Half Year Results Presentation FOR THE 6 MONTHS ENDED 31 DECEMBER 2018
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 TENANTS We are committed to delivering STRONG & SUSTAINABLE INCOME with a target dividend yield of USD 8.25%; total return of USD 12.0% p.a. 1 1. These are targets only and are not guaranteed. These targets are based on a number of bases and assumptions which may or may not materialize.
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), Achievements • CFO of Motseng Investment Holdings in 2009 - instrumental in growing the CA(SA) company’s direct real estate exposure to ZAR2 billion within 3 years • Listing Delta Property Fund on JSE & conversion to REIT structure • CFO & CIO of Delta Property Fund Portfolio Update • Co-founded Delta International Property in 2014, appointed CEO Leon van de Moortele Financial Review Chief Finance Officer • Joined Grit in April 2015 as CFO BCompt (Hons), CA(SA) • Extensive experience in Africa • Global Risk Management Services within PwC, Senior Manager in Data Looking Ahead Management • Group Finance Director of Solenta Aviation in 2004 • During his tenure as Group Finance Director, the group expanded from 12 aircraft to 48 aircraft, operating in 8 African countries (South Africa, Mozambique, Algeria, Ghana, Gabon, Kenya, Tanzania and Cote d’Ivoire) . Annexures Ι 3
STRATEGY
EXECUTIVE SUMMARY Investment Case Delivering attractive, stable & sustainable shareholder returns through selective risk mitigated investments Talented team Strong & broad African Margins of Safety Hard currency Experienced, well-resourced team, in- management exposure 01 country management, alignment of Hard currency interests Robust risk mitigation 02 Consistent performance Repatriation of funds Compelling USD returns 9 consecutive dividend payments 03 Political risk & macro-economics Quality portfolio High quality long-term 04 hard currency income Land tenure Diversification, investment grade 05 Blue-chip Relationship strength Ability to raise debt multinational tenants Joint ventures, access to pipeline 06 Counterparty Ι 5
EXECUTIVE SUMMARY Attractive & Diversified Portfolio 7 countries, 5 asset classes, 25 assets 1 Total Portfolio Properties Value 4 acquired (US$m) Occupancy 2 96.0% at reporting date Office: 2 HY19 Corp. Accomm: 1 796.4 Light Industrial: 2 FY18 Occupancy 2 Corp. Accomm: 1 96.6% 642.3 Office: 1 31 Jan ‘19 Other: 1 FY17 Hospitality: 4 490.4 Country Value Retail: 2 Mozambique US$280m 8.6% Valuation yield Retail: 4 FY16 Mauritius US$162m Light Industrial: 1 296.7 Office: 1 Morocco US$92m FY15 Zambia US$170m Office: 4 210.4 Retail: 1 6.5 WALE (years) 3 Ghana US$55m Kenya US$34m Botswana US$3m 1. Includes 1 equity investment & 1 land parcel held for development 2. Calculation based on EPRA vacancy guidelines (weighted by market rent) Ι 6 3. Weighted by GLA 4. Includes property loans receivable
EXECUTIVE SUMMARY Strength of Counterparty Successful delivery of hard currency income from multinational tenants % Rental Contribution to Portfolio by 92.6% multinational tenants 1 Tenancy Classification 2% 64.5% 5% rental income top 15 tenants 15% 35% 93.2% income hard currency weighted avg. annualised rental 3.1% escalation 43% Forbes Other Global Pan African National Local 1. Includes Forbes 2000, Other Global & Pan African tenants, weighted by income Ι 7
ACHIEVEMENTS
ACHIEVEMENTS Financial & Strategic Highlights Creating value for shareholders EPRA NAV 2 Distributable Earnings Income Producing Asset Value 1 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. Includes property loans receivable 2. EPRA NAV excludes deferred tax on Property Dividend Yield 5 NOI growth (incl. acquisitions) 3 Group LTV (87% payout ratio for HY19) 43.4% 20.3% (FY18: 51.4%) SEM – 8.1% Property LTV 4 Existing portfolio NOI growth 3 JSE – 8.5% 40.5% LSE – 7.9% 3.9% 4. Excluding revolver facilities 3. 6 months Dec 17 vs Dec 18 5. Last 12 month dividend / share price on each exchange as at 31 December 2018 Ι 9 Grit Real Estate Income Group
ACHIEVEMENTS Portfolio Highlights Creating value for shareholders Weighted Average Cost Vacancy rate 1 WALE 2 of Debt 6.5 years 31 Dec ‘18 6.31% 3.4% 6.7 years 31 Dec ‘18, excluding (FY18: 5.75%) Vacancy 31 Jan ’19 vs. LIBOR increase of 1.26% acquisitions made in the period 1. Measured as a percentage of total estimated 2. Weighted Average Lease Expiry (by GLA) rental value, current portfolio EPRA vacancy Cost to Income Ratio incl. Gross Rental Income Growth Fair value movement 4 associates 3 15.2% +25.9% (Dec ‘17: 18.6%) x Admin Cost to Asset Value Profit from Operations Growth +1.6% 1.3% +75.7% (Dec ‘17 : 1.4%) 4. Fair value movement excluding 3. Including straight lining contractual receipts from vendors. 6 months to 31 Dec ‘18 Ι 10
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% UK 1 15 37% TOTAL 100 45% 8% 8% 6% 5% Government Employees Pension Fund (PIC) Drive In Trading Limited Management & Staff Fund Managers Pension Funds Retail Delta Property Fund Transformers Investment Ltd Management & Staff Others • New institutional shareholders from the UK following LSE listing • Increased investments by African Pension Funds • Increased participation by retail investors and improvements in liquidity 1. As at 28 December 2018 Ι 11
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 in 2018 20.0 Cloud Atlas AMI series BIG 50 EX-SA Included in underlying ETF (South Africa) index in 2018 9.1 10.0 2.9 FTSE/JSE All Property Index (South 0.0 Targeted 2019 Africa) JSE SEM LSE Total Last 12 months (as at 31 Jan 2019) FTSE/JSE SA Listed Property Index Targeted 2019 (South Africa) Average Daily Value Traded FTSE Frontier Index Series (UK) Targeted 2019 200,000 150,494 Value Traded in USD MSCI Frontier Markets Index & 150,000 Targeted 2019 MSCI Emerging Frontier Markets ex South Africa IMI indexes (Global) 100,000 47,639 50,000 SEM Sustainability Index (SEMSI) Targeted 2019 16,567 Intended LSE Premium listing Targeted 2020 - JSE SEM LSE Last 12 months (as at 31 Jan 2019) Ι 12
PORTFOLIO UPDATE
INVESTMENT Completed acquisitions since LSE listing 5 TH AVENUE Property Name CADS II ACACIA ESTATE Sector COMMERCIAL COMMERCIAL CORP. ACCOMM Location ACCRA ACCRA MAPUTO GLA 5,070m² 7,262m² 18,400m² Dec ‘18 Value 1 US$21.4M US$37.1M US$64.7M Acquisition Yield 10.13% 8.46% 8.25% Dec ‘18 Valuation yield 9.08% 8.22% 8.24% WALE 2 3.2 years 4.4 years 4.8 years Ownership 100% stake 50% stake 80.1% stake Asset management potential Renewal options of 2+2+1 years Negotiation for 2 year extension Confident on lease renewal given high spec nature of property 1. Based on 100% ownership value 2. Based on GLA Ι 14
ASSET MANAGEMENT Asset Management Highlights Benefits of Sectoral Differentiation Hospitality Retail Office Contribution to Total Portfolio Value (%) 31.6% 20.5% 28.7% Existing portfolio Rental growth 1 (%) +3.3% +1.2% +2.4% Rental growth incl. acquisitions 1 (%) +3.3% +1.2% +39.3% WALE 2 3.2 years 12.1 years 4.7 years Key tenancies renewed(last 12 months) Vodacom, Bata No key tenancy expiries KPMG, Barclays, British Council, BP Occupancy 3 (%) 100.0% 92.1% 96.0% Cost to Income Ratio 4 (%) (EPRA based) 31.5% 0.2% 8.0% Valuation trend ( , , ) 1. Contractual lease rental Dec ’17 vs Dec ’18 2. Based on GLA 4. Based on EPRA cost ratio reporting guidelines Ι 15 (excluding all recoveries) 3. Based on market rental, EPRA reporting guidelines
ASSET MANAGEMENT Asset Management Highlights Benefits of Sectoral Differentiation Total Corp Accomm. Light Industrial Contribution to Total Portfolio Value (%) 13.7% 4.6% 100% Existing portfolio Rental growth 1 (%) n/a (11.8)% +2.3% Rental growth incl. acquisitions 1 (%) All assets acquired during (11.8)% +21.6% the period WALE 2 2.6 years 6.4 years 6.5 years Key tenancies renewed (last 12 months) No key tenancy expiries No key tenancy expiries n/a Occupancy 3 (%) 100.0% 100.0% 96.0% Cost to Income Ratio 4 (%) (EPRA based) 12.7% 2.9% 14.9% Valuation trend ( , , ) 1. Contractual lease rental Dec ’17 vs Dec ’18 2. Based on GLA 4. Based on EPRA cost ratio reporting guidelines Ι 16 (excluding all recoveries) 3. Based on market rental, EPRA reporting guidelines
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