File image: James White
File image: James White

Grit is preparing to consolidate its Moroccan assets

By Edward West Time of article published Feb 14, 2020

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CAPE TOWN – London and JSE listed Grit Real Estate is planning to consolidate its Moroccan assets and in-country pipeline within this vehicle and will introduce equity co-investors upon completion.

The only listed Africa-focused income distribution group to offer property investors access to opportunities in growing continental economies yesterday said that introduction of co-investors would provide a measured reduction to its sole exposure to the vehicle going forward.

It said it had access to an identified pipeline of about $470 million (R6.96 billion) which it expected to deliver on in the medium term.

The group this week reached an agreement to purchase a Moroccan Reit/OPCI vehicle consisting of a flagship mixed use development asset in Casablanca and exclusivity over a further industrial asset located in the Meknes industrial zone.

Chief executive Bronwyn Corbet said Grit continued to grow its operations through carefully considered investments and partnering with large international tenants.

“We successfully entered Senegal after taking transfer of the Club Med Skirring resort; we took delivery of the first development into which Grit provided pre-funding, providing us with a meaningful share of development profits; and we increased our shareholding in Letlole la Rona (LLR) within the investment grade country of Botswana,” she said.

Grit lifted its net property income 16.7 percent to $17.8m in the six months to December 31.

Headline earnings per share for the group, which operates in Morocco, Senegal, Ghana, Mozambique, Kenya, Botswana, Zambia and Mauritius, increased 1.1 percent to US2.80 cents, from US2.77c in the prior corresponding period.

Its net asset value per share fell 4.6 percent to US128.3c from US134.5c in the comparative period.

Profit from operations increased 46.6 percent to $10.7m as a result of strong portfolio performance and acquisitive growth.

The weighted average cost of debt declined to 6.07 percent (June 2019: 6.44 percent).

Loan to value was expected to reduce to 40 percent by the end of the financial year.

Earnings per share, headline earnings per share were negatively impacted by one-off non-recurring tax charges of $1.1m and $1.3m additional provision for bad debts relating to retail property portfolio assets.

Acquisition of an additional 23.75 percent in LLR, increasing the shareholding in LLR from 6.25 to 30 percent, represented a significant expansion in Botswana, which, with its strong and politically sound economy, was a key market for Grit’s future growth, Corbett said.

She said that she expected the retail sector to remain challenging in both the occupancy and investment markets.

“But we expect to generate value by continuing to focus on maximising portfolio performance and creating value through our operational expertise and proactive asset management, strong financial management and continuing our strategy to diversify and expand our real estate assets,” Corbett said.

Total income producing asset value increased to $860.1m (June 2019: $825.2m) and like-for-like property valuations increased 2.9 percent.

The portfolio now comprises 46 properties (including 20 properties held in LLR), across seven countries and five property sectors.

Some 92.8 percent of revenue was earned from multinational tenants and 94.1 percent of income was produced in hard currency.

European Property Real Estate Association portfolio occupancy rate improved to 97.4 percent as at December 31, as a result of continued leasing activity at AnfaPlace Mall.

Total gross lettable area, attributable to Grit, increased 20.9 percent from June 2019 to 315 098 square metres as a result of acquisitions.

Grit shares closed 0.12 percent lower at R 16.46 on the JSE on Thursday.


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