Grit Real Estate Income Group Limited · LSE:GR1T
Grit Real Estate Income — FY2024 Earnings Presentation
55 slides from Grit Real Estate Income's earnings presentation, November 2024
Slide 1: Annual Results Presentation
ANNUAL RESULTS PRESENTATION For the year ended 30 June 2024 10 YEARS OF PIONEERING IMPACT AFRICAN REAL ESTATE 1
Slide 2: 10 Years of Pioneering Pan-African Real Estate with Impact
| 10 YEARS OF OPERATION 10 YEARS OF PIONEERING PAN-AFRICAN REAL ESTATE WITH IMPACT THAT GOES BEYOND BUILDINGS Proud developers and owners of Through o c.US$1Bn of Assets in 10 Years THE PRECINCT GRIT 2.0 o Global Benchmark in African the Indian Ocean Islands region's first Transforming traditional r
Slide 3: Key Highlights for FY2024
| STRONG SUSTAINABLE OPERATIONS & EVIDENCE OF GRIT 2.0 STRATEGY KEY HIGHLIGHTS FOR FY2024 Acquisition of GREA and APDM completed Support of DFI funders – Bora Africa IFC funding & imminent further opportunities +7.9% Grit Proportionate US$ NOI incl. significant re-leasing activity 14.0% Reduction in
Slide 4: Executive Summary: Headwinds
| KEY HIGHLIGHTS EXECUTIVE SUMMARY: Headwinds Soft FY24 results due to: NO. KEY HEADWINDS KEY DRIVER/IMPACT Interest rates remaining 1 Rising Finance Costs higher for longer Affecting distributable earnings and dividend 2 Impacted Earnings payment in 2H2024 (1H dividend paid: US$1.50cps) Asset reval
Slide 5: Executive Summary: With Progress Underway
| KEY HIGHLIGHTS EXECUTIVE SUMMARY: With Progress underway NO. KEY PROGRESS MADE KEY PROOF POINT Resilient property portfolio Complemented by pioneering new investment 1 (+7.9% Grit Proportionate US$ NOI) sectors - ENEO (BPO) Significant Capital Committed PIC – US$100m / 2 (US$116m) IFC – US$16m Obt
Slide 6: Resilient Portfolio and Operational Performance
RESILIENT PORTFOLIO AND OPERATIONAL PERFORMANCE 6
Slide 7: 33 Assets in 11 Territories across Africa
| STRONG & SUSTAINABLE PROPERTY PORTFOLIO WE ARE PAN-AFRICAN 33 Assets in 11 US$971m territories across Value of Income-Producing Assets (on consolidation of GREA) Africa (excluding South Africa) COUNTRY EXPOSURE1 NIGERIA (3.3%) MOZAMBIQUE (33.4%) MAURITIUS (5.3%) ETHIOPIA (8.8%) KENYA (16.3%) ZAMBI
Slide 8: High Quality Tenants, Hard Currency Long Term Leases
| STRONG & SUSTAINABLE PROPERTY PORTFOLIO HIGH QUALITY TENANTS, HARD CURRENCY LONG TERM LEASES 94% Rank Tenant Industry Income % Lease Currency Income Hard Currency 1 US EMBASSY Consular 15.5% US$ 2 TOTAL Energy 9.0% US$ 90% 3 VODACOM Communications 6.1% US$ EPRA Occupancy 4 LUX Hospitality 4.8% EUR
Slide 9: Group EPRA Vacancy Bridge
| HEALTHY LEASING ACTIVITY & STRONG ASSET PERFORMANCE GROUP EPRA* VACANCY BRIDGE (30 JUN 2023 to 31 DEC 2024 est.) Increased EPRA vacancy related to ENEO development completed in May 24 and VDE increased vacancies 10.2% 0.04% 39,324 0.38% 0.62% 262m2 1.64% EPRA vacancy excluding VDE & 1,316m2 6,231m
Slide 10: Healthy Leasing Activity
| HEALTHY LEASING ACTIVITY & STRONG ASSET PERFORMANCE HEALTHY LEASING ACTIVITY Leasing Activity during FY 2024: Property Tenant Industry Lease Activity Lease ccy High Quality Acacia US EMBASSY Consular 7-year lease renewal US$ Tenants Commodity House 2 EXXON MOBIL Energy 3-year lease renewal US$ Com
Slide 11: Asset Recycling – Strong Momentum
| EVIDENCE OF GRIT 2.0 STRATEGY ASSET RECYCLING – STRONG MOMENTUM December’23 target met. Board has extended the target to an additional US$200m of non-core assets Transactions in advanced discussions ASSET RECYCLING Core sectors Focus sectors Non-core sectors December 2023 target Tamassa Lux Resort
Slide 12: Administrative Outsourcing Partnership
| EVIDENCE OF GRIT 2.0 STRATEGY Administrative outsourcing partnership Property and facilities management (non-core) Strategic objectives: Cost reduction Simplification Economies of scale Grit Group retains core activities: Strategic leasing Asset management Development management Existing Grit coun
Slide 13: Grit 2.0 - Simplifying the Group and Operations
GRIT 2.0 - SIMPLIFYING THE GROUP AND OPERATIONS 13
Slide 14: Simplified Group Operating Structure
| SIMPLIFIED GROUP OPERATING STRUCTURE SIMPLIFIED GROUP OPERATING STRUCTURE Now Positioned For The Future A significant reduction in Associate accounted assets has been achieved. The Group’s assets are now arranged in sector silos. Key Benefits: - Simplified Reporting - Optimization of Cost - Enhanc
Slide 15: GREA & Substructure Update
GREA & SUBSTRUCTURE UPDATE 15
Slide 16: GREA Highlights & Milestones in FY2024
| GREA AND SUBSTRUCTURE UPDATE GREA HIGHLIGHTS & MILESTONES IN FY2024 CONSOLIDATION RECAPITALISATION STRONG EXECUTION g ll in GREA recapitalisation tro st Grit increased US$100m n Co tere ENEO commissioned In stake in GREA May 2024 53.3% PIC US$48.5m final regulatory approvals obtained post Y/E Supp
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Slide 18: ENEO at Tatu City Achievements
ENEO AT TATU CITY Achievements IFC Edge Champion Winner IPA Best Mixed-use Development API Best Mixed-use Development in Africa 18
Slide 19: ENEO at Tatu City Case Study
| ENEO CASE STUDY ENEO AT TATU CITY Case Study: GREA development execution Nairobi, Kenya Property Description: Offices & retail GLA: 25,752 m² Completion Date: May 2024 Tenants: CCI Global, IWG, GRES, Naivas Express, Tamarind, Prime Bank Local Job Creation c. 7,600 Value creation US$48.0m US$35.4m
Slide 20: Bora Africa Highlights
| SIMPLIFIED GROUP OPERATING STRUCTURE BORA AFRICA HIGHLIGHTS 100% owned now by in FY24. Well Positioned for development opportunities INVESTMENT GRADE African real estate partner to • Light Industrial • Logistics • ICT-related (including BPO, Data Centres & Digital Infrastructure) POSITIVE ENGAGEME
Slide 21: Low Risk, Sovereign Strategy
| SIMPLIFIED GROUP OPERATING STRUCTURE Low Risk, Sovereign Strategy Combined Assets & pipeline KEY BENEFITS FOR GRIT GROUP: • Portfolio Optimization o Extension of WALE o US$ income o Exposure to low-risk sovereign paper • Ability to capture development fees • Access to asset management fees • Scale
Slide 22: FY2024 Financial Review
mr 4 - FY2024 FINANCIAL REVIEW fF =
Slide 23: Summary of Results (30 June 2024)
| RESILIENT PROPERTY PERFORMANCE SUMMARY OF RESULTS (30 JUNE 2024) • Various impacts arising from GREA and APDM consolidation • Resilient property performance and focused cost control offset by materially higher finance costs. • Isolated property valuation pressures and goodwill impairments impacted
Slide 24: EPRA NRV Bridge June 2023 to June 2024
| NAV IMPACTED FURTHER TO CONSOLIDATION EPRA NRV BRIDGE BETWEEN JUNE 2023 TO JUNE 2024 Property Valuation And GREA Consol Impacts 24
Slide 25: Summary of Results: Healthy Asset Performance
| HEALTHY ASSET PERFORMANCE SUMMARY OF RESULTS (30 JUNE 2024) [object File] Value of Property Portfolio NOI FY24 – Proportionate basis EPRA 12M Fair value 12M YOY Comparable Topped Up 30 June 2024 Reported NOI3 NIY Change movements Reported Change change NIY US$'000 % US$'000 US$ '000 % % % % Retail
Slide 26: Ongoing Administration Expense Reductions
| STRONG & FOCUSED COST CONTROLS ONGOING ADMINISTRATION EXPENSE REDUCTIONS AND FURTHER GROUP COST OPTIMISATIONS FY23 • Consolidation of APDM/GREA: increased governance costs 2.42% • Investment into Bora set up Admin cost to Inc. producing assets • Internalised FM cost (FY23 US$22.58m) FY24 • Post GR
Slide 27: Higher LTV and Covenant Waivers
| HIGHER LTV AND COVENANT WAIVERS AS A RESULT OF GREA CONSOLIDATION DEBT INCREASE RELATED TO CONSOLIDATION OF GREA & DELAYS IN GREA RECAPITALISATION, WHICH WERE FORESEEN AND AGREED WITH FUNDERS New GREA developments are expected to annualise and improve ICR from FY25 onwards @ LSE Listing COVID-19 p
Slide 28: Significant Increase in Cost of Debt
| OPERATING IN HIGH INTEREST RATE ENVIRONMENT SIGNIFICANT INCREASE IN COST OF DEBT IMPACTED FY2024 RESULTS 971.2 Income producing assets (US$m) Interest rate outlook is improving in conjunction with improved Group hedging post balance sheet date 10,0% Current year increase as a result of: 8,4% Inter
Slide 29: Interest Rate Risk Management
| ENHANCED HEDGING STRATEGY & TREASURY MANAGEMENT INTEREST RATE RISK MANAGEMENT Hedge positions have been effective, but hedge maturities reset protection levels in FY2024 UPDATED POLICY: amended to target 75% floating rate risk hedge. To be phased in over the coming periods Total SOFR EURIBOR US$39
Slide 30: Interest Rate Hedging Slide
| ENHANCED HEDGING STRATEGY & TREASURY MANAGEMENT INTEREST RATE HEDGING SLIDE Impact of Hedges on all debt WACD % chg vs current WACD (bps) Impact (US$ ‘000) At 30 June 2024 (including hedges) 10.00% At 31 October 2024 (including hedges) 9.77% +50bps 10.01% 0.24 1.3m +25bps 9.89% 0.12 0.6m -50bps 9.
Slide 31: Medium Term Strategy: Managing Asset Yields & Cost of Debt
| RISING FINANCE COSTS MEDIUM TERM STRATEGY: MANAGING ASSET YIELDS & COST OF DEBT Debt Funding and Asset Strategy key to distributable earnings recovery WACD EPRA NIY 971.2 Global rate hikes have impacted all property companies. Management actions include: Improve Blended Asset Yields 1 Income produ
Slide 32: Group Strategy in Numbers
| GRIT 2.0 STRATEGY GROUP STRATEGY IN NUMBERS Medium Term Return Targets Shareholder Value Creation Targeted Asset Yield Asset Yield spread over WACD c.9% c.2% Annual NAV growth 4% to 7% Admin cost ratio target Development Income 1.0% > c.10.5% of total income producing assets Target dividend payout
Slide 33: Concluding Remarks: Progress Underway
CONCLUDING REMARKS: PROGRESS UNDERWAY 33
Slide 34: Conclusion: Focus Areas and Targets
| GRIT 2.0 STRATEGY CONCLUSION: FOCUS AREAS AND TARGETS (PROGRESS UNDERWAY) 01 Proportionate NOI Consistently strong Strong Sustainable Strong Property +7.9% Leasing Operations activity Fundamentals 02 Final Negotiations “Shrink to grow”, simplify & Additional Disposal target Core expertise focus Ev
Slide 35: Q&A
Q&A 35
Slide 36: 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 as an offer or solicitation to buy, sell, or subscribe for any securities, financial instruments, or any rights attached to such securi
Slide 37: Annexures
ANNEXURES 37
Slide 38: Operating Context
| MACRO-ENVIRONMENT OPERATING CONTEXT Persisting high interest rate environment and outlook accommodative SOFR rates Goldman Sachs The U.S. Federal Reserve to deliver consecutive 25 bps rate cuts from 16 Oct 2024 November 2024 through June 2025 to a terminal rate range of 3.25- 3.5% (Goldman Sachs,
Slide 39: ESG Achievements and Targets
| ESG ESG ACHIEVEMENTS AND TARGETS ENVIRONMENTAL GOVERNANCE SOCIAL (FY23 vs FY24) Premium Listed on the London Stock Exchange Gender equality: +40% 40% NEW of women employees DEVELOPMENTS in leadership positions according to IFC** Compliance with the UK Corporate Governance Code (2018) National Code
Slide 40: Gender Equality: Buildher Programme Kenya
| CASE STUDY - BUILDHER GENDER EQUALITY: Buildher Programme Kenya Supporting the promotion of women in the built environment, Buildher Kenya (www.buildher.org). Direct and Indirect Number of women Increase in their Beneficiaries employed on the Rosslyn income after training impacted Grove constructi
Slide 41: Group Strategy
| GROUP STRATEGY Controlling interests in high quality, long term, income producing assets in Africa with up to 20% of GAV in risk mitigated, client led developments. Grit 2.0 aims to further monetise our Intellectual property through additional revenue generation for the benefit of shareholders GRI
Slide 42: Grit Core Asset Portfolio
| GRIT CORE ASSET PORTFOLIO VDE Housing Estate Club Med Cap Skirring Value: US$ 44.0m Value: US$ 31.4m Commodity House Phase 1 Commodity House Phase 2 Value: US$ 57.0m Value: US$ 20.7m Vodacom Building Tullow Oil Value: US$ 51.3m Value: US$ 25.5m 42
Slide 43: Grit Core Asset Portfolio
| GRIT CORE ASSET PORTFOLIO Hollard Building Capital Place Value: US$ 21.1m Value: US$ 20.0m 5th Avenue Corporate Offices Anfaplace Mall Value: US$ 16.7m Value: US$ 67.5m Mukuba Mall Cosmopolitan Mall Value: US$ 62.2m Value: US$ 56.4m 43
Slide 44: Grit Core Asset Portfolio
| GRIT CORE ASSET PORTFOLIO Capital Place Kafubu Mall Mall de Tete Value: US$ 19.7m Value: US$ 13.4m Buffalo Mall Zimpeto Square Value: US$ 10.0m Value: US$ 3.3m 44
Slide 45: GREA Core Asset Portfolio
| GREA CORE ASSET PORTFOLIO (GRIT OWNS 53.3% OF GREA) Artemis Curepipe Hospital The Precinct Value: US$ 24.7m Value: US$ 33.3m Adumuah Place Metroplex Shopping Centre Value: US$ 2.7m Value: US$ 20.0m 45
Slide 46: DH Africa Asset Portfolio
| DH AFRICA ASSET PORTFOLIO Elevation (DH1) Acacia Estate Value: US$ 76.9m Value: US$ 70.2m Rosslyn Grove (DH3) Value: US$ 59.8m 46
Slide 47: Bora Africa Asset Portfolio
| BORA AFRICA ASSET PORTFOLIO Africa Data Centre Phase 1 Orbit Africa Value: US$ 28.5m Value: US$ 26.7m Imperial Distribution Centre Bollore Warehouse Value: US$ 18.6m Value: US$ 10.1m Eneo at Tatu Central Value: US$ 48.0m 47
Slide 48: Elevation
| GREA PROVEN TRACK-RECORD OF ACCRETIVE AFRICAN DEVELOPMENTS ELEVATION Addis Ababa, Ethiopia Property Description: Diplomatic Residential GLA: 15 201 m² No. of units 112 apartments No. of Parking Bays: 134 Parking Bays Valuation FY24: US$76.9m Completion Date: November 2021 US Embassy, British Embas
Slide 49: Rossyln Grove
| GREA PROVEN TRACK-RECORD OF ACCRETIVE AFRICAN DEVELOPMENTS ROSSYLN GROVE Nairobi, Kenya Property Description: Diplomatic Accommodation GLA: 16 038 m² No. of Parking Bays: 145 Parking Bays Valuation FY24: US$59.8m Start Date: October 2020 Completion Date: July 2022 Single Tenant: US Embassy Lease T
Slide 50: Africa Data Centre
| GREA PROVEN TRACK-RECORD OF ACCRETIVE AFRICAN DEVELOPMENTS AFRICA DATA CENTRE Lagos, Nigeria Property Description: Data Centre GLA: 994 m² No. of Parking Bays: 9 Parking Bays Valuation FY24: US$28.5m Start Date: March 2021 Completion Date: November 2021 Africa Data Centres (100% Single Tenant: Occ
Slide 51: Adumuah Place
| GREA PROVEN TRACK-RECORD OF ACCRETIVE AFRICAN DEVELOPMENTS ADUMUAH PLACE Accra, Ghana Property Description: Corporate Offices and Retail Space GLA: 2 125 m² Valuation FY24: US$2.7m No. of Parking Bays: 85 Open Parking Bays Completion Date: April 2022 Anchor Tenants: Rendeavour and C&J Hospital Typ
Slide 52: The Precinct
| GREA PROVEN TRACK-RECORD OF ACCRETIVE AFRICAN DEVELOPMENTS THE PRECINCT Grand Baie, Mauritius Property Description: Office Site Area: 35 931 m² GLA: 10 077 m² Valuation FY24: US$33.3m Start Date: June 2021 No. of Parking Bays: 241 Parking Bays Completion Date: February 2023 Grit, GREA, Dentons, Wo
Slide 53: Artemis Curepipe Hospital
| GREA PROVEN TRACK-RECORD OF ACCRETIVE AFRICAN DEVELOPMENTS ARTEMIS CUREPIPE HOSPITAL Curepipe, Mauritius Property Description: Multi-speciality Hospital GLA: 5 368 m² Valuation FY24: US$24.7m Start Date: June 2021 No. of Parking Bays: 85 Parking Bays Completion Date: February 2023 Single Tenant: A
Slide 54: ENEO at Tatu Central
| GREA PROVEN TRACK-RECORD OF ACCRETIVE AFRICAN DEVELOPMENTS ENEO AT TATU CENTRAL Nairobi, Kenya Mixed-use Development of Corporate Property Description: Offices & Retail Site Area: 9 197 m² GLA: 25 752 m² Start Date: June 2022 No. of Parking Bays: 571 Parking Bays Valuation FY24: US$48.0m Tower 1 (
Slide 55: Thank You
THANK YOU 55
Grit Real Estate Income Group — FY2024 Earnings Presentation on 6ix