Annual Results Presentation FOR THE YEAR ENDED 30 JUNE 2017 Ι 1 Ι 1
Contents Group Review Portfolio Overview FY17 Financial Review Case Studies Market Overview Looking Ahead Q&A Ι 2
Grit Team Presenters Bronwyn Corbett Chief Executive Officer B.Comm (Acc) (Univ. of Natal, PMB), CA(SA) Leon van de Moortele Chief Finance Officer BCompt (Hons), CA(SA) Ι 3 Ι 3
Group Overview Ι 4 Ι 4 Anadarko Building (Mozambique)
FY 2017 Highlights Target Distribution WACD 3 WALE 1 Achieved 5.78% 4 7.8 years 2 US$12.07 cps -0.44% decrease vs. 2016 vs. 5.8 years (2016) +2.7% growth vs. 2016 1. Weighted Average Lease Expiry 3. Weighted Average Cost of Debt 2. After successful renegotiation of lease renewals and recent 4. As at 30 June 2017 acquisitions Portfolio Occupancy Dividend Yield Capital Raised 96.9% 8.75% US$156m (mainly driven by strategic annualised – SEM additional capital vacancy in Anfa Place & 10% on the JSE successfully raised Shopping Center) Ι 5
Dual listed on the JSE Main Board (South Africa) and SEM Official Market (Mauritius) Market capitalisation of US$ 287.7 M ; Grit shares traded on 74% of trading days year-to-date across both exchanges 1 US Dollar-denominated income fund 7 distributions declared; semi-annual dividend payments Pan Africa (ex South Africa) exposure Exposure to real estate 20 properties ; Total GLA of 205,705 m 2 ; Assets value of US$ 546.3 M 2 ; Occupancy rate 96.9% 2 , WALE of 7.8 years 3 Strong Counterparties Strong management team, supported by in-country asset and property management teams 59 years of combined experience in Africa ; 51 employees across 5 countries Supportive Shareholders US$ 121 M raised through rights issue ; 97% shareholder approval for name change Notes: 1 - As at 14 September 2 - As at 31 August 2017 Ι 6 3 - Post Pipeline Conversion
Grit’s Vision Within the next 5 years, Grit Real Estate Income Group aims to become the leading real estate owner on the African continent outside of South Africa, focusing on income-producing assets with extremely strong counterparties, to ensure consistent growth of shareholder value. Properties’ location: • Mauritius & Morocco (Investment grade countries) • Kenya, Mozambique & Zambia Grit continues to seek opportunities in high yielding property assets in sound African jurisdictions which are anchored by high quality tenants. Approved prospective jurisdictions: • Botswana, Ghana & Rwanda Targeted jurisdictions: • Seychelles & Tanzania Ι 7
Investment Strategy • Grow portfolio based on quality hard currency long-term leases and strong counterparties • Existing/pending Real Estate Investment Trust (REIT) structures • Strategic partnerships and in-country resources Core Competencies Margins of Safety • Existing knowledge base • Hard currency • Managinga pan African portfolio • Repatriation offunds • Delivering solutions • Political risk and macroeconomic landscape • Transparencyand high level of disclosure • Land tenure • Strong network of partners • Abilityto raise debt Ι 8
Shareholder Base Ι 9 Ι 9 Cosmopolitan Mall (Zambia)
Shareholder Base Public Investment Corporation/ Others 2017* Government Employees Pension Anchor shareholders: 2016 Fund 25% • Public Investment Corporation/ 32% 2015 23% 28% Government Employees 25% 26% Pension Fund 32% • Delta Property Fund Ltd 8% 11% Redefine 6% 13% Properties Ltd 9% 32% • Drive in Trading Proprietary Ltd 11% 6% 7% 24% 6% • Eskom Pension & Provident Fund 5% 11% Management 11% & Staff 5% Delta Property 3% • Management & Staff 7% Fund Ltd Eskom Pension & Drive in Trading Provident Fund Proprietary Ltd Stanlib *As at 05 September 2017 Ι 10
Portfolio Overview Ι 11 Ι 11 Barclays House (Mauritius)
LIGHT CORPORATE HELD FOR RETAIL COMMERCIAL HOSPITALITY INDUSTRIAL RESIDENTIAL DEVELOPMENT ANADARKO VDE BOLLORE ANADARKO TAMASSA ZIMPETO SQUARE PHASE 2 COMPOUND 44% ANFA PLACE LE VICTORIA IMPERIAL IMPERIAL HOLLARD SHOPPING CENTER PHASE 2 44% 50% MUKUBA MALL VODACOM LE CANONNIER 44% 50% Mauritius KAFUBU MALL BARCLAYS HOUSE LE MAURICIA Mozambique COSMOPOLITAN 50% MALL Morocco 50% BUFFALO MALL Zambia Kenya MALL DE TETE * Properties are owned at 100% unless specified otherwise Ι 12
Portfolio Key Metrics Corporate Held for As at 31 August 2017 Retail Commercial Light Industrial Hospitality Total Residential Development Number of Properties 7 4 2 4 1 2 20 Property Value/Acquisition Price 230.7 124.2 24.5 127.3 21.4 18.3 546.3 (US $ M) Weighted Average Capitalisation Rate 7.7% 8.0% 9.0% 7.9% 10.6% 0% 8.0% WALE (years by income) 4.6 years 10.0 years 7.6 years 12.5 years 3.0 years n/a 7.8 years Weighted Average Lease Escalations 4.05% 4.58% 3.64% 0.63% 3.00% n/a 3.0% Weighted Average Gross US$ Rental 18.4 26.7 14.1 12.6 n/a n/a 19.3 per m² per month 1 Gross Lettable Area [GLA] (m 2 ) 83,963 31,445 19,934 57,397 12,966 n/a 205,705 Operating Cost to Income ratio 1 41.1% 10.8% 12.9% 0.0% n/a n/a 27.5% Vacancies 3.3% 0% 0% 0% 0% n/a 3.1% Weighted Average Cost of Property 5.2% 7.8% 6.3% 4.1% 7.0% 4.6% 5.6% Debt Debt to Property Value 2 46.4% 45.0% 35.0% 48.3% 54.9% 31.0% 45.8% 1. Year-end 30 June 2017 2. Excluding revolver facilities Ι 13
Diversification of Portfolio Geographical Split of Property Sectoral Split of Property Aug 2017 Aug 2017 Corporate Morocco Residential Mozambique 4% Commercial 2017 2017 20% 25% 4% Hospitality 2016 22% 2016 23% 33% 19% 27% 3% 37% 3% 34% 41% 45% 2% 5% 21% Light 5% Mauritius 2% 14% 53% Industrial 26% 2% 18% 48% 16% 5% Retail Zambia 43% Kenya Note: Split by asset value Ι 14
Strong Counterparties Tenancy Grading 5% 21% 74% A-grade tenants B-grade tenants C-grade tenants Tenancy grading as per the JSE: A – grade: Large national tenants, large listed tenants and major franchisees B – grade: National tenants, listed tenants, franchisees, medium to large professionalfirms C – grade: Smaller retail tenants Ι 15
FY17 Financial Review Ι 16 Ι 16 Imperial Warehouse (Kenya)
GROUP Statement of 2017 2016 Movement US$ M US$ M Financial Position Assets Non-current assets Investment property 351.8 248.5 41.6% Investments in associates 89.0 45.9 93.8% Loans receivable 66.7 - NAV per share Other non-current assets 26.5 13.5 97.0% (US$ cps) Total non-current assets 534.1 308.0 73.4% Total current assets 51.0 35.9 42.2% 2017: 150.9 Total assets 585.2 343.8 70.2% Equity and liabilities 2016: 163.3 Total equity attributable to equity holders - - Share capital 320.0 172.0 86.0% Foreign currency translation reserve 1.1 0.0 Antecedent dividend reserve 1.3 0.6 98.4% Retained (loss)/income (7.6) (9.3) -18.1% Total equity attributable to equity holders 314.7 163.4 92.6% Loan to Value Liabilities Non-current liabilities Preference shares 12.8 - 2017: 41.6% Interest-bearing borrowings 187.4 127.1 47.5% Other non-current liabilities 1.1 0.8 28.0% Total non-current liabilities 201.4 127.9 57.4% 2016: 48.8% Total current liabilities 69.1 52.6 31.4% Total liabilities 270.4 180.5 49.9% Total equity and liabilities 585.2 343.8 70.2% Ι 17
Composition of Property Investment Total Property Investment Value (US$M) Value 600,0 Composition of Total Property 2017 546,3 Asset Value (US$ M) 500,0 492,4 Existing assets under Property 312.1 Investments 400,0 Property value included under 92.7 Investment in Associate Interest bearing deposits on under 24.4 300,0 Property Investments 295,0 Building under construction under 15.3 Property Investments 200,0 210,4 Property investment under intangible assets (right of use of 0.6 land) 100,0 Property investments under loans 47.4 receivable 0,0 TOTAL PROPERTY ASSET VALUE 492.4 2015 2016 2017 as at 30-Aug-17 Ι 18
EVOLUTION OF NAV PER SHARE EVOLUTION OF NAV PER SHARE +2.2% 11.56 f 149.56 Ι 19
Deployment of US$ M Proceeds from Rights BHI Transaction (44.428% of three Beachcomber resorts) 28.7 VDE Compound (final payment) 18.2 Issue Settlement of the equity revolving facilities 17.7 Cosmopolitan Mall (final payment) 15.7 Imperial Warehouse (final payment) 13.1 Anadarko Phase II Construction 6.6 Share Issue Expenses 4.6 Investment in 6.25% of Letlole La Rona Limited 3.8 Investment in Gateway Delta Development (initial investment) 2.0 Total Capital Deployed 110.5 Further capital commitments: • Beachcomber - EUR 3.2 M (November 2017 following the completion of 40 additional rooms at Le Victoria Hotel and Spa) • Investment in Gateway Delta Developments Based on capital calls following the execution of their seed projects Ι 20
Debt Summary Ι 21 Ι 21 Mall de Tete (Mozambique)
Debt Summary YoY change in Key Debt Currency Exposure Investment Currency Exposure Debt Financing metrics (2016 to 2017) (2016 to 2017) 6,2% 50,0% 6,5% 5,8% 48,0% 6,0% 46,0% 5,5% 2017 2017 44,0% 5,0% MZN MZN 48,8% 42,0% 4,5% 40,0% 4,0% 1% 0% 41,6% 38,0% 3,5% 2016 2016 36,0% 3,0% 2% EUR EUR 0% 2016 2017 30% 32% 21% 22% LTV Cost of Debt WACD vs 3m Libor 7,5% 2,5% 76% 79% 69% 68% 7,0% 2,0% USD USD 6,5% 1,5% 6,0% 1,0% 5,5% 0,5% 5,0% 0,0% Weighted Average Cost of Debt 3m Libor (secondary axis) Ι 22
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