Grit Real Estate Income Group Limited · LSE:GR1T
Grit Real Estate Income — H1 2019 Earnings Presentation
43 slides from Grit Real Estate Income's earnings presentation, Feb 14, 2019
Slide 1: Half Year Results Presentation
Half Year Results Presentation FOR THE 6 MONTHS ENDED 31 DECEMBER 2018
Slide 2: Grit: multi-listed real estate income group in Africa
LSE - GR1T:LN JSE - GTR:SJ SEM - DEL.N0000 Grit is a c.$440m MULTI-LISTED REAL ESTATE INCOME GROUP operating in carefully selected AFRICAN COUNTRIES excluding South Africa We optimise our structural investments which are underpinned by SOLID PROPERTY FUNDAMENTALS and anchored by MULTINATIONAL TENANT
Slide 3: Agenda
Agenda Bronwyn Corbett Strategy Chief Executive Officer • Founding member and CEO of Grit Real Estate Income Group & Co-founder • Over 13 years’ experience in the real estate investment sector B.Comm (Acc) • Financial Director in real estate investment firm for 4 years (Univ. of Natal, PMB), Achieve
Slide 4: Strategy
STRATEGY designed to
Slide 5: Investment Case
EXECUTIVE SUMMARY Investment Case Delivering attractive, stable & sustainable shareholder returns through selective risk mitigated investments Talented team Margins ofHardSafety currency Strong & broad African Experienced, well-resourced team, in- management exposure country management, alignment of
Slide 6: Attractive & Diversified Portfolio
EXECUTIVE SUMMARY Attractive & Diversified Portfolio 7 countries, 5 asset classes, 25 assets1 Total Portfolio Properties Value4 acquired (US$m) Occupancy2 96.0% at reporting date Office: 2 HY19 Corp. Accomm: 1 796.4 Light Industrial: 2 FY18 96.6% Occupancy2 642.3 Corp. Accomm: 1 31 Jan ‘19 Office: 1
Slide 7: Strength of Counterparty
EXECUTIVE SUMMARY Strength of Counterparty Successful delivery of hard currency income from multinational tenants % Rental Contribution to Portfolio by Tenancy Classification 92.6% multinational tenants1 2% 5% 64.5% rental income top 15 tenants 15% 35% 93.2% income hard currency 3.1% weighted avg. a
Slide 8: Achievements
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Slide 9: Financial & Strategic Highlights
ACHIEVEMENTS Financial & Strategic Highlights Creating value for shareholders Income Producing Asset EPRA NAV2 Distributable Earnings Value1 US$6.06 US$143.1 cps (Interim ‘18: US$6.07) EPRA NAV growth Interest Coverage Ratio US$796.4m from portfolio performance (+19.8% during HY19) 5.15% 3.2 1. Incl
Slide 10: Portfolio Highlights
ACHIEVEMENTS Portfolio Highlights Creating value for shareholders Weighted Average Cost Vacancy rate1 WALE2 of Debt 6.5 years 31 Dec ‘18 6.31% 3.4% Vacancy 31 Jan ’19 6.7 years 31 Dec ‘18, excluding (FY18: 5.75%) acquisitions made in the period vs. LIBOR increase of 1.26% 1. Measured as a percentage
Slide 11: Shareholder Base
ACHIEVEMENTS Shareholder Base Diversifying shareholder base to allow access to global capital markets Shareholders By Type Large shareholders (>5%) 5% 13% Register % 28% South Africa 22 Mauritius 63 45% UK1 15 37% TOTAL 100 45% 8% 8% 5% 6% Government Employees Pension Fund (PIC) Drive In Trading Lim
Slide 12: Liquidity & Index Inclusion
ACHIEVEMENTS Liquidity & Index Inclusion Increase in trading volume & focus on index inclusion continuing to increase liquidity in the markets Volume Traded Inclusions & targets Status 37.9 40.0 SEM-10 Index (Mauritius) Included in 2017 30.0 25.9 Million Shares S&P Africa Frontier (Global) Included
Slide 13: Portfolio Update
kafubumall JOPRILE « PORTFOLIO UPDATE designed to
Slide 14: Completed acquisitions since LSE listing
INVESTMENT Completed acquisitions since LSE listing Property Name 5TH AVENUE CADS II ACACIA ESTATE Sector COMMERCIAL COMMERCIAL CORP. ACCOMM Location ACCRA ACCRA MAPUTO GLA 5,070m² 7,262m² 18,400m² Dec ‘18 Value1 US$21.4M US$37.1M US$64.7M Acquisition Yield 10.13% 8.46% 8.25% Dec ‘18 Valuation yield
Slide 15: Asset Management Highlights
ASSET MANAGEMENT Asset Management Highlights Benefits of Sectoral Differentiation Retail Office Hospitality Contribution to Total Portfolio Value (%) 31.6% 28.7% 20.5% Existing portfolio Rental growth1 (%) +3.3% +2.4% +1.2% Rental growth incl. acquisitions1 (%) +3.3% +39.3% +1.2% WALE 2 3.2 years 4.
Slide 16: Asset Management Highlights
ASSET MANAGEMENT Asset Management Highlights Benefits of Sectoral Differentiation Corp Accomm. Light Industrial Total Contribution to Total Portfolio Value (%) 13.7% 4.6% 100% Existing portfolio Rental growth1 (%) n/a (11.8)% +2.3% Rental growth incl. acquisitions1 (%) All assets acquired during (11
Slide 17: Portfolio Exposure
ASSET MANAGEMENT Portfolio Exposure Ongoing sectoral & geographic diversification to optimise returns & mitigate risk Dec 2018 - Geographic Dec 2018 - Sectoral 0.4% 0.5% 0.4% 4.9% 4.6% 7.9% 13.7% 31.6% 12.8% 38.1% 20.5% 13.2% 22.7% 28.7% Mozambique Mauritius* Morocco* Retail Office Zambia Ghana Keny
Slide 18: Portfolio Key Metrics – by Sector
ASSET MANAGEMENT Portfolio Key Metrics – by Sector Corporate Held for Other As at 31 Dec ‘18 Retail Office Light Industrial Hospitality Total Accommodation Development Investments Number of Properties/ Investments 7 8 2 4 2 1 1 25 Property Value1 (US$ m) 259.1 198.0 26.5 143.4 102.2 3.4 3.1 735.7 We
Slide 19: Portfolio Key Metrics – by Country
ASSET MANAGEMENT Portfolio Key Metrics – by Country As at 31 Dec ‘18 Morocco Kenya Ghana Mauritius Mozambique Zambia Botswana Total Number of Properties/ Investments 1 3 3 5 9 3 1 25 Property Value1 (US$ m) 92.2 28.7 52.2 158.9 273.2 127.4 3.1 735.7 Weighted Average Capitalisation Rate (%) 9.2 6.6 8
Slide 20: Notable new leases and lease extensions
ASSET MANAGEMENT Notable new leases and lease extensions Continued counterparty strength improvements and lease extensions drive capital value Country Property Tenant GLA Lease period Global Petroleum expansion Commodity House Ph 1 1,910m² 10 years and 2 months replacing S&C Attorneys Mozambique Com
Slide 21: Top 15 Tenants
ASSET MANAGEMENT TOP 15 TENANTS Majority of portfolio income generated from strength of multinational tenancies Rank1 Key Tenant Industry Income (% of Group Total) Tenant Grading Lease Covenant Lease Currency 1 Hospitality 9.1 Other Global Triple Net EUR 2 Telecommunications 8.3 Forbes 2000 Double N
Slide 22: Asset Management Strategy
ASSET MANAGEMENT Asset Management Strategy NAV uplift opportunities Lifecycle Status Strategic Investment Focus Estimate Timing of deliverable Retail Anfa Place Mall Maturing Redevelopment, Market and Tenancy re-positioning Q2 ’19 Buffalo Mall Maturing Disposal Q2 ’19 Zimpeto Square Mature Suitable
Slide 23: Mozambique Case Study
ASSET MANAGEMENT Mozambique Case Study Grit Maputo office portfolio outperforms Maputo office market performance Grit Maputo Maputo Office Portfolio Office Sector Average rental growth last 3 years (%) 1.4% (6.6)% Average Vacancies last 3 years (%) 0.3% 33.8% Average Rental last 3 years US$ m2 US$29
Slide 24: Investment opportunities
PIPELINE Investment opportunities Grit actively pursuing yield accretive opportunities across approved investment jurisdictions Potential Industrial portfolio Potential Industrial Portfolio expansion of c.37% expansion of c.7% • Potential Botswana regional • Potential Kenya regional expansion expans
Slide 25: Financial Review HY19
FINANCIAL REVIEW HY19 SE designed to perfignmmm a’ 3 @
Slide 26: Distributable Income
FINANCIAL REVIEW Distributable Income 31 Dec 2018 14 US$’000 +2.7% +1.0% Basic Earnings attributable to the owners of the parent 20,643 +4.1% 12.07 12.19 Add Back non-cash items: 12 11.75 11.29 6.12 6.12 - Straight-line leasing (non-cash rental) (642) 6.17 6.64 - Total fair value adjustment on inves
Slide 27: EPRA NAV Bridge
FINANCIAL REVIEW EPRA NAV Bridge US$m Portfolio performance 5.15% increase Corporate activity Ι 27
Slide 28: Debt Financing Overview
FINANCIAL REVIEW Debt Financing Overview Funding strategy continues to target reduction in LTV and cost of debt DEBT EXPIRY PROFILE NET EUR EXPOSURE MULTI BANK STRATEGY 90 Facility currently being refinanced 70 66.6 80 76.4 30.1% 60 70 54.9 60.8 60 50 50 US$m EUR m 38.0 40 33.2% 40 27.8 30 23.3 25.5
Slide 29: Statement of Comprehensive Income
FINANCIAL REVIEW Statement of Comprehensive Income GROUP 31 Dec 2017 31 Dec 2018 Condensed consolidated statement of comprehensive income - For the 6 months ended 31 Dec 2018 (US$’m) (US$’m) Gross rental income 14.9 18.7 Straight-line rental income accrual 0.4 0.6 Revenue 15.3 19.4 Property operatin
Slide 30: Statement of Financial Position
FINANCIAL REVIEW Statement of Financial Position INCOME PRODUCING ASSETS Condensed consolidated statement of financial position 30 June 2018 31 Dec 2018 30 June 2018 31 Dec 2018 Movement As at 31 Dec 2018 (US$’m) (US$’m) (US$’m) (US$’m) Assets Non-current assets Investment properties 383.1 552.8 383
Slide 31: Outlook
OUTLOOK perform
Slide 32: Outlook: Focus for FY19
OUTLOOK OUTLOOK Focus for FY19 Target Total Return Target Dividend Access to Pipeline Focus Growth Accretive assets with 12.0%¹ 3 - 5%¹ additional minimum annually blue-chip tenancies NAV Growth Reduction in Cost of Liquidity & Indices Existing Geographies Initiatives by Funding Focus June ‘19 Compl
Slide 33: 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 Communications: [email protected] Investor relations: [email protected] Ι 33
Slide 34: Annexures
ANNEXURES perform
Slide 35: Peer Performance
EXECUTIVE SUMMARY Peer Performance Grit targets a dividend yield in excess of 8.25%* vs. a global REIT dividend of 4.2% in USD terms Dividend Yield (%) 12.0 Target of min. 12% 10.0 9.4 total USD return for Grit for FY19 8.0 8.0 6.0 4.4 4.2 4.2 Target of min. 4.0 3.7 8.5%* dividend yield and 3.5% NAV
Slide 36: Executive Members of the Board
Executive Members of the Board Bronwyn Corbett Bronwyn is a founding member and CEO of Grit Real Estate Income Group, the largest pan-African focused real estate group listed on the LSE, JSE and SEM (stock exchanges in London (UK), Johannesburg (South Africa) and Port Louis Chief Executive Officer (
Slide 37: Non-Executive Members of the Board
Non-Executive Members of the Board Peter Todd Peter is a qualified attorney and began his career as the senior tax manager at Arthur Anderson and Associates in Johannesburg. He joined TWS Rubin Ferguson in 1993 as a tax partner and was instrumental in listing several Board Chairman companies on the
Slide 38: Non-Executive Members of the Board
Non-Executive Members of the Board David Love David Love is a Chartered Accountant, qualifying with Deloitte, and holds a BCom and LLB (Hons First) with a distinction in Land Law, Equity and Trusts. He has over 18 years’ experience in the real estate investment sector. He is Independent Non-Executiv
Slide 39: Non-Executive Members of the Board
Non-Executive Members of the Board Matshepo More Matshepo is a Chartered Accountant and holds a Certificate in Theory of Accounting and a Bachelor of Business Science in Finance. Matshepo served her articles at Deloitte, specialising in financial institutions, before being Non-Executive Director sec
Slide 40: Executive Team
Executive Team Heidi Rix Heidi joined Grit as Chief Operating Officer in May 2016. She has 19 years’ commercial and real estate experience and is an admitted attorney holding BComm and LLB degrees in addition to specialised real estate sector qualifications. Heidi Group General Manager has recently
Slide 41: Executive Team
Executive Team Eric Weirich Eric joined Grit as Finance Director of Delta International Mauritius Limited on 1 September 2018. Eric joins from Gazprom Marketing & Trading (GM&T) London, where he was the Global Head of Business Planning and Reporting and Financial Director acted as Head of the Global
Slide 42: Executive Team
Executive Team Jaco van Zyl Jaco holds a BCom Degree from the North-West University, a BCompt Honours Degree from the University of South Africa and is a qualified Chartered Accountant. After completing articles he moved to Federal Airlines as Financial Deputy Chief Financial Manager and ultimately
Slide 43: 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
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