% Industrial Office Corporate Acco

  38. Slide 38: Outlook

    Outlook

  39. Slide 39: Summary

    Summary Key Takeaways Progressive Existing Portfolio Robust Platform Dividend 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 Listing In-c

  40. Slide 40: 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

  41. Slide 41: Annexures

    ANFA PLACE MALL MOROCCO

  42. Slide 42: Peer Performance

    Peer Performance Target of 12% total USD return for Grit for FY20 Dividend Yield (%) 12.0 10.0 9.6 8.5 8.0 6.0 3.9 3.9 3.8 4.0 3.6 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 2020 YTD Ι 42 Gri

  43. Slide 43: ESG

    ESG Grit is actively managing its Environmental, Social and Governance risks and opportunities Environmental Social Governance National Code of Corporate Governance for Mauritius 2016 Aligning strategies and operations Empowering the female working King IV Report (South Africa) to UNGC standards com

  44. Slide 44: 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 Chief Executive Officer Port Louis (

  45. Slide 45: 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

  46. Slide 46: 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

  47. Slide 47: Non-Executive Members of the Board

    Non-Executive Members of the Board Sir Samuel Esson 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 Jonah, KBE, OSG worked for Ashanti

  48. Slide 48: 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 Bright is the founder and CEO of Rural Development Allian

  49. Slide 49: 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

  50. Slide 50: Thank You

    Thank You Grit Real Estate Income Group Reg. No. C128881 T +230 269 7090 3rd floor, La Croisette Shopping Centre, Grand Baie 30517, Mauritius E ir@grit.group Level 3, Alexander House, 35 Cybercity Ebene 72201, Mauritius

Grit Real Estate Income Group — H1 2020 Earnings Presentation on 6ix