Grit Real Estate Income Group (LSE:GR1T) — Full Year Results

0:02 Good afternoon, ladies and gentlemen, and welcome to the GRIT REAL ESTATE INCOME GROUP Full Year Results Investor Presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Just please simply type in your question and press send. The company may not be in a position to answer every question in today's meeting. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. We'll make these available to you via your dashboard, and we'll notify you when they're ready for your review. I'd also like to remind you that

0:33 this presentation is being recorded. Before we begin, we'd like to submit the following poll. And if you'd give that your kind attention, I'm sure the company will be most grateful. And I'd now like to hand over to Bronwyn Knight, CEO. Good afternoon. Good afternoon. Thank you, and and thank you for hosting us today. So we'll be taking you through the June 2021 results as a business. Leon, our CFO, is also on the call today, so we'll spend some time on the numbers themselves. But, you know, the intention is to try and really define what the GRIT strategy is, what the investment platform is, and just really taking you and contextualizing how the business has performed under the COVID period, as well as these strategies in place now, from an operating business perspective, and the opportunities that we're going to be looking at into the future.

1:26 So just a reminder, that the GRIT business invests and is involved cradle to grave from a real estate solution, across the African continent. So, basically, from an investment strategy perspective, we are pan African. We invest in countries that we are able to secure hard currencies, euros and dollars. We invest in counterparties or tenants that are strong international conglomerates that have to be in Africa, and, basically, GRIT is their real estate partner of choice. So effectively, what, as I previously said, cradle to grave means what? We have the real estate platform across all of these countries, which I'll show you now, when I get to the next slide, that really has facilities management, property management, leasing management, development management, as the well as well as the whole ability to manage the real estate assets within the ambience of our portfolio.

2:27 Just so that you can see exactly where we invest, and exactly why we believe that GRIT is a great conduit to investing in Africa, but in a governed risk mitigated way. So what is very important that our portfolio, we invest, cross geography. We have access into North, West, East, and South Africa outside of South Africa. We invest in hard currency leases, so we remove any currency issues that might take place traditionally in emerging markets. We invest or we have real estate partners or tenants that are multi global tenants. We look at a array of asset classes, so we have exposure into light industrial, office, corporate accommodation, hospitality, retail.

3:13 And what we believe is that the, cost diversification of that of the portfolio, as well as country geography allows us to have a really risk mitigated real estate platform to to access African growth effectively. So just to continue, what is really important is that where we see the world of investment across Africa, we have half of our portfolio invested in investment grade Africa, countries like Morocco, Botswana, Mauritius, and the other half of our portfolio is invested in growth Africa. However, the key margins of safety before we will even look at investment is that, the importance of the macro stability, as I've mentioned, the hard currency and the ability to achieve hard currency rentals, the repatriation of money out of these countries, the security of the land tenure, the ability to raise, debt, and then obviously overlaid by the global tenants that has to be in Africa itself.

4:19 Whilst that the, the sort of journey of GRIT, has been a very interesting one, what we have seen, and and sort of the highlights of the business thus far, is that we've been able to build up this multi geographic portfolio. So, and I'm just going to maybe just go to the slide whereby I can just really just show sort of what went right and what has been challenging under the COVID period. So, due to our portfolio diversification, we had we were able and continue to able to weather storms. Obviously, what we saw under the COVID period, 50% of the portfolio, corporate accommodation, light industrial office proved to be extremely resilient. From a operational performance perspective, we were able to take down vacancies over the financial year from 8% to under 6%.

5:12 We had very strong cash collections over 92%. What we were able to do is we're able to grow the net the NOI of the business. However, overlay to that, we have seen increased LTV pressure, which I'll go into exactly where that has come from, and then obviously pressure on covenants. So that is a really, really important, key consideration with what we have put into place now to be able to really tackle that loan to value. So as I mentioned to to yourselves is that if you look at the investment platform of GRIT and the multi geographic so the multi asset class meant that over 50% of our portfolio was resilient.

5:57 What I mean when I say that, we were collecting rentals. We were re renewing leases. We were filling up vacancies. 25% of the portfolio was hospitality, which as you can imagine under the COVID period was a very difficult asset class. And then 25% of the portfolio was retail, which was also a very challenging asset class. However, as we've seen now and as we continue to see, and I'm just gonna jump across to hospitality, what we have seen is that effectively the countries that GRIT invest in today went through lockdowns from around March of last year to October effectively of this year. We did not discount any rentals for tenants. However, we had to give them cash flow holidays effectively or cash flow assistance.

6:45 Where we stand today with all the borders, in Mauritius, as well as in Senegal reopening fully, we see that the majority of our hospitality tenants are in the process of catching up historic rentals. From the first of October, they are all repaying their rentals. So whilst we had quite a depressed situation over the COVID period under hospitality, hospitality, we see some short term recovery now. And that short term recovery is really, really important when it comes to the metrics of the portfolio. So this particular slide really shows you the asset class diversification. If you can if you look at the slide, what you'll see is that over the COVID period, we lost about a $100,000,000 worth of value, on the asset value. What what happened then is that, obviously, the loan to value, went up to the 53%.

7:39 Now that loan to value up to 53%, pre COVID, we were sitting around 45%, but this valuation pressure and the ability and and accessing additional liquidity facilities have now taken us to loan to value whereby we as management and the board are looking at significant, actions to reduce that loan to value. So, ordinarily, the strategies that we are looking at, which can be depicted in this slide, is that we want to get to a near term target of 45%. What that 45% near term means is that we can resume dividends.

8:15 And how do we get to that 45%? So we have announced an asset recycling program. That asset recycling program, we have announced is 20% of our asset value, which constitutes about a $150,000,000 worth of assets. Currently under offers, one of our retail assets, which constitutes about $80,000,000 of that. So asset recycling itself will have an impact of loan to value from 1% to 5%. We've also successfully, concluded a transaction which has allowed us to take on a very accretive industrial warehouse in East Africa, plus an equity preference note, which has had a positive impact on loan to value, and then overlay that with the assets, recovery on valuations.

9:03 So where you see this previous slide, what we see is that we see offices recovering in the short term. We did not see the same trajectory as other developed markets on offices. People are not reducing their office space. People have gone back to their offices fairly quickly. So this valuation reduction that you see just under 6%, we see quite a quick recovery of that valuation. On hospitality, because of what we've seen from the markets reopening, we see the ability for hospitality to recover quite quickly. We have, asset management control of one of our corporate accommodation assets in Mozambique Vale for that to recover. The challenge will be retail. So retail will probably take enough two years to recover. In the interim, we've had to sign sort of two year leases to just really tie over those retail tenants, and we see that being a slightly longer recovery.

9:57 However, as I've mentioned to you, we are looking at disposing one of our major retail assets, which is just under half of what our retail exposure is. So that would obviously improve that number thereafter. So really from us just going back. Sorry. So whilst we have got a near term target of 45%, which then puts us into dividend paying territory, the medium term target is to get that around 35 to 40%. And we as management are looking at some sort of different ideas around how do we get that further to from 35 to 40%. And there's some other opportunities outside of the initiatives that you see on the right hand side, but those initiatives that you see on the screen today are very much underway currently.

10:47 So as I've mentioned earlier, one of the substantial assets that we are disposing are of is our shopping center Morocco. That particular asset is under, offer currently. We hope to have that closed and secured by the end of this year, and that asset will be disposed at book value. So the net asset value you see in the business today, which we believe is a depressed net asset value just under $10.03, sits with the book value that ANFA will be disposed at. So there's two parts. There's obviously the net asset value of the business and how do we grow that, and then there's obviously where we see from a share price perspective and such a significant trade discount to that NAV. But we are confident that the net asset value that we quoted at the end of June is a very depressed valuation or value, that we see significant traction on the recovery of that NAV over time as valuations themselves recover.

11:46 The transaction that I mentioned earlier was one of the key transactions that we concluded. This transaction did a couple of things. The key focus of the group going forward will be infrastructure type assets, light industrial, offices, corporate accommodation, data centers, and that focus point really goes under the ambience of this transaction that we closed. We had the ability to secure an industrial, project as well as a redevelopment of this particular industrial warehouse. The redevelopment will be done at a 16% development yield and geared. We were able to secure a twenty year lease, a dollar based lease on this particular asset, and we were very, successful in concluding additional financing from IFC, which is really a key funding partner for Africa and for, emerging markets.

12:41 Overlaid to that, we were able to secure a preference note, which is recognized as equity, and this transaction is NAV enhancing for ourselves, as well as having a positive impact on loan to value.

12:57 So what I'm going to so this particular slide, as I mentioned earlier, the key fundamentals of our business is real estate. So from an operational perspective, we need to be able to manage what the delivery of rent real estate is. And as I've mentioned, and I will ask Leon to show us a particular slide here, that we have been able to grow and continue to grow the NOI. But the other important metric is that from December of last year, we're sitting at an 8% vacancy. We're now sitting at just under a 6% vacancy, and the team continues to take and fill up that that vacancy, which is really key. So, Leon, if I can ask you just to jump into the financial review, please, and just if we can just also take the audience through the NOI and and what we've progressed.

13:47 And then, obviously, the cost reduction and cost saving of the business was a key material item of the management team. Perfect. Thanks, Bronwyn. So just certain of the key highlights that that we wanted to to put forward is is obviously the management team had to focus on specifically the items that were directly within the control of of management. Obviously, one of the the key aspects is is very tight cost control. So you'll see that our our administrative costs, significant savings of about 31%. Of that, about half of that is transactional based and others are ongoing asset manage ongoing administrative costs. Some of it is temporary during this COVID period. For example, our travel costs where we've been unable to spend as much time on our assets as we we were historically, which will come back, but we should see a very good saving in terms of the the ongoing costs, specifically around the the listing costs. Previously, we were listed on three exchanges being the Johannesburg Stock Exchange, the Stock Exchange of Mauritius, the London Stock Exchange. Having dropped that one listing, that provides us a very good impetus to to keep those costs down.

14:53 Another very key aspect was the the rental collections. You know, the team has worked specifically hard on on ensuring that all the rental that is built is actually collected. During the year, we've actually improved our our rental collections from the the previous period from eighty eight point six to to ninety two point five. And this is one of the the key strengths of the management team as well as just the the close ties we do with have with our tenants. The cost ratios in terms of the EPRA cost ratios dropped by 1.4%. And just in terms of the income producing assets, in spite of the the heavy losses that we we did take on the valuations, yeah, we have kept the the income producing assets down to a minimum in terms of they they declined to 2.6%. In terms of the revenue, I just got a decent slide here that gives you a lot more breakdown of this.

15:43 So when it comes to the revenue, you'll see that the heaviest impact we've had is on the retail sector. Not only did we have a number of leases that actually expired right on the the 03/31/2020 in one of the assets in Zambia, we've also had the just come out of a redevelopment phase on Anfa where we were now starting to fill up that vacant space and essentially got into COVID period, which put the brakes on this. I think one of the pre questions that we had was how can we ensure that the the vacancy trajectory is actually gonna be coming down. One of the key items that we've seen is is within the Zambian Mall that actually suffered all of those those lease termination well, sorry, the the lease coming to an end in March is we've managed to fill that center. It's basically got no vacancies at the moment.

16:33 What we've seen there as well is a very strong recovery of the the local economic factors in in Zambia over the last three to four months. The currency has improved from 22 to to a dollar to to now about 16 to a dollar. That is very attractive for us because during the this period, we did convert some of our leases from being dollar based leases to based leases on some of the fashion retailers who who are struggling. So we should see a very nice recovery in terms of those rates in dollar terms. What we've also seen is now that the the COVID period is coming to an end within the Moroccan environment. All of the tenants that we had lined up pre COVID to to actually take up the space that was created through the the redevelopment are now coming back to the table and wanted to to actually execute some of these leases, and that trajectory should carry on into to the future. What we are seeing is some very nice green shoots in terms of the the recovery of footfall.

17:29 And what we've actually seen in the the Anfra Place shopping mall in Morocco is is actually record high footfalls that we've had in the last four years. And this has started sort of from July, and it's it's looking very good to continue into the future. What we've also seen is just through through some of the cost saving initiatives, specifically in the the office space, we have had quite a significant reduction in our operating costs. Again, some of this is is just through the passage of time where certain maintenance events we we couldn't actually do due to lockdown for limited hours. Some of these will come back, but we have found some some long term savings in those cost structures. And then through the other assets, we have been the beneficiary of an increased euro versus the dollar for our hospitality assets, which are all euro denominated. And just a reminder to to the the listeners at the moment is when it comes to our hospitality, it's not traditional hospitality as as some other s owners are. These are all sale and leaseback transactions with a fixed lease. There there's no variability to the lease at all, then effectively triple net leases, one invoice per month for all of these assets.

18:36 Just some assets that we have seen some good growth on is the LRR portfolio, which is our Botswana portfolio. Essentially, those have a much higher effective increase in the rates, generally around about an 8% increase. And we've also seen just the full year impact of that acquisition back in the previous financial year. They did do an additional five assets during the period as well, which have been performing quite well, and vacancies are generally under control there as well.

19:07 Some of the other key metrics that are obviously very, very key to us, LTV, one of the primary items. I think when we're looking at our discount of the the share price to to NAV, one of the key impacts of that is obviously the LTV, which is why there's such a key focus on on the management team to get this down through a number of strategies. What we have seen as well is just our cost of debt. Even through this period where we've had a number of transactions where we've actually refinanced them, the weighted average cost of debt has come down slightly from 5.9 to 5.7.

19:38 One of the other items just keeping control over is obviously our covenants. Our interest cover has come down during this period due to all the concessions and the vacancies in the retail side to 1.8, but we do see that recovering quite strongly now as those vacancies are are reduced.

19:57 I think this slide here is just really to to underpin the fact that there's been an extensive amount of work from a management team to keep costs down. You know, over this period, we've had salary reductions for for senior managers well as the the directors, anything from 20% to to reducing to 10%. Obviously, some of the the cost like the travel as mentioned earlier, and then the the listing cost and administrative cost that come in in line with that. When we look at the transaction costs, obviously these are very transactional based and one off in nature with the limited transaction flow that we had during this financial year that has obviously come down as well. One of the biggest items and one of the key focuses of the team is obviously at our debt expiry profile.

20:43 What the team has done is effectively got to a point now where we've extended the majority of our debt facilities out by further eighteen months. And this is really ahead of a very large refinancing structure that we're gonna be looking at in the quarter one of next year, looking to to have a single point of update, either a high yield bond or a debt syndication through through one of the banks to bring all the the debt under one umbrella and get a longer tenure. The aim is to to get to a five to a seven year tenure on this this date. This would make it far more effective in terms of our way of of financing. Historically, as we grew from a a very small property company where you effectively took your debt at each property level, it's now got to a scale where it's sufficiently large enough to actually look at a high yield bond as an example of of

21:31 the debt restructure, and that's something the team will be focusing on in the next couple months. And it's just one of the key items that we have been a key trigger to our success up to now is just our very close ties that we do have with our financiers. Our biggest bank is actually Standard Bank of South Africa through their various balance sheets on the continent as well as Absa Bank, Bank of China, and and then State Bank of Mauritius who's the primary funder for our hospitality assets here in Mauritius.

22:05 Sorry. Let me ask you. What we've done as well, just to Apologies. I was just skipping you through that. So sorry if I changed the slide. There we go. That's fine. Just one of the key items to to actually understand GRITS numbers is is often in Africa, the norm is to have properties where you have partners in those properties.

22:24 The unfortunate side of that is to to get proper visibility of the actual underlying performance of of the the portfolio. Now, obviously, when you have assets that are held as joint ventures or or as associates, you know, they come through the the income statement on a single line item being your your share of profits from associates. What we do here is really just to to provide a a detailed breakdown of how the those income streams in these these properties, which are effectively run as as joint ventures or proportionately owned properties. And then where we have properties where we have a small outside shareholder, you know, the the noncontrolling interest. And what I I just wanna make sure is that when we're looking at the business itself, the key way management is is is looking at it is our proportionate share of income, our proportionate share of assets.

23:11 Another key item just to to mention here is even though we had the significant vacancies in the 30% decrease in our property portfolio in the retail sector, the company still did generate fair amount of distributable earnings at 5.97¢, of which 4.47 has been held back with a strategy to reduce the LTV down from the 53% closer to the 45%.

23:44 I'll hand over back to Bowman. Thank you. So just from, I'm just going to touch, specifically, on our one of our associate companies. So just a reminder that GRIT actually invests, and is currently a 20% shareholder in a development company by the name of Gateway Real Estate Africa. The this particular company has been very successful over the last twenty four months even during COVID around deploying all its equity into projects across the region. What we have seen is that they have successfully completed or in the process of completing a number of projects that align with the pipeline, projects of GRIT or basically the, asset base where which we wanna align ourselves in the future.

24:38 So they have completed and are completing a number of corporate accommodation embassy assets, light industrial assets. They have successfully handed over a data center for for a, global operator. So, basically, where they sit is this business sits with a construction cost base, net asset value of a $186,000,000, which has the opportunity upon completion to go to a NAV of around $250,000,000. Chris is obviously a strategic partner of this development company. So whilst we have consolidated from our side, this particular business has had the capital to continue developments across Africa. So when I talk about the cradle to grave real estate solution, we need to be able to service our tenants, which you can see are very similar from an asset management perspective, from a real estate management perspective, and then from a development management perspective. So, from this particular associate business of ours, we are able to align ourselves with being able to develop for some of our key, tenants as well.

25:51 Just to touch on sustainability. I mean, I think from our side, one, we're in Africa business. We have really, really big institutional shareholders. We have pension funds across Africa that are holders of the GRITED stock. Not only that, we're sitting in emerging markets. So we have a very big opportunity to make a major impact across the African continent. So we do that with an ambience of our own business. For us, the ability to look at solar, the ability to clip on solar or for our real estate across Africa is a massive opportunity. So things like building efficiency is a key key, element of our social responsibility that we look at. The ability to put people and to train people and to create localized structures is absolutely key.

26:43 We've got over a 120 people cradle to grave real estate across Africa, and the importance of having local representation became even more important over COVID because we actually couldn't fly to a of these jurisdictions. So our localized teams are extremely upskilled, extremely talented individuals. And then, obviously, gender equality, not just because this is a woman led business, but because the importance of gender equality. So we boast to have very successful and very exciting stats around having key women in key positions, at the GRIT business. So the social element for us and social responsibility is a key parameter to our success actually across Africa and actually that we can make such a big impact. So I think from my side, just to quickly sum up and then and just for everybody to realize that whilst we are in Africa and whilst it is emerging markets, what GRIT prides itself as and why we did the premium segment step up at the beginning of this year is we wanted to create a highly governed conduit for developed market investors to access the Africa growth story, which meant it was the backing of a management team and a platform that was able to take out a lot of the perceived Africa risks.

28:00 So how do we do that? And we do that with the ability, to be cross geography, cross asset class. More importantly, the type of tenants that we transact with are international conglomerates that have to be in Africa. We secure hard currency leases. But whilst we've seen success on the actual underlying operations, we still had challenges around loan to value specifically and, obviously, valuation pressure. So whilst we haven't declared a dividend for the second half of this year, we are extremely motivated, and have already put measures into place, including, as I've mentioned, the recycling of assets, which has a material impact on the on the LTV.

28:46 So for us, one of the key key aspects on the short term is how do we get back to that 45%? How do we get back to actually paying dividends, which is really key? So for us, just to quickly have on the on the final slide, some closing remarks, you know, why do we do and and and what is our business and what is our our proposition? So, basically, we obviously have a strong operational business, strong assets. We want to strengthen the group balance sheet and liquidity, which is one of the key aspects which I've discussed today. This includes the asset recycling, which I have detailed today, including an asset of 8%, which the Anfra Shopping Center. We want to, implement a long term debt strategy. So as Leon mentioned, we're well underway of looking at a syndicated either bond, syndicated type loan structure whereby we will have much longer dated, debt, and then we need to resume cash dividends.

29:46 And cash collections is absolutely key. But we have demonstrated that our operational team has collected even though things have been very, very tough for real estate globally, but obviously in Africa as well. So on that note, what I would like to do just in closing, is maybe start reading out some of the questions that have come through on on the call today. Maybe, Mark, I can hand over to you for a second. That's great. Bronwyn, Leon, thank you very much indeed for updating investors this afternoon. Ladies and gentlemen, please do continue to submit your questions using the q and a tab situated on the right hand corner of your screen. Just by while Bromwin and Leon take a few moments to review and questions submitted, I'd like to remind you that recording of this presentation along with a copy of the slides and the published Q and A can be accessed via your Investor Meet company dashboard.

30:34 I'd also like to remind you that your feedback is important to the company. And immediately after this presentation has ended, we'll redirect you for the opportunity to provide feedback in order that the company can better understand your views and expectations. Brumman, Leon, perhaps if I could, I I would start off by reading out some of these, questions that we've received. And I know you've touched on a number of these throughout the presentation, but where you can, perhaps, any further clarity would be great for. Are you increasingly confident on the outlook for contracted revenue collections for the twelve months to the end of June twenty two? So maybe I can answer that and then Leon can overlay if I have left anything off. So I think, you know, the confidence comes in the track record ultimately. So I think from our side, we've demonstrated that even over sort of the lockdown periods, which we saw from March to around about the October 1, specifically for our hospitality tenants, the the the team did an exceptional job.

31:29 I mean, I our collections rate never went below 90% and obviously was greatly impacted by the hospitality sector. So, yes, we are confident around cash collections, but we're confident because we have seen the recovery, and specifically the hospitality sector, which makes up 25% of our portfolio. These countries have reopened. We have actually, interesting enough, over Mauritius, our four hotels that we own there, November, December, January bookings are over 85%, occupancy. So all of this goes to demonstrating the the collectability. We have, though, on the hospitality side, started collecting already, which is really important. So, whilst, obviously, we wanna be slightly conservative, but there's no reason why that can't even continue to improve and could continue to improve quite dramatically.

32:21 So we're very confident around the cash collections. Yeah. I think just to overlay the the opening of the borders in Mauritius on the October 1 has been a remarkable change to to the actual just day to day life of Mauritians. And the way you're actually seeing it in the streets and the the volume of tourists coming in, I think Bron has been trying to to get a ticket back to to Mauritius from London and is actually struggling to to find availability. So Struggling to get home at this stage. So, you know, it's it's nice to see how quickly it actually has rebounded in in a very short term, and it's only been open for for roughly a month. That's great. Thank you very much indeed. You certainly touched on dividends, but the one of the questions that we received is do you expect to pay any dividends in the next twelve months?

33:13 So it's a good question that from the fact that I think what we would rather say is that we need to see loan to value at 45% before we can consider paying dividends. So, Mark, to answer that question, it's more say we see in the near term, how we get to that 45% through those initiatives that I've mentioned, the acid recycling, partially valuation recovery, obviously, some accretive acquisitions. So but we are extremely motivated, both personally as as investors and GRIT ourselves, as well as understanding what our needs of our shareholders are to get back to paying the. So this is obviously absolutely key for us. So but that 45%, LTV is also absolutely key to be able to get to that LTV. That's great. Actually, that that maybe turns on nicely to another question. How are you going to lower GRITS LTV?

34:13 Yeah. So I think sort of that slide that I took, everybody through. So we were sitting at 45%. Post COVID now we're sitting at 53%. So as I said, Mark, what we have committed to do is recycling 20% of our asset value. I think I've seen actually one of the questions of how far progressed we are on on ANFA, which constitutes, 3% of our asset value is about a $150,000,000. ANFA constitutes about $80,000,000 of that. We are expecting that process whilst the asset won't be transferred, but we are expecting the sale process to be concluded this out of Christmas. So one is the recycling of assets, being able to put that, cash back into our debt facilities, valuation recovery, which we see near term, being hospitality offices, partly corporate accommodation near term.

35:07 So that is really the trajectory that we've seen. As I mentioned earlier, we did a transaction, in Kenya, which was the light industrial, which was very yield accretive, plus we took on a preference note, which was equity. So that has an impact on LTV as well, positive impact on LTV. So those are the initiatives that in the near term now that we are following to get to that 45%. That's great. Thank you very much indeed. A broad question. And, again, I certainly know you did touch on on certain aspects. But what strategies do you have in place to improve the group's net asset value, distributable earnings, and its yield? So, yeah, so I think, obviously, Nick, I have touched on it, but so maybe I can just summarize. So, I mean, obviously, over the valuation and the obviously, the the valuations that we've seen a material impact on, the net asset value sits such just under one zero three.

36:01 The improving of that net asset value can come about in many ways, but, obviously, we need to continue to fill up our vacancies, which we demonstrated that we're doing. We need to continue to maintain NOI. We need to continue to maintain growth in the numbers. That obviously all has a positive impact on valuations. So as I've mentioned, the net asset value will grow by some of those valuations now coming through, and the recovery of those valuations. Maybe, Leon, I can just ask you to touch on sort of part two and three of that of earnings in this. Yeah. So I think the the key focus is to to remain strong on the fundamentals of property. You know, make sure you're collecting your rentals. Make sure that your your your generic growth that should be coming through just from your normal lease escalations are are actually secured and collected, and making sure that the assets are are well maintained, looked after. And most important, you know, being a tenant led company is maintaining close relationships with the tenants, know what their changing needs are, and being able to fill those needs.

37:01 You know, whether it's a new development that they require, which we can do through the the GREA structure, you know, or looking for additional space. It's it's something that you have to really maintain or your close focus with the tenants. I think the the other aspect which which we're very excited about is just through the the GREA structure. A number of the assets have actually reached completion phase in the last couple months. We've seen very strong valuation upticks in terms of the the difference between the construction costs and now that the assets are handed over and operational. You know, we'll see much more of that coming into the future as the the new assets come online. They've recently handed over the one of the US embassy housing projects. They've just handed over in the last couple days the the actual data sent in Nigeria. And during the first quarter or second quarter of next year, it's the second embassy housing project that comes online.

37:51 And while these items come online, we've got a 20 stake in those structures. They're fairly significant profit margins that do come through these revaluations, and it's something that we're very excited to see. That's great. Thank you, Leon. A couple of questions. I don't know if you've got the q and a tab there. If you're happy for me, I can I will continue to to to read them out, or if you could just take a quick look? I don't if I can see them all, Mark, but I I did see one question here, which maybe I can touch on. It's it's just to remind our audience around the capital structure of GRIT and and some of the things that we actually did do and and the rationale behind why we did it. So one of the sort of the the over the last couple of months, what we have done is we have successfully delisted off the Johannesburg Stock Exchange, which has given us a primary listing in London and secondary in Mauritius.

38:42 The other aspect is that we actually, moved up from a standard to a premium segment stock, and then we redomiciled out of, Merseysen to Guernsey. Why did we do all of that? And that's to ensure or to allow the ability or to become eligible for the main FTSE in London. So, again, that's really, really important, you know, as the business obviously grows and and and, where we're sitting is that we have found that we have bit of an index orphan at the moment. So the importance of getting onto the indices in The UK and sitting as an as an index listed stock is really, really key. So that was really around the trajectory of us refining the capital structure to be able to do that. That's perfect. Indeed. That question was from Darren who was just asked, could you help us understand your reasons for the redomicile to Guernsey and around the move to the premium segment?

39:36 The other question that we had from Nick, so thank you to to you, was what would be the ideal split in the assets you own between retail hospitality, and is there an interesting pipeline of new assets potentially, that you see? Yeah. So thanks, Nick. I think what's really important is that even pre COVID, we had actually said quite vocally that we wanna reduce retail. Retail currently constitutes 21% of the portfolio with the disposal of ANFA now. It will drop closer sort of to 10%. I think sort of the retail side is, you know, we've seen resilience in the infrastructure type assets for Africa, and that's been demonstrated in the portfolio even over COVID. So sort of looking three years ahead, we see the majority of our portfolio is sitting in corporate accommodation, which has led to embassies, predominantly the American embassies, an element of data centers, telecommunications, across Africa, light industrial, which is obviously also really, really key from a distribution perspective, office accommodation serving servicing a lot of these conglomerates.

40:40 And then we see our retail exposure to be decreasing. We don't see ourselves taking on any more hospitality, and pre COVID, actually, this was one of our best performing asset classes. But I think because of the strength of our tenants and our counterparties and because we've actually been quite successful on not cutting rentals and actually, now rentals have resumed, we see quite quite a bit of recovery in hospitality itself. But we don't we it's not our intention to increase the hospitality, but we are very happy with the hospitality we see in the portfolio today. Bronwyn, that's very kind of you. That that, in fact, addresses all of the questions that we've received. So thank you very much indeed for those that submitted questions and for your time in answering. I know investor feedback is important to you, and I will shortly ask the investors on the call give you their thoughts and expectations, which I'm sure will be, very useful. But perhaps before doing so, I could just ask you for a few closing comments, just to wrap up with, and then I'll divert investors to give you feedback.

41:38 Yeah. Thanks, Mark, and and and thank you for all the questions. It's always good, to be able to, take questions and and just give you some of our sort of in-depth understanding of what's going on. But I think maybe in summary for myself and Leon and obviously the the the GRIT board is that, you know, we are obviously a very personally invested, shareholder into the business ourselves. We very much boots on the ground across the African Continent. We believe we own we have the and and know currently to date, we have the only real estate platform cradle to grave that can invest multi geographic, multi asset class across Africa. And it's just about simplifying things now, you know, back to investors. It's allowing investors to access the African growth story, understanding that this is the platform to do it, stabilizing those valuations, recycling those assets, getting the loan to value down, getting back into dividend paying territory, and for investors to understand that even in the NAV today, there's huge value. So when you look at that to according to the share price, which is trading at somewhat a 50% discount to NAV, there's there's huge value in the stock today.

42:46 And we're really excited around the opportunity, the pipeline, the trajectory, and the platform that has taken us somewhat seven years to create across the African continent. So, Mark, thank you. We really appreciate being hosted on this platform today. That's great. Bromwyn, Leon, thank you once again for updating investors. Could I please ask investors not to close this session as we'll now automatically redirect you for the opportunity to provide your feedback in order that the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of GRIT REAL ESTATE INCOME GROUP, I'd like to thank you for attending today's presentation. That now concludes today's session, and good afternoon or early evening to you all. Thank you.