Grit Real Estate Income Group Limited · LSE:GR1T
Grit Real Estate Income — Mara Delta Property Holdings — H1 2017 Earnings Presentation
54 slides from Grit Real Estate Income's earnings presentation, February 2017
Slide 1: Interim Results Presentation
Interim Results Presentation FOR THE SIX MONTHS ENDED 31 DECEMBER 2016
Slide 2: Proceedings
Proceedings 1. Introduction 3-5 Barclays House, Mauritius 2. Highlights 6-7 3. The Journey to Date 8-15 4. Financial Review 16-23 5. Subsequent Events 24-29 6. Looking Ahead 30-37 7. Annexure A: Property Portfolio 38-42 8. Annexure B: Corporate Structure 43-45 9. Annexure C: Investment Strategy & Cr
Slide 3: Introduction
moaradele PROPERTY HOLDINGS INTRODUCTION
Slide 4: Introduction to Mara Delta
Introduction to Mara Delta Only African income fund focused on real estate in Africa (excluding South Africa) 1 listed on the Stock Exchange of Mauritius and the Johannesburg Stock Exchange Diverse asset portfolio focused on strength of counterparty and located in 2 African countries with solid fund
Slide 5: Mara Delta at a Glance
Mara Delta at a Glance Mara Delta is a pan-African property income fund focusing on African real-estate assets (excluding South Africa), underpinned by predominantly US Dollar and Euro denominated medium to long term leases (with strong counterparties), delivering sustainable income. Company Snapsho
Slide 6: Highlights
moaradele PROPERTY HOLDINGS HIGHLIGHTS
Slide 7: Highlights for the six months ended December 2016
Highlights (for the six months ended 31 December 2016) DELIVERY OF COST OF DEBT 24.0% INCREASE FORECASTED DPS DOWN 0.42% IN INCOME US$6.12 cps* 5.80% US$13.2m FY2016: US$11.75 cps FY2016: 6.22% 31 Dec 2015: US$10.7m YIELD ACCRETIVE HOSPITALITY OCCUPANCY DEALS DIVERSIFICATION RATE US$244m 4 98% curre
Slide 8: The Journey to Date
moaradele PROPERTY HOLDINGS THE JOURNEY TO DATE
Slide 9: Mara Delta Timeline
Mara Delta Timeline July 2014 July 2014 March 2015 April 2015 June 2015 October 2015 December 2015 May 2016 October 2016 Acquired Acquisition of Acquisition of Acquisition of Paid distribution Anadarko Debut on Hollard/KPMG Acquired Kafubu Anfa Place Acquisition of Buffalo Mall of US$5.58 cents Buil
Slide 10: Diversified Portfolio Overview (Post Pipeline)
Diversified Portfolio Overview (Post Pipeline) Modern diversified portfolio with attractive tenant mix located in African countries with strong fundamentals Portfolio Metrics1 Light Corporate Regional Diversification (GAV) POST PIPELINE Retail Office Industrial Hospitality Accomm. Total Mauritius
Slide 11: Asset Overview (Post Current Acquisitions)
Asset Overview (Post Current Acquisitions) Stake Pro-rata Valuation Pro-rata Properties Sector Country City Anchor Tenants (%) (US$m) GLA (m2) EXISTING ASSETS Anadarko Building Office Mozambique Maputo Anadarko Petroleum 100 43.2 7 248 Vodacom Building Office Mozambique Maputo Vodacom 100 47.8 10 99
Slide 12: Asset Overview (Post Current Acquisitions)
Asset Overview (Post Current Acquisitions) Stake Pro-rata Valuation Pro-rata Properties Sector Country City Anchor Tenants (%) (US$m) GLA (m2) ASSETS UNDER DEVELOPMENT/REDEVELOPMENT Anfa Place Retail Morocco Casablanca Carrefour, M&S, H&M, Starbucks 100 97.4 30 879 Anadarko Building Office Mozambiqu
Slide 13: Asset Overview (Post Current Acquisitions)
Asset Overview (Post Current Acquisitions) Stake Pro-rata Valuation Pro-rata Properties Sector Country City Anchor Tenants (%) (US$m) GLA (m2) ASSETS UNDER TRANSFER Corporate VDE Compound Mozambique Tete Vale & Barloworld 100 35.0 12 966 Accomm. Mall de Tete Retail Mozambique Tete Shoprite, Choppies
Slide 14: High Quality Tenant Base
High Quality Tenant Base In line with its focus on counter-party strength, Mara Delta has a blue chip tenant base with a weighted average lease term of 7.3 years Anchor Tenants Tenancy Grading A+ (Global Corporates) 10% 45% A (National or African 45% Continent Corporate) B (Local Tenancy) Weighted
Slide 15: Shareholder Base
Shareholder Base As at 31 December 2016 Units held Holding Government Employees Pension Fund 33 408 647 29.9% Delta Property Fund Limited 23 866 776 21.4% Pivotal Global (now Redefine) 13 187 535 11.8% Management 7 611 061 6.8% Eskom Pension & Provident Fund 6 017 218 5.4% Stanlib 5 917 248 5.3% Anc
Slide 16: Financial Review
moaradele PROPERTY HOLDINGS FINANCIAL REVIEW
Slide 17: Financial Overview
Financial Overview 6 months to 12 months to 6 months to 31 Dec 2016 30 June 2016 31 Dec 2015 Dividend per share (US$ cents) 6.12 11.75 6.17 Cost to income ratio * 25.9% 26.7% 17.1% Property LTV 51.0% 48.9% 44.7% NAV per share (US$ cents) 163.32 163.27 161.78 Weighted average rental/m² US$20.1 US$23.
Slide 18: Distributable Income Statement
Distributable Income Statement Unaudited Audited Unaudited 6 months to 12 months to 6 months to 31 Dec 2016 30 June 2016 31 Dec 2015 US$ ’000 US$ ’000 US$ ’000 Net property income 7 764 17 196 8 615 Rental income 10 700 23 012 10 390 Property operating expenses (2 936) (5 816) (1 775) Other income a
Slide 19: Quality of Income
Quality of Income REALISED FOREX GAIN US$1.9 million CONCESSIONS PROVIDED TO ANFA TENANTS US$0.4 million SEVERANCE SETTLEMENTS (ANFA) US$0.2 million ADDITIONAL PROVISION FOR BAD DEBTS US$0.5 million INTERIM RESULTS AS AT 31 DEC 2016 INTRODUCTION | HIGHLIGHTS | JOURNEY TO DATE | FINANCIAL REVIEW | SU
Slide 20: Statement of Financial Position
Statement of Financial Position Unaudited 31 Dec Audited 30 June Unaudited 31 Dec 2016 (US$ ‘000) 2015 (US$ ‘000) 2015 (US$ ‘000) Assets Non-Current assets 343 597 307 958 263 320 Investment property/associates 328 413 294 491 260 985 Other non-current assets 15 184 13 467 2 335 Current assets 22 38
Slide 21: Debt Summary
Debt Summary Debt Expiry Profile – US$ millions Debt Currency Exposure MZN; 1.5% EUR; 30% 50.1 USD; 68.5% 38.0 25.3 20.0 WACD 7,20% Revolver 9.5 10.5 6,80% 7.9 5.7 0.5 2.5 6,40% 6.94% MAR JUN DEC MAR JUL FEB SEP SEP FEB JUL 2017 2017 2017 2018 2018 2019 2019 2021 2022 2027 6,00% March 2017 6.22% 5
Slide 22: Debt Summary (Continued)
Debt Summary (Continued) Debt Exposure by Lender Nedbank Barclays Banco Unico DEBT PROVIDER AS AT 31 DEC 2016 PERCENTAGE South Africa State Bank Investec Bank 29.8% Mauritius Standard Bank South Africa 22.4% Standard Afrasia Bank 15.5% Bank Mozambique Standard Bank South 11.2% Investec Africa\Rockca
Slide 23: Debt Summary (Continued)
Debt Summary (Continued) Debt Composition Property Fixed Revolver Interest – 63.6% 12% Term Debt 81% Bridge Property Floating 7% Interest 36.4% Management of Debt Target hedge – 70% USD/100% EUR of property loan’s interest exposure Target Fund LTV – 50% Maximum LTV (property level) – 60% INTER
Slide 24: Subsequent Events
moaradele PROPERTY HOLDINGS SUBSEQUENT EVENTS
Slide 25: Subsequent Events: Tamassa Acquisition
Subsequent Events (for the six months ended 31 December 2016) TAMASSA ACQUISITION (LUX RESORTS) MAURITIUS Binding sale agreement signed with Néréide Limited (wholly owned subsidiary of Lux Island Resorts Limited) for a purchase consideration of US$40 million Approval from Board of Investment and
Slide 26: Subsequent Events: Beachcomber Acquisition
Subsequent Events (for the six months ended 31 December 2016) BEACHCOMBER ACQUISITION MAURITIUS Mara Delta has concluded negotiations with New Mauritius Hotels Limited (“NMH”) for the acquisition of a 44.4% interest in an entity owning three hotel assets in Mauritius, namely: Le Victoria, Le Canon
Slide 27: Subsequent Events: Imperial Warehouse
Subsequent Events (for the six months ended 31 December 2016) IMPERIAL WAREHOUSE KENYA Mara Delta has acquired the Imperial Health Sciences Logistics Warehouse in Nairobi, Kenya The facility will be leased back to Imperial on a 10 year triple net basis, with annual escalations of 3%, denominated
Slide 28: Subsequent Events: Pipeline Conversion
Subsequent Events (for the six months ended 31 December 2016) PIPELINE CONVERSION MOZAMBIQUE & ZAMBIA The Vale accommodation compound in Tete, Mozambique and the Cosmopolitan Mall in Lusaka, Zambia are awaiting transfer pending regulatory approvals INTERIM RESULTS AS AT 31 DEC 2016 INTRODUCTION |
Slide 29: Subsequent Events: Mall de Tete
Subsequent Events (for the six months ended 31 December 2016) MALL DE TETE MOZAMBIQUE Mara Delta has entered into a share sale and purchase agreement to acquire a newly-built community retail centre in Tete, Mozambique Mara Delta will purchase 100% of the issued share capital of Gerania Limited,
Slide 30: Looking Ahead
moaradele PROPERTY HOLDINGS LOOKING AHEAD
Slide 31: Case Study: Resilience of Mozambique Portfolio
Case Study: Resilience of Mozambique Portfolio Despite macro-economic and geo-political headwinds, Mara Delta’s Mozambique portfolio has remained resilient (as evidenced by the below metrics) Unaudited Audited Unaudited MOZAMBIQUE PORTFOLIO 31 Dec 2016 30 June 2016 31 Dec 2015 US$ ‘000 US$ ‘000 US$
Slide 32: Case Study: Anadarko Building
Case Study: Anadarko Building (incl. Phase II) An asset that fully encapsulates and speaks to Mara Delta’s positioning and investment strategy Transaction Highlights Acquired in July 2014 for US$32.5 million, the property is currently valued at US$43.2 million Located in the most prestigious upc
Slide 33: Large Market Opportunity in Africa
Large Market Opportunity in Africa Africa offers high investment return potential supported by attractive macro growth prospects and impressive population growth 1 Attractive Macro Growth Prospect GDP CAGR 2015 - 2020E Current GDP 1,087 272 36 22 64 33 74 142 138 (US$bn) 7.8% 8.0% 6.7% 7.0% 5.1% 5
Slide 34: Risk Mitigation
Risk Mitigation The Fund continues to mitigate the operational and other risk associated with African Real Estate through the following measures: Prioritization of assets with USD or Currency Risk USD/Euro-denominated leases Prioritization of long-term leases with blue chip multinational Tenancy R
Slide 35: Mara Delta Growth Platform
Mara Delta Growth Platform High quality property management and development platform with deep market know-how Core Experienced Management Team & Corporate Governance Structure Board Risk Committee Audit Committee Investment Committee Remuneration Committee CEO Bronwyn Corbett CIO CFO COO Head of
Slide 36: Prospects
Prospects DISTRIBUTION TOTAL COST CURRENT GROWTH (US$) RETURN OF DEBT PIPELINE 2% - 4% 12% 5% - 6.5% US$244m FORECAST Long term leases & FORECAST TARGETED A-Grade counterparties (Dividend Return: 7% - 8%) ACCESS TO RISK COMPETITIVE SEM10 PIPELINE MITIGANT ADVANTAGE Multi-banked Ahead of peers Li
Slide 37: Thank You
moaradele PROPERTY HOLDINGS THANK YOU
Slide 38: Annexure A: Property Portfolio
ANNEXURE A: PROPERTY PORTFOLIO
Slide 39: Geographic Spread
Geographic Spread Kenya (2 assets) Population (million) 43.2 Morocco (1 asset) GDP (USDbn, 2015) 60.9 1 Population (million) 33.0 Real GDP growth rate (2016 ave forecast) 6% GDP (USDbn, 2015) 110 GDP / Capita (USD, 2015) 1 331 Real GDP growth rate (2016 ave forecast) 1.8% CPI (2016 ave forecast) 5.4
Slide 40: Property Portfolio
Property Portfolio Anadarko Building KPMG/Hollard Building Vodacom Building Maputo, Maputo, Maputo, Location: Location: Location: Mozambique Mozambique Mozambique Anchor Anadarko Anchor KPMG, Hollard & Anchor Vodacom tenant: Petroleum tenants: BP tenant: Sector: Office Sector: Office Sector: Office
Slide 41: Property Portfolio
Property Portfolio Kafubu Mall (50% ownership) Mukuba Mall (50% ownership) Buffalo Mall (45.5% ownership) Location: Ndola, Zambia Location: Kitwe, Zambia Location: Naivasha, Kenya Anchor Anchor Shoprite, Game, Anchor Shoprite Tuskys tenant: tenants: Pick n Pay tenant: Sector: Retail Sector: Retail S
Slide 42: Property Portfolio
Property Portfolio Le Mauricia Resort & Spa (44.4% ownership) Tamassa Resort Cosmopolitan Mall (50% ownership) Trou-aux-Biches, Bel Ombre, Location: Location: Location: Lusaka, Zambia Mauritius Mauritius Anchor Anchor Anchor Beachcomber Lux Island Resorts Shoprite, Game tenant: tenant: tenants: Sect
Slide 43: Annexure B: Corporate Structure
ANNEXURE B: CORPORATE STRUCTURE
Slide 44: Corporate Structure
Corporate Structure Assets funded by Equity (50%) and Investors Debt (50%) 50% of asset acquisition (plus costs) funded Each property is held in an “in- by shareholders country” PropCo, which has its own intermediary HoldCo (based Mara Delta Property in either Mauritius or Dubai) Holdings (“List
Slide 45: Governance
Governance Dual primary listing on the SEM and JSE Compliance with the Code of Corporate Governance of Mauritius and the King Code on Corporate Governance for South Africa Independent Non-Executive Chairperson Majority Non-Executive Directors appointed to the Board Independent Board Sub-Co
Slide 46: Annexure C: Investment Strategy & Criteria
ANNEXURE C: INVESTMENT STRATEGY & CRITERIA
Slide 47: Investment Strategy
Investment Strategy Investment Strategy Leverage on existing knowledge base and experience in Mozambique, Morocco, Zambia, Mauritius and Kenya Grow portfolio based on quality USD based leases and strong counterparties Focus on countries with existing/pending REIT structures Develop and maint
Slide 48: Investment Criteria
Investment Criteria The Fund considers key criteria such as: ability to conduct business in hard currency, repatriation of funds, political risk, currency risk, land tenure and debt raising ability in the first instance before proceeding further with any investment opportunity Investment opportu
Slide 49: Annexure D: Management Team
moaradele PROPERTY HOLDINGS ANNEXURE D: MANAGEMENT TEAM |
Slide 50: Executive Team
Executive Team Bronwyn Anne Corbett Bronwyn is the Chief Executive Officer of Mara Delta Property Holdings, the largest pan African focused real estate fund listed on Chief Executive Officer the Johannesburg Stock Exchange and in Mauritius. Bronwyn has significant corporate finance and deal making e
Slide 51: Management Team (Continued)
Management Team (Continued) INVESTMENT MANAGEMENT Mike Sewell Mike is a charted management accountant with over eight years’ international experience in real estate, having worked on a cross Head of Acquisitions section of deal structures, asset sectors and jurisdictions. His previous position as Fu
Slide 52: Management Team (Continued)
Management Team (Continued) FINANCE Jaco van Zyl Jaco holds a BCom Degree from the North-West University, a BCompt Honours Degree from the University of South Africa and he is a Group Finance Manager: Mauritius qualified Chartered Accountant. After completing articles he’s moved to Federal Airlines
Slide 53: Management Team (Continued)
Management Team (Continued) OPERATIONS Trevor Matthews Trevor has over 30 years industry experience beginning his career in 1979 as a property assistant, a position he held for six years, in Senior Operations Asset Manager which he established the building blocks to a long and successful career in t
Slide 54: Disclaimer
Disclaimer For professional advisers or Qualified Institutional Buyers only. This material is not suitable for retail clients. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may
Mara Delta Property Holdings — H1 2017 Earnings Presentation on 6ix