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Grit Real Estate Income Group: DEEP DIVE

Grit Real Estate Income well placed to deliver attractive shareholder returns

The company expects to capitalise on the “significant potential growth” from its unique high-quality portfolio of properties
OVERVIEW: GR1T The Big Picture
GRIT has property investments spread across seven African countries
  • Grit 'on track' to deliver 12% shareholder return

  • Firm continues to add high quality assets to its portfolio

  • A US$600mln pipeline of potential investment opportunities identified

  • Plans to move to premium segment of the London market by the end of 2019

What Grit Real Estate Income does:

Grit Real Estate Income Group Ltd (LON:GRIT) is an African-focused property trust with investments spread across seven countries: Ghana, Botswana, Mauritius, Morocco, Mozambique, Kenya and Zambia.              

Offices, retail and hospitality make up 80% of its 25-strong portfolio of real estate assets.

Grit, which stands for Global Resource Investment Trust, listed on the standard market in London last July, raising US$132.2mln, and intends to move to the premium segment of the market by the end of 2019. 

Portfolio holdings:

Assets include the Mukuba Mall in Zambia, the Vodacom Building office in Mozambique, the Buffalo Mall in Kenya and the Capital Place commercial block in Ghana.

In Mauritius, GRIT owns the Barclays House office complex and Canonnier Beachcomber Golf Resort & Spa, among others.

Inflection points

  • Ahead of September's final results, a June update confirmed Grit was "on track" to deliver its 12% total shareholder return target for the financial year to 30 June, with the dividend also expected to grow from the US$12.19 per share paid last time.
  • Management has identified a US$600mln pipeline of “attractive potential investment opportunities, diversified across sector and geography”.
  • Having deployed its existing equity and debt capital, Grit “is considering its options in respect of raising further capital to fund the pipeline in due course”.
  • The company expects its vacancy rate to improve significantly when the refurbishment of the Anfa Shopping Centre in Casablanca is completed, with a US$25mln contract agreed in June for 20%-owned Gateway Delta to be the developer.
  • In March, Grit announced that it had acquired an additional 25% stake in the Mukuba Mall in Zambia in a US$8.2mln deal, taking its total holding to 75%.

Blue sky

Chief executive Bronwyn Corbett said she believes the company is well placed to capitalise on the “significant potential growth” from its unique high-quality portfolio of properties as the company continues to meet its targets of annual income distribution and total annual return growth.

Since the LSE listing, more opportunities have been presented to add high quality assets to the portfolio, Corbett said, with a focus on assets leased to multinational corporates and attracting hard currency rental streams to ensure that potential investments are value accretive.

"We are well placed with an excellent platform for growth and we look forward to capitalising on a significant and growing pipeline of investment opportunities that the company has currently identified," she said in June.

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Grit Real Estate Income Group Timeline

CN Research
June 27 2019

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