Grit Real Estate Income Group Limited · LSE:GR1T
Grit Real Estate Income — FY2017 Earnings Presentation
52 slides from Grit Real Estate Income's earnings presentation, September 2017
Slide 1: Annual Results Presentation
Annual Results Presentation FOR THE YEAR ENDED 30 JUNE 2017 Ι1
Slide 2: Contents
Contents Group Review Portfolio Overview FY17 Financial Review Case Studies Market Overview Looking Ahead Q&A Ι2
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) Ι3
Slide 4: Group Overview
Group Overview Ι4 Anadarko Building (Mozambique)
Slide 5: FY 2017 Highlights
FY 2017 Highlights Target Distribution WALE1 WACD3 Achieved 7.8 years2 5.78%4 US$12.07 cps vs. 5.8 years (2016) -0.44% decrease vs. 2016 +2.7% growth vs. 2016 1. Weighted Average Lease Expiry 3. Weighted Average Cost of Debt 2. After successful renegotiation of lease renewals and recent 4. As at 30
Slide 6: Dual listed on the JSE Main Board and SEM Official Market
Dual listed on the JSE Main Board (South Africa) and SEM Official Market (Mauritius) Market capitalisation of US$ 287.7 M ; Grit shares traded on 74% of trading days year-to-date across both exchanges 1 US Dollar-denominated income fund 7 distributions declared; semi-annual dividend payments Pan Afr
Slide 7: Grit’s Vision
Grit’s Vision Within the next 5 years, Grit Real Estate Income Group aims to become the leading real estate owner on the African continent outside of South Africa, focusing on income-producing assets with extremely strong counterparties, to ensure consistent growth of shareholder value. Properties’
Slide 8: Investment Strategy
Investment Strategy • Grow portfolio based on quality hard currency long-term leases and strong counterparties • Existing/pending Real Estate Investment Trust (REIT) structures • Strategic partnerships and in-country resources Core Competencies Margins of Safety • Existing knowledge base • Hard curr
Slide 9: Shareholder Base
Shareholder Base Ι9 Cosmopolitan Mall (Zambia)
Slide 10: Shareholder Base
Shareholder Base Public Investment Others 2017* Corporation/ Government Employees Pension Anchor shareholders: 2016 Fund 25% • Public Investment Corporation/ 23% 2015 32% Government Employees 28% 25% 26% Pension Fund 32% • Delta Property Fund Ltd 11% Redefine 6% 13% 8% Properties Ltd 9% 32% • Drive
Slide 11: Portfolio Overview
Portfolio Overview Ι 11 Barclays House (Mauritius)
Slide 12: Portfolio by sector and location
LIGHT CORPORATE HELD FOR RETAIL COMMERCIAL HOSPITALITY INDUSTRIAL RESIDENTIAL DEVELOPMENT ZIMPETO SQUARE ANADARKO BOLLORE TAMASSA VDE ANADARKO COMPOUND PHASE 2 ANFA PLACE 44% HOLLARD IMPERIAL LE VICTORIA IMPERIAL SHOPPING CENTER 44% PHASE 2 50% MUKUBA MALL VODACOM LE CANONNIER 50% KAFUBU MALL 44% BA
Slide 13: Portfolio Key Metrics
Portfolio Key Metrics Corporate Held for As at 31 August 2017 Retail Commercial Light Industrial Hospitality Total Residential Development Number of Properties 7 4 2 4 1 2 20 Property Value/Acquisition Price 230.7 124.2 24.5 127.3 21.4 18.3 546.3 (US $ M) Weighted Average Capitalisation Rate 7.7% 8.
Slide 14: Diversification of Portfolio
Diversification of Portfolio Geographical Split of Property Sectoral Split of Property Aug 2017 Corporate Aug 2017 Morocco Residential Mozambique 4% Commercial 20% 2017 2017 Hospitality 4% 25% 22% 2016 23% 2016 33% 19% 3% 27% 37% 3% 34% 45% 41% 2% 5% Mauritius 21% Light 5% 2% 14% 53% 26% Industrial
Slide 15: Strong Counterparties
Strong Counterparties Tenancy Grading 5% 21% 74% A-grade tenants B-grade tenants C-grade tenants Tenancy grading as per the JSE: A – grade: Large national tenants, large listed tenants and major franchisees B – grade: National tenants, listed tenants, franchisees, medium to large professional firms
Slide 16: FY17 Financial Review
FY17 Financial Review Ι 16 Imperial Warehouse (Kenya)
Slide 17: Statement of Financial Position
GROUP Statement of 2017 US$ M 2016 US$ M Movement Financial Position Assets Non-current assets Investment property 351.8 248.5 41.6% Investments in associates 89.0 45.9 93.8% Loans receivable 66.7 - NAV per share Other non-current assets 26.5 13.5 97.0% (US$ cps) Total non-current assets 534.1 308.0
Slide 18: Composition of Property Investment Value
Composition of Property Investment Total Property Investment Value (US$M) Value 600,0 Composition of Total Property 2017 546,3 Asset Value (US$ M) 500,0 Existing assets under Property 492,4 312.1 Investments Property value included under 400,0 92.7 Investment in Associate Interest bearing deposits o
Slide 19: Evolution of NAV per Share
EVOLUTION OF NAV PER SHARE +2.2% 11.56 f 149.56 Ι 19
Slide 20: Deployment of Proceeds from Rights Issue
Deployment of US$ M Proceeds from Rights BHI Transaction (44.428% of three Beachcomber resorts) 28.7 VDE Compound (final payment) 18.2 Issue Settlement of the equity revolving facilities 17.7 Cosmopolitan Mall (final payment) 15.7 Imperial Warehouse (final payment) 13.1 Anadarko Phase II Constructio
Slide 21: Debt Summary
Debt Summary Ι 21 Mall de Tete (Mozambique)
Slide 22: Debt Summary
Debt Summary YoY change in Key Debt Currency Exposure Investment Currency Exposure Debt Financing metrics (2016 to 2017) (2016 to 2017) 50,0% 6,2% 6,5% 5,8% 48,0% 6,0% 46,0% 5,5% 2017 2017 44,0% 5,0% 42,0% 48,8% 4,5% MZN MZN 40,0% 4,0% 1% 0% 41,6% 38,0% 3,5% 2016 2016 36,0% 3,0% 2016 2017 EUR 30% 2%
Slide 23: Debt Expiry Profile (US$ ‘000)
Debt Expiry Profile (US$ ‘000) 70 000 60 000 50 000 40 000 30 000 20 000 10 000 - Jul 17 Dec 17 Jun 18 Jul 18 Feb 19 Sep 19 Mar 20 Sep 21 Feb 22 Apr 22 Jul 27 Jun 31 US$ 5.6 M construction Currently under State Bank Mauritius bridge will be converted Revolving negotiation as part of a Bank of China
Slide 24: Multi-Bank Strategy
Multi-Bank Strategy Debt by Financier 2017: US$ 237.4M 2017 2016: US$ 163.6M Other SBSA/ Vendor $18,1m Multi-bank Approach Bank of China $13,0m 2016 $52,2m $12,8m New relationships with: AfrAsia Bank $19,3m $19,0m $51,7m • Bank of China • Mauritius Commercial Bank $20,0m • Nedbank Limited $35,7m • S
Slide 25: FY17 Distributable Income
FY17 Distributable Income Ι 25 Mukuba Mall (Zambia)
Slide 26: Distributable Income Movement
Distributable Income Movement Distributable Income Movement 2017 US$ M 2016 US$ M Movement Rental Income 24.3 20.9 17% Operating Costs Share in profit from associates to Income 5.2 3.2 62% (excluding non-cash items) Operating expenses (7.2) (5.8) 24% 2017: 27.5% 2016: 25.9% Other Income 3.3 2.9 12%
Slide 27: Dividend History
Dividend History +2.7% +4.1% • Increase in distribution: +2.7% 11,29 11,75 12,07 • Within targeted 2% - 4% 14,00 • Full year dividend: 12,00 2017 - US$12.07cps 10,00 5,58 8,00 4,65 4,57 2016 - US$11.75cps Total 6,00 6,64 6,17 6,12 1,38 H2 Dividend • Distributable income : 4,00 Clean out dividend 201
Slide 28: Rental & NOI Analysis
Rental & NOI Analysis YoY NOI Analysis (US$ M) Average Monthly Rentals 35,0 30,0 28.9 US$ 3 500 25.3 4,5 US$ 661 25,0 2,3 18.8 20.9 US$ 3 000 20,0 3,7 US$ 642 1,9 US$ 2 500 15,0 23,0 24,3 10,0 US$ 2 000 US$ 862 US$ 778 16,9 17,2 5,0 US$ 1 500 - US$ 1 000 (6,1) US$ 1 324 US$ 1 384 (7,1) (5,0) (0,4) (
Slide 29: Acquisition Effect on WALE (years)
Acquisition Effect on WALE (years) 12 10 7,8 8 FY2017 6,1 6,4 5,8 6 11,0 4 7,1 5,8 6,1 2 0 Existing Assets Existing FY2016 Assets Existing Assets Existing FY2017 Assets Acquisitions transferred Acquisitions prior to year Acquisitions transferred transferred Acquisitions post year transferred FY 2016
Slide 30: Administrative Costs
Administrative Costs Breakdown of Administrative Costs 6,0 1,4% 1,3% 4% 1,1% 5% 1,2% 5,0 10% • Although administration expenses 11% 1,0% increased by 45.2% over the prior year 4,0 3% 5% 10% 19% 0,8% • Administration expenses of total 3,0 4% property investments dropped by 0,6% 35% 1.3% to 1.1% 2,0 0
Slide 31: Case Studies
Case Studies Ι 31 Le Canonnier (Mauritius)
Slide 32: Mozambique – our in-country “grit”
Mozambique – our in-country “grit” Challenges Faced Outcomes Achieved Priority: operational Strong local authority and Delayed rental payments; Macro-economic environment risk management counterparty relationships no bad debt written off to date Vodacom Pepkor KPMG Long-term lease negotiated Early 1
Slide 33: Morocco – Anfa Place Shopping Center
Morocco – Anfa Place Shopping Center Challenges Faced Impact Outcomes Achieved Anfa Place Shopping Center is in the Top 10 Tourist destinations in Casablanca, with 6 million visitors a year Tenant mix Declining Morocco Improved design inconsistent retail rentals Lack of center Increasing Refurbishme
Slide 34: Mauritius - Tamassa Resort
Mauritius - Tamassa Resort • Tenant: LUX* • 10 year, triple-net EUR lease • Acquisition yield: 8% • Equity US$ 19.8 M and debt US$ 24 M, equivalent • Cost of debt: fixed rate EUR 3.75% • US$ 12.8 M preference shares 6.25% yield with strategic co-investor • Return on Grit equity of 15% • Variable ren
Slide 35: Market Overview
Market Overview Ι 35 Buffalo Mall (Kenya)
Slide 36: Market Overview
Number of Grit Shares Traded Market Overview 350 000 Initiatives to improve liquidity: 300 000 • Index inclusion tracking: SEM 10 250 000 (Mauritius), SA Listed Property Index (or SAPY) index (South Africa), South 200 000 Africa new property indices (to be launched in October 2017), 150 000 MSCI Fro
Slide 37: Looking Ahead
Looking Ahead Ι 37 Le Mauricia (Mauritius)
Slide 38: Paradise Hospitality Group
Paradise Hospitality Group Paradise Hospitality Group (“PHG”) was established to take advantage of the current liquidity and enhanced returns in the hospitality sector. Overview of PHG: 100% • The primary objective of PHG is to invest into properties in the Delta International Mauritius Mauritius St
Slide 39: Gateway Delta Development Holdings Ltd
Gateway Delta Development Holdings Ltd • Investment into development company • 20% stake • Minimum internal rate of return of 20% 20% • Project pipeline: US$ 680 M • Seed investors - capital committed: US$ 175 M • Strategic partnerships: local development partners, blue-chip multinational tenants •
Slide 40: REIT Legislation Developments & Grit
REIT Legislation Developments & Grit Morocco Rwanda REIT legislation promulgated in REIT legislation promulgated in 2015/2016 2013 Listed REITs: 0 Listed REITs: 0 Grit engaged with Moroccan Grit engaged with Rwandan Real Estate partners in partners in country to implement implementing REIT structure
Slide 41: Forward Guidance
Barclays House Anfa Place Shopping Center Forward Guidance (Mauritius) (Morocco) Grow shareholder value and returns Target 12% total USD return (8.25% dividend yield, 3.75% NAV growth) Forecast dividend growth 3% - 5% Buffalo Mall Anadarko Building Vodacom Building (Kenya) (Mozambique) (Mozambique)
Slide 42: Thank You
Thank You Grit Real Estate Income Group Reg. No. C128881 3rd floor, La Croisette Shopping Centre, Grand Baie 30517, Mauritius Level 3, Alexander House, 35 Cybercity Ebene 72201, Mauritius T +230 269 7090 Ι 42
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Slide 44: Annexure
Annexure Ι 44 Vodacom Building (Mozambique)
Slide 45: Timeline (2014-2015)
Timeline (2014-2015) 2014 Acquisition of Assets Key Events July 2014 July 2014 July 2014 Acquired Anadarko Building Acquisition of Anfa Place Shopping Completion of inward listing on the JSE (Mozambique) as its 1st asset for US$ Center (Morocco) for US$ 100.7m Limited’s ALT-X board as Delta 41.6m In
Slide 46: Timeline (2016-2017)
Timeline (2016-2017) 2016 Acquisition of Assets Key Events March 2016 March 2016 May 2016 Acquisition of Barclays House Acquisition of Buffalo Mall (Kenya) Delta Africa officially becomes Mara (Mauritius) & Bollore Warehouse (Mozambique) Delta – the largest pan African income US$ 14.3m Combined: US$
Slide 47: Executive Team
Executive Team Bronwyn is the Chief Ex ecutive Officer of Grit Real Estate Income Group Limited (“Grit” previously Mara Delta Property Holdings), the largest pan African focused real estate fund listed on the Johannesburg Stock Exchange and in Mauritius. Bronwyn has over ten years’ experience in the
Slide 48: Executive Team
Executive Team Heidi Rix joined Grit Real Estate Income Group Limited (“Grit”) pr eviously Mara Delta Property Holdings) as Chief Operating Officer on 1 May 2016. Heidi has 19 years’ commercial and real estate experience and is an admitted attorney holding BComm and LLB degrees in addition to specia
Slide 49: Property portfolio (1/3)
Property portfolio (1/3) 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 tenant: BP tenant: Sector: Office Sector: Office Sector: Of
Slide 50: Property portfolio (2/3)
Property portfolio (2/3) 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: Retai
Slide 51: Property portfolio (3/3)
Property portfolio (3/3) Tamassa Resort Barclays House Buffalo Mall (50.0% ownership*) Bel Ombre, Location: Ebene, Mauritius Location: Naivasha, Kenya Location: Mauritius Anchor Anchor Anchor Lux Island Resorts Barclays Bank Tuskys tenant: tenant: tenant: Sector: Hospitality Sector: Office Sector: R
Slide 52: 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
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