Grit Real Estate Income Group Limited · LSE:GR1T
Grit Real Estate Income — HY2021 Earnings Presentation
59 slides from Grit Real Estate Income's earnings presentation, February 2021
Slide 1: HY2021 Results
HY2021 RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2020 COMMODITYHOUSE COMMODITY HOUSEPHASE PHASEII1 MOZAMBIQUE MOZAMBIQUE
Slide 2: Proceedings
Proceedings BRONWYN KNIGHT Introduction Chief Executive Officer BCom (Acc), CA(SA) Key Highlights • 2019 EY Entrepreneur of the Year Award Winner (Exceptional Category, Southern Africa) Portfolio Overview • 2015 Top CA(SA) under 35 Award Winner Financial Review Growth & Pipeline LEON VAN DE MOORTELE
Slide 3: Introduction
Introduction
Slide 4: The African Opportunity
The African Opportunity Mauritius ranks 50% 3.4% 40% Why Africa 2.6 Bn+ 54 urbanisation 13th Regional Growth Africans will be Population by 2060 countries Ease of doing business middle-upper class by 2030 2021 by 2030 worldwide RISING STRONG POPULATION INCREASING GROWING Key Trends GROWTH ECONOMIC G
Slide 5: Combined exposure to pre-funding developments and Gateway Real Estate Africa
*Combined exposure to pre-funding developments and Grit’s equity ownership to Gateway Real Estate Africa not to exceed 20% of Gross asset value
Slide 6: Grit at a glance
Our High-quality Tenants Grit at a glance GEOGRAPHIC SPLIT1 Geographic & sectoral diversification FINANCIAL HIGHLIGHTS # Mozambique 3.2% Mauritius 3.7% Zambia 3.8% 46.5% 5.8% Morocco 6.5% PROPERTY LTV WACD 39.3% Ghana 8.7% Kenya Botswana 9.9% PORTFOLIO HIGHLIGHTS # Senegal 23.4% Other Investments US
Slide 7: 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
Slide 8: Highlights
VDE HOUSING ESTATE MOZAMBIQUE Highlights
Slide 9: HY2021 Highlights & Trends (31 December 2020)
HY2021 Highlights & Trends (31 December 2020) Solid operational performance in a challenging environment US$849.2m US$1.244 8.0% +8.1% (+3.1%) (+6.3%) Total Income EPRA NRV per EPRA Vacancy Net Operating Income Producing Assets1 share 2 rate3 (incl. Associates)4 FY2020: US$823.5m FY2020: US$1.171 FY
Slide 10: Key Group Strategic Focus Areas
Key Group Strategic Focus Areas Focus on managing our assets and improving balance sheet strength through strict debt collection and cost control 1. Collections focus, cost control 2. Addressing rising Vacancy 3. Strengthening Balance and protecting existing portfolio rate (8.0% at 31 Dec ’20)1 shee
Slide 11: COVID-19 Impact on Rental Collections
COVID-19 Impact on Rental Collections Rental collection impacts improving through to December 2020 (>90%) Corp. Light Total July to Total Mar to Office Retail Hospitality Accomm Industrial Dec 2020 Jun 2020 Contracted Rent 100% 100% 100% 100% 100% 100% 100% Rent deferrals 0% (0.5%) 0% (13.8%) 0% (2.
Slide 12: Valuation movements for 6 months to 31 December 2020
Valuation movements for 6 months to 31 December 2020 COVID-19 valuation impacts have moderated • Uptick experienced in valuations Like for Like across office, hospitality, light Total Like for Fair value FX & other BALANCE % move for 6 industrial, corporate like move Additions movement impacts 31 DE
Slide 13: Continuing COVID-19 Impact on Grit's Real Estate Sectors
Continuing COVID-19 Impact on Grit’s Real Estate Sectors Resilient portfolio performing well, with >90% of contracted revenue value collected in July-December 2020 Focus on Corporate Accommodation, Corp. Accommodation, Industrial Industrial, Officeand and Office sectors Other investments supporting
Slide 14: EPRA vacancy contribution by property
EPRA vacancy contribution by property c.2% EPRA vacancy increase in six months to 31 December 2020 primarily driven by Retail • Anfa Place Shopping Centre Exit of H&M and delays in tenant take-up primarily 0.4% 0.2% driven by COVID-19 lockdowns. c.3,000m² 0.5% committed for take-up by 2021 Q3, reduc
Slide 15: Retail sector update
Retail sector update Exit of predominantly fashion retailers in favour of stronger international food and services operators MOROCCO – ANFAPLACE MALL (ENCLOSED) ZAMBIA – KAFUBU, MUKUBA, COSMO MALL • AnfaPlace Mall monthly cost • Mukuba, Kafubu and Cosmo of vacancy c.US$283k monthly cost of vacancy •
Slide 16: COVID-19 impact: Hospitality sector
COVID-19 impact: Hospitality sector Rent payments materially resuming in September 2020, looking to 2021 for consistent collection rates MAURITIUS HOSPITALITY PORTFOLIO (BEACHCOMBER & LUX) • All hotels operational – Tamassa and Canonnier open for domestic use, Mauricia and Victoria being used as des
Slide 17: Investment & Corporate actions update
Investment & Corporate actions update Grit has successfully delivered a series of quality acquisitions, capex additions and strategic corporate actions in the period, positioning the Group well for future growth Conversion to £ quote AnfaPlace Mall, Bolloré, Acacia Estate, Premium Listing on JSE Del
Slide 18: Portfolio overview
COMMODITY HOUSE MOZAMBIQUE Portfolio overview
Slide 19: Portfolio Characteristics (HY2021)
Portfolio Characteristics (HY2021)1 By Grit Economic By Grit proportionate interest consolidation 3.2% 3.0% KEY METRICS 3.8% 3.7% 3.5% 3.4% EPRA Occupancy 6.0% 6.5% 92.0% 39.3% 39.1% GEOGRAPHIC 8.7% 10.6% Multinational Tenants2 9.9% 11.7% 88.7% 2. Forbes 2000, Other Global & pan African tenant 23.4%
Slide 20: Income profile expiry
Income profile expiry 1 Corporate Accommodation LLR Office Light Industrial Retail Hospitality 100.0% 86.9% 72.3% 28.7% 26.6% 26.0% 24.2% 2 23.1% 23.2% 21.0% 20.6% 20.3% 19.9% 16.7% 15.8% 13.7% 13.1% 3 8.9% 7.8% 7.1% 6.8% 5.9% 4.5% 3.2% 2.0% 0.9% 0.8% 0.2% - - - - - - - - - - - - - - 6 M O N THS 1 2
Slide 21: Top 15 Tenants (as at 31 December 2020)
Top 15 Tenants (as at 31 December 2020) Majority of portfolio income generated from strength of multinational tenancies Income Lease Lease Rank Tenant Industry Tenant Grading (% of Group Total) Covenant Currency 1 BEACHCOMBER Hospitality 11.8% OTHER GLOBAL Triple Net EUR 2 TOTAL Mining and Natural R
Slide 22: Vale potential exit from Mozambique
Vale potential exit from Mozambique Quality asset subject to long lease mitigates near term risks • Vale announced in late January the consolidation of its ownership in Moatize mine and the Nacala Corridor infrastructure project, and although re-iterated its intention to reshape mine operations and
Slide 23: Letting activities
Letting activities Significant new lettings and renewals and commercial terms agreed in the 6 month period (100% basis) 2 PROPERTY TYPE TENANT SECTOR AREA (M ) LEASE TERM Commercial terms Vodacom Building Vodacom Office 10,659 5.0 agreed* Mukuba Mall Renewal Game Retail 5,060 4.9 Mukuba Mall Renewal
Slide 24: Financial Review
perform Financial Review
Slide 25: Financial highlights (as at 31 December 2020)
Financial highlights (as at 31 December 2020) Robust cost control offset revenue weakness to generate strong profit from operations and net income growth. Well positioned to rebound once COVID-19 impacts dissipate 31 Dec 2020 31 Dec 2019 12M Movement Dividend per share (US$ cps) 1.50 5.25 (71.4%) Gr
Slide 26: EPRA Net Reinstatement Value evolution – HY21
EPRA Net Reinstatement Value evolution – HY21 Portfolio Performance US$ cents # Other non-cash items include: ECL provisions, movement in foreign currency translation reserve, and deferred tax Ι 27
Slide 27: Like for like Revenue and NOI y-o-y movement
Like for like Revenue and NOI y-o-y movement ** Strong Operating cost control offset revenue weakness; specifically in retail sector HY2021 HY2021 19.3% 21.0% ➢ Revenue -6.2% on like for like basis ➢ NOI +0.9% on like for like basis ➢ Revenue -0.1% inclusive of acquisitions ➢ NOI +8.1% inclusive of
Slide 28: Key financial metrics
Key financial metrics Income producing assets ($m), Group LTV (%), WACD (%) Revenue and Net income ($m) Interest cover (x) Revenue Total Comprehensive Income Group LTV WACD 24.1 23.6 2.3x 19.6 19.4 19.7 1,000.0 80.0% 15.3 10.3 2.1x 2.1x 2.1x 900.0 860.1 6.4 849.2 70.0% 823.5 796.4 800.0 60.0% HY18 H
Slide 29: Loan to value (LTV)
Loan to value (“LTV”) Deleveraging and strengthening of the balance sheet is a strategic imperative in the medium term COVID-19 pandemic GRIT COVID-19 initiatives 51.4% 50.2% Initiatives under consideration to achieve 49.2% 49.3% 43.9% 45.0% LTV target in the near and medium term: 43.4% 43.1% 35% -
Slide 30: Debt Financing Update – December 2020
Debt Financing Update – December 2020 % DEBT EXPIRY PROFILE (excl. associates) MULTI BANK STRATEGY 59.4% 1.8% 4.0% 0.4% Standard Bank 38.6% 4.1% Bank of China 1.1% 1.0% State Bank of Mauritius Expiring within 1Y Expiring within 2Y Expiring within 3Y Expiring 3Y > 12.0% 41.5% Investec DEBT EXPIRY PRO
Slide 31: Drive In Trading (DiT) Refinance Update
Drive In Trading (DiT) Refinance Update A new loan facility1 with the Public Investment Corporation (PIC) has been approved and proposed in principle, subject to documentation PIC PROPOSED LOAN TERMS • Duration: 5 years (2 years with option to extend for another 3 years) • Interest rate: 9% per annu
Slide 32: Distributable Income
Distributable Income 31 Dec 2020 31 Dec 2019 US$’000 US$’000 Basic Earnings attributable to the owners of the parent 9,706 16,874 12.07 12.19 12.20 Company specific distribution adjustments - VAT Credits utilised on rentals 1,132 304 - Interest related to Anfa Place Mall areas under construction - 5
Slide 33: Statement of Financial Position
Statement of Financial Position INCOME PRODUCING ASSETS As at 31 Dec 2020 30 June 2020 Movement 31 Dec 2020 30 June 2020 Movement (US$’m) (US$’m) % (US$’m) (US$’m) % Assets Non-current assets Investment properties 584.8 572.1 2.2% 584.8 572.1 2.2% Deposits paid on investment properties 5.1 4.5 12.2%
Slide 34: Statement of Comprehensive Income
Statement of Comprehensive Income For the 6 months ended 31 Dec 2020 31 Dec 2019 Movement (US$’m) (US$’m) % Gross rental income 23.9 24.3 (1.6%) Straight-line rental income accrual (0.3) (0.2) 56.7% Revenue 23.6 24.1 (2.1%) Property operating expenses (4.1) (6.3) (34.2%) Net property income 19.5 17.
Slide 35: Growth, Investment & Pipeline
5TH AVENUE CORPORATE OFFICES GHANA Growth, Investment & Pipeline
Slide 36: Pipeline & investment considerations in light of COVID-19
Pipeline & investment considerations in light of COVID-19 3. Accelerated disposals of non-core assets and other recycling initiatives 2. Defending and strengthening 4. Reassessed all target acquisitions Grit’s Balance Sheet key priority in light of COVID-19 impacts 1. Grit extended target execution
Slide 37: Pipeline Transactions no longer being progressed
Pipeline Transactions no longer being progressed COVID-19 impacts have resulted in the non-closure of a number of pipeline opportunities Announced October 2019 • Adjacent acquisitions were announced PWC Location: Accra, Ghana prior to the onset of the COVID-19 BUILDING pandemic. Sector: Office • Upo
Slide 38: Pipeline Developments being progressed
Pipeline Developments being progressed Funding either secured through asset recycling initiatives or through DFI funding Target Completion Q3 2022 Size (GLA): 6,087m2 Property Yield: 10.5% ST. HELENE Date: CLINIC Location: Curepipe, Transaction US$7.3m Avg Annual Escalation: European Harmonised Maur
Slide 39: Announced Redevelopments underway
Announced Redevelopments underway Significant redevelopment activity to complement existing asset acquisitions Target Closing Q4 2021 Size (GLA): 7,324m2 Property Yield: 8.00% Date: Bolloré Pemba, Transaction Warehouse Location: Mozambique Value:* US$7.6m Avg Annual Escalation: US CPI + 1.5% (Redeve
Slide 40: Gateway Real Estate Africa Limited
Gateway Real Estate Africa Limited Grit’s development associate provides a “one solution” approach to client’s real estate needs GREA SHAREHOLDER STRUCTURE 48.6% • Founded and co-sponsored by Grit, GREA is a private company funded with US$175mln equity commitments and is staffed by an experienced te
Slide 41: Attractive GREA pipeline and capital investments
Attractive GREA pipeline and capital investments GREA’s focus on US embassy corporate accommodation and data centre sectors aligned with Grit strategy No. Project Country Sector Ownership % Project Start Project End Secured Projects include inter alia: 1 DH1 (US Embassy) Ethiopia Diplomatic Housing
Slide 42: Sustainability
KAFUBU MALL ZAMBIA Sustainability
Slide 43: Our sustainability agenda
Our sustainability agenda SDG’s that are significant to our business Grit employs 76% of local talent We’ve supported the local We have procedures in place for We ensure that all genders are across its offices in Africa. We community in Mauritius during the daily running of the business valued in th
Slide 44: Our sustainability priorities - Ongoing efforts to reach our ESG targets
Our sustainability priorities - Ongoing efforts to reach our ESG targets 25% 25% > 40% > 65% Targets Reduction by 2025 Improvement by 2025 Woman leadership positions Localised CARBON EMISSIONS BUILDING EFFICIENCY GENDER EQUALITY LOCAL REPRESENTATION 2019/20 Achievements 2019/20 Achievements 2019/20
Slide 45: ESG 2020/21 focus areas
ESG 2020/21 focus areas • Further develop our carbon offset strategy and plan in order to reach our target of net zero carbon by 2040. ENVIRONMENTAL • Deploy our Environmental Sustainability Management and Reporting Policy across all our assets in Africa. • Develop and implement a strategy to suppor
Slide 46: Closing Remarks
CLUB MED CAP SKIRRING SENEGAL Closing Remarks
Slide 47: Dividend policy guidance
Dividend policy guidance USD1.50cps interim dividend proposed, reflecting recent strong rent collection trends and the Group’s early progress towards its near-term LTV target of 45% ➢ To protect the long-term strength of the business, the Board temporarily suspended the dividend in the second half o
Slide 48: Premium Listing & Redomiciliation to Guernsey
Premium Listing & Redomiciliation to Guernsey Grit is a proudly African, now Premium LSE-Listed and UK-domiciled Company, headquartered in Mauritius Premium Listing on LSE Redomiciliation to Guernsey Represents the highest listing standards Migration of corporate seat of listed entity and places Gri
Slide 49: Closing Remarks
Closing Remarks 1 Reduced our exposure to the Retail sector Strong collection rates and effective management of 2 our assets Refined our current investment strategy to include more 3 resilient, essential and high-growth sectors Successful redom to Guersney & Premium Step Up 4 on LSE Resuming conserv
Slide 50: Annexures
ANFAPLACE MALL MOROCCO Annexures
Slide 51: Shareholder Base Evolution
Shareholder Base Evolution JSE shareholder contraction over time was the primary driver for JSE delisting and to concentrate liquidity through fewer exchanges Successful JSE de-listing 19.16 19.14 19.80 21.44 21.55 25.14 27.50 27.69 27.77 27.88 27.88 27.88 27.90 30.92 30.91 30.92 31.73 31.73 34.82 L
Slide 52: Corporate Awards and Accolades
Corporate Awards and Accolades Recognised for leadership, governance and compliance excellence EPRA 2020 Best Practices Recommendations Compliance SEP 2020 Bronze Award – Grit Real Estate Income Group 2020 API Top Africa Real Estate CEO SEP 2020 of the Year Award – Bronwyn Corbett (CEO) PWC (Mauriti
Slide 53: Coronavirus impact on Africa
Coronavirus impact on Africa Africa remains relatively less affected versus other territories Impact on Grit’s Footprint Countries* Per 1mn Country Total cases pop’n Grit’s footprint Morocco 475,355 12,787 Kenya 101,819 1,869 Ghana 70,768 2,249 Zambia 62,633 3,351 Senegal 28,760 1,691 Mozambique 44,
Slide 54: Vaccine deployment in Africa
Vaccine deployment in Africa Africa Mauritius January 2021 90 MILLION DOSES February 2021 90 million doses ordered for African countries – this will vaccinate 3% of the African population. 100k DOSES 100,000 doses deployed in Mauritius to front liners such as doctors, nurses, police, airport and cus
Slide 55: Portfolio Key Metrics – Geographic (as at 31 December 2020)
Portfolio Key Metrics – Geographic (as at 31 December 2020) Botswana Other % Attributable to GRIT Morocco Mozambique Ghana Mauritius Kenya Zambia Senegal Total (LLR)5 Investments 6 Number of Properties/Investments 1 9 3 5 2 3 26 1 4 54 Grit attributed Asset Value 1 93,678 313,903 47,766 171,864 27,8
Slide 56: Portfolio Key Metrics – Sectoral (as at 31 December 2020)
Portfolio Key Metrics – Sectoral (as at 31 December 2020) Corporate Other % Attributable to GRIT Hospitality Light Industrial Office Retail LLR Total Accommodation Investments6 Number of Properties/Investments 2 5 2 8 7 26 4 54 Grit attributed Asset Value 1 138,979 181,497 30,039 203,449 210,092 27,
Slide 57: EPRA key performance metrics (as at 31 December 2020)
EPRA key performance metrics (as at 31 December 2020) EPRA COST RATIOS EPRA COST RATIOS % Attributable to GRIT GLA (m²) EPRA NIY IFRS NIY EPRA TOPPED-UP NIY EPRA VACANCY RATE (incl. direct vacancy) (excl. direct vacancy) Mozambique 88,880 7.0% 7.2% 7.6% 5.3% 14.3% 13.7% Mauritius 69,907 6.4% 6.7% 6.
Slide 58: 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
Slide 59: 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 ir@grit.group
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