Grit Real Estate Income Group Limited · LSE:GR1T
Grit Real Estate Income — H1 FY18 Earnings Presentation
54 slides from Grit Real Estate Income's earnings presentation, February 2018
Slide 1: Interim Results Presentation
Interim Results Presentation FOR THE 6 MONTHS ENDED 31 DECEMBER 2017
Slide 2: Proceedings
Proceedings Group Review Market Overview Portfolio Overview H1 FY18 Financial Review Case Studies Looking Ahead Q&A Ι 2
Slide 3: Grit Team Presenters
Grit Team Presenters Bronwyn Corbett Chief Executive Officer B.Comm (Acc) (Univ. of Natal, PMB), CA(SA) Leon van de Moortele Chief Finance Officer BCompt (Hons), CA(SA) Left to right: Greg Pearson (Group Director), Moira van der Westhuizen (Chief Integration Officer), Bronwyn Corbett (CEO), Heidi Ri
Slide 4: Africa Macro Roundup
Africa Macro Roundup Morocco Kenya ➢ Dirham allowed to trade within a ➢ Kenya's presidential rerun handed band of +/- 2.5% around its peg over victory to Uhuru Kenyatta ➢ Real GDP growth of 4.6% in 2017 compared to 1.2% in 2016 Botswana ➢ S&P to maintain Botswana’s que sovereign credit rating at A-;
Slide 5: Group Overview
Group Overview Ι 5 Victoria Beachcomber Resort & Spa, Mauritius
Slide 6: Interim Results Highlights
Interim Results Highlights H1 FY18 Distribution WALE1 WACD2 NAV US$6.07cps 7.4 years 5.69%3 US$152.7 cps4 within forecast -9 bps vs. FY17 +2.1% from FY17 1. Weighted Average Lease Expiry 2. Weighted Average Cost of Debt 4. US$158.7 cps pre dividend 3. As at 31 December 2017 Dividend Yield Portfolio
Slide 7: Grit – At A Glance
Grit – At A Glance Improved liquidity through dual-listing on the JSE Main Board and SEM Official Market Market capitalisation: US$302m* Dividend yield: 8.6% (SEM); 9.6% (JSE)* Free Float: 45.9% (as per JSE) Attractive and sustainable hard currency income stream 8 declared distributions in line with
Slide 8: Margins of Safety
Risk Mitigation 01 02 03 Margins 04 05 06 Political risk Hard currency Repatriation of funds & macro- economics of Land tenure Ability to raise debt Counterparty Safety Ι 8
Slide 9: Growth, consistency, strength
growth consistency • Expansion & diversification of portfolio • Hard currency returns underpinned by solid • Shareholder value & returns property fundamentals • Existing expertise • High occupancy rates & quality tenants v strength team • Robust portfolio • Strong & experienced management • Sound tr
Slide 10: Market Overview
Market Overview Ι 10 Commodity House Phase 2, Mozambique
Slide 11: Shareholder Base
Shareholder Base Shareholders By Type • New institutional shareholders from the 7% 3% UK and Ghana 1% • New investments by African Pension Management & Staff Funds Investment Holding Companies • Increased participation by retail investors and improvements in liquidity 37% Mutual Funds • Anchor share
Slide 12: Grit in Figures: Liquidity of Grit Shares
Grit in Figures Liquidity of Grit Shares 1,100 1,000 Price Discount to NAV 900 Number of Shares Traded (‘000s) JSE: ZAR 15.60 800 JSE: 15.4% (US$1.29) 700 SEM: 5.0% SEM: US$1.45 600 500 Market 400 Free Float Capitalisation 300 JSE: ZAR3.3bn JSE: 45.9% 200 SEM: US$302m SEM: Not reported 100 0 Average
Slide 13: Grit Trading Statistics
Grit Trading Statistics Trading Frequency Total Volume Traded 80.0% 5,000 70.0% 4,500 Number of Shares (‘000s) 4,000 TRADING H1 H1 60.0% 3,500 FREQUENCY FY17 FY18 50.0% 3,000 40.0% 2,500 JSE 54.8% 73.8% 2,000 30.0% SEM 2.4% 55.6% 1,500 20.0% 1,000 10.0% 500 TOTAL TURNOVER 0.0% 0 JSE (ZAR) 66,174,871
Slide 14: Differentiating Grit from Global REITs
Differentiating Grit from Global REITs Dividend Yield (%) 10 9 Target of 12% total 8 USD return for Grit for FY18 7 6 5 4 Target of 8.25% dividend 3 yield and 3.75% 2 NAV growth 1 0 Global Americas Asia/Pacific Europe Middle East/ Africa Grit 2015 2016 2017 Ι 14 Source: National Association of Real
Slide 15: Portfolio Overview
Portfolio Overview Ι 15 Mauricia Beachcomber Resort & Spa, Mauritius
Slide 16: Portfolio Overview
Portfolio Overview LIGHT LIGHT CORPORATE CORPORATE HELD FOR EQUITY LISTED RETAIL RETAIL COMMERCIAL HOSPITALITY HOSPITALITY INDUSTRIAL INDUSTRIAL ACCOMMODATION RESIDENTIAL DEVELOPMENT COMMODITY VDE HOUSING ZIMPETO SQUARE BOLLORE ESTATE LLR (6.25%) HOUSE LUX: MALL DE TETE Phase 1 IMPERIAL: Tamassa BUF
Slide 17: Portfolio Key Metrics
Portfolio Key Metrics Corporate Held for As at 31 January 2018 Retail Commercial Light Industrial Hospitality Total Accommodation Development Number of Properties 7 5 2 4 1 1 20 Property Value/Acquisition Price 235.5 143.6 24.9 136.9 34.3 8.1 US$583.5m3 (US$ m) Weighted Average Capitalisation Rate (
Slide 18: Diversification of Portfolio
Diversification of Portfolio Geographical Split of Property Sectoral Split of Property FY15 FY16 FY17 H1 FY18 FY15 FY16 FY17 H1 FY18 50.0% 50.0% 45.0% 45.0% 40.0% 40.0% 38.2% 35.0% 32.8% 35.0% 29.3% 30.0% 30.0% 24.2% 25.0% 25.0% 21.9% 20.3% 17.8% 20.0% 20.0% 15.0% 15.0% 10.0% 10.0% 5.5% 4.3% 4.5% 5.
Slide 19: Key Tenants Schedule
Key Tenants Schedule GLA Income Lease Lease Rank Key Tenants Industry Jurisdiction (% of Group (% of Group Covenant Currency Total) Total) 1 Hospitality 18% 14% Triple Net EUR 2 Mining 5% 10% Gross USD 3 Hospitality 10% 9% Triple Net EUR 4 Telecom. 5% 9% Double Net USD 5 Retail 8% 7% Gross USD Ι 19
Slide 20: Key Tenants Schedule (Cont.)
Key Tenants Schedule (Cont.) GLA Income Lease Rank Key Tenants Industry Jurisdiction (% of Group (% of Group Lease Currency Covenant Total) Total) Oil & Gas 6 2% 5% Gross USD Exploration 7 Retail 5% 5% Gross USD / ZMW 8 Retail 4% 4% Gross USD / ZMW 9 Logistics 7% 4% Triple Net USD 10 Retail 2% 4% Gr
Slide 21: H1 FY18 Financial Review
H1 FY18 Financial Review Ι 21 Cosmopolitan Mall, Zambia
Slide 22: Statement of Financial Position
GROUP Statement of H1 FY18 FY17 Financial Position US$m US$m Movement Assets Non-current assets Total Property Investments 592.4 507.6 16.7% Other non-current assets 28.4 26.5 7.2% NAV per share Total non-current assets 620.9 534.1 16.3% (US$ cps) Total current assets 50.9 51.0 -0.2% Total assets 67
Slide 23: Property Investment Updates
Property Investment Updates 600.0 Total Property Investment Value (US$m) 592.4 • Total Property Investments 500.0 507.6 • US$592m (+16.7%) • Transfers completed: 400.0 • Imperial Distribution Centre (Kenya), August 17 295.0 300.0 • Beachcomber Hotels 210.4 (Mauritius), August 17 200.0 • Commodity Ho
Slide 24: Evolution Of NAV Per Share
Evolution Of NAV Per Share +2.08% Ι 24
Slide 25: Debt Summary
Debt Summary Ι 25 Barclays House, Mauritius
Slide 26: Debt Summary
Debt Summary Debt Currency Exposure Investment Currency Exposure Net EUR Exposure 2017 2018 2017 2018 80.0% 80.0% 80,000 70.6% 70.0% 70.0% 70,000 -29.6% 60.1% 60.0% 60.0% 60,000 50.0% 50.0% 50,000 EUR ('000s) 39.9% 40.0% 40.0% 40,000 30.0% 28.4% 30,000 30.0% 20.0% 20.0% 20,000 10.0% 10.0% 10,000 0.9
Slide 27: Debt Summary (Cont.)
Debt Summary (Cont.) Weighted Average Cost of Debt 8.0% 1.6% 7.0% 1.4% 6.0% 1.2% 6.94% 5.0% 6.22% 1.0% 4.0% 5.78% 0.8% 3.0% 5.69% 0.6% 2.0% 1.0% 0.4% 0.0% 0.2% FY15 FY2015 FY16 FY2016 FY17 FY2017 H1 FY18 HY2018 WACD Libor Ι 27
Slide 28: Debt Expiry Profile
Debt Expiry Profile Debt Expiry Profile 160,000 140,000 120,000 100,000 US$ (‘000s) 80,000 60,000 40,000 20,000 - Feb 18 Apr 18 Jul 18 Sep 18 Nov 18 Feb 19 Mar-19 Sep 19 Mar 20 Dec 20 2021 onwards Ι 28
Slide 29: Multi-Bank Strategy
Multi-Bank Strategy Debt Provider 35.0% 31.5% 30.0% 25.0% 23.1% 20.0% 17.1% 15.0% 13.2% 10.4% 10.0% 5.0% 3.8% 1.0% 0.0% 0.0% 0.0% Bank of China Standard Bank Investec Bank State Bank Barclays Afrasia Bank Banco Unico Rockcastle / Nedbank South Mauritius Standard Bank Africa FY17 H1 FY18 Ι 29
Slide 30: H1 FY18 Distributable Income
H1 FY18 Distributable Income Ι 30 Cannonier Beachcomber Resort & Spa, Mauritius
Slide 31: Distributable Income Movement
Distributable Distributable Income Movement H1 FY18 H2 FY17 H1 FY17 US$m US$m US$m Income Movement Rental Income 15.2 13.6 10.7 Share in profit from associates 5.5 2.7 2.5 Operating Costs (excluding non-cash items) to Income Operating expenses (2.7) (4.2) (2.9) H1 FY18: 15.3% Other Income 1.6 1.9 1.
Slide 32: Dividend History
Dividend History 14.00 +2.7% 12.00 +4.1% • Distribution: +2.0% vs H2 FY17 Target 11.29 11.75 12.07 10.00 US$ Cents per share (cps) • Full year dividend within 3-5% target range 8.00 • Full year dividend: 6.00 6.07 H1 FY18 - US$6.07 cps 4.00 H2 FY17 - US$5.95 cps 2.00 0.00 FY15 FY16 FY17 H1 FY18 Ι 32
Slide 33: Case Studies
Case Studies Ι 33 Hollard, Mozambique
Slide 34: Grit's Transformational Strategy
Grit’s Transformational Strategy • Grit is committed to supporting the underlying economies of its operations and to being a responsible corporate citizen. • Empowering local communities within all areas of Grit’s operations and stakeholders, through employment, knowledge transfer and best practice
Slide 35: Margins of Safety: Opportunities in Ghana
Margins of Safety Opportunities Investment Strategy Investment into Ghana is ramping up, with upcoming developments such as the new Accra as a regional Grit as the preferred airport due for completion in April 2018 Hard currency leases economic and logistics hub corporate real estate partner Proven
Slide 36: Margins of Safety: Opportunities in Botswana
Margins of Safety Opportunities Investment Strategy Botswana is the country with the highest Investment Grade rating in Africa, with an S&P Stable local currency Grit as a key corporate real A- rating with and a Moody’s A2 rating Hard currency leases partially pegged to a estate partner; Target hard
Slide 37: Anfa Place Shopping Center
Anfa Place Shopping Center Current Revitalisation Project Status Key Tenancies Successfully Relocated for • Required Vacancy Creation for layout Project Objective improvements: +/- 95% complete • Body Shop • Required Tenancy Relocation Commitment • La Vie en Rose for improved tenancy mix: +/- 85% •
Slide 38: Looking ahead
Looking ahead • Country diversification into new jurisdictions with promising growth prospects • Introducing new shareholders at NAV • Expansion of international brands, tenant base and relationships • Asset growth through new accretive acquisitions • Asset diversification whilst ensuring secure, ha
Slide 39: Thank You
Thank You Grit Real Estate Income Group Reg. No. C128881 3rd floor, La Croisette Shopping Centre, Grand Baie 30517, Mauritius Level 5, Alexander House, 35 Cybercity Ebene 72201, Mauritius T: +230 269 7090 E: communications@grit.group Ι 39
Slide 40: Annexure
Annexure Ι 40
Slide 41: Timeline - 2014
41 Timeline - 2014 July 2014 July 2014 Acquired Anadarko Completion of inward Building listing on the JSE (Mozambique) as its Limited’s ALT-X board 1st asset for as Delta International US$32.5m July 2014 Acquisition of Anfa Place Shopping Center (Morocco) for US$114.68m Acquisition of Assets Key Eve
Slide 42: Timeline - 2015
Timeline - 2015 March 2015 April 2015 Debut on Mauritius Stock Acquisition of August 2015 Exchange (SEM) and Hollard/KPMG June 2015 Paid distribution of migration from BSX (Mozambique) Maiden issue US$4.65cps, taking building for of shares on FY2015 distribution to Maiden distribution of US$14.9m th
Slide 43: Timeline - 2015 continued
Timeline - 2015 continued November 2015 Delta Africa and Pivotal merger announcement and formation of Mara Delta December 2015 Acquired Kafubu Mall and Mukuba Mall (Zambia) US$40.6m Acquisition of Assets Key Events Ι 43
Slide 44: Timeline - 2016
Timeline - 2016 April 2016 October 2016 Acquisition of Buffalo Mall Paid distribution of March 2016 (Kenya) US$5.58cps, Acquisition of Barclays & Bollore Warehouse taking FY2016 House (Mauritius) (Mozambique) distribution to a total US$13.6m Combined: US$14.8m of US$11.75 cps March 2016 May 2016 Dec
Slide 45: Timeline - 2017
Timeline - 2017 March 2017 June 2017 Leaseback acquisition Sixth distribution – clean June 2017 August 2017 of Tamassa Resort out dividend for period 1 Acquisition of Acquisition of Imperial (Mauritius) from Lux Jan 17 to 30 Apr 17 of Cosmopolitan Mall Distribution (Kenya) for Resorts for US$24.2m U
Slide 46: Executive Team
Executive Team Bronwyn is a founding member and CEO of Grit Real Estate Income Group, the largest pan-African focused real estate group listed on the JSE and SEM (stock exchanges in South Africa and Mauritius respectively). Bronwyn has over 10 Bronwyn Corbett years’ experience in the real estate inv
Slide 47: Executive Team
Executive Team Heidi joined Grit as Chief Operating Officer in May 2016. She has 19 years’ commercial and real estate experience and is Heidi Rix an admitted attorney holding BComm and LLB degrees in addition to specialised real estate sector qualifications. Heidi Group General Manager has recently
Slide 48: Members of the Board
Members of the Board Peter is a qualified attorney and began his career as the senior tax manager at Arthur Anderson and Associates in Peter Todd Johannesburg. He joined TWS Rubin Ferguson in 1993 as a tax partner and was instrumental in listing six companies Lead Independent Director on the JSE. In
Slide 49: Members of the Board
Members of the Board Matshepo is a Chartered Accountant and holds a Certificate in Theory of Accounting and a Bachelor of Business Matshepo More Science in Finance. Matshepo served her articles at Deloitte, specialising in financial institutions, before being Independent Non-Executive seconded to Ne
Slide 50: Members of the Board
Members of the Board Maheshwar Doorgakant Permanent alternate Maheshwar is a fellow of the Institute of Chartered Accountants of England and Wales. He holds the position of director for Chandra Managing director of Apex Fund Services (Mauritius) Limited, which forms part of the Apex Group. He holds
Slide 51: Property Portfolio
51 Property Portfolio Commodity House Phase 1 Hollard Building Vodacom Building Maputo, Maputo, Maputo, Location: Location: Location: Mozambique Mozambique Mozambique Anchor Anadarko Anchor KPMG, Hollard & Anchor Vodacom tenant: Petroleum tenant: BP tenant: Sector: Office Sector: Office Sector: Offi
Slide 52: Property Portfolio (Cont.)
52 Property Portfolio (Cont.) VDE Housing Estate Barclays House Tamassa Resort Tete, Bel Ombre, Location: Location: Ebene, Mauritius Location: Mozambique Mauritius Anchor Vale and Anchor Anchor Barclays Bank Lux Island Resorts tenants: Barloworld tenant: tenant: Corporate Sector: Office Sector: Hosp
Slide 53: Property Portfolio (Cont.)
53 Property Portfolio (Cont.) Kafubu Mall (50% ownership*) Mukuba Mall (50% ownership*) Cosmopolitan Mall (50% ownership*) Location: Ndola, Zambia Location: Kitwe, Zambia Location: Lusaka, Zambia Anchor Anchor Shoprite, Game, Anchor Shoprite Shoprite, Game tenant: tenant: Pick n Pay tenant: Sector:
Slide 54: Disclaimer
Disclaimer This report has been issued and approved for use by you 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 attaching to such securities or financial instrum
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