The acquisition will enable the company to deliver enhanced profitable growth and superior returns to shareholders
Grit Real Estate Income Group has acquired a 77.95% controlling stake of Africa Property Development Managers (APDM), the external asset manager of Gateway Real Estate Africa (GREA).
The acquisition will be settled through a vendor placement of over 17-million new ordinary shares for 47.37% interest, and a cash payment of $7.59m to Gateway Partners for their 30.58% interest. The initial agreement with Gateway Partners envisaged that the consideration would be paid by an issue of new ordinary shares at the issue price.
Grit said the controlling interest in APDM will immediately give the company significant influence over GREA’s operations via the services APDM provides to GREA under its asset management contract. These include development management, asset management and advisory services.
APDM is entitled to development management fees from GREA of about 4% of the total project costs of each development owned by GREA, and is entitled to a standard annual fee of 1.5% of the fair value of completed properties owned by GREA.
“Acquiring a majority stake in APDM offers Grit the potential for new revenue and fee income streams, asset and facilities management and other discrete asset classes,” said CEO Bronwyn Knight. The acquisition will also accelerate Grit’s strategy of increasing exposure to the provision of professional services to its tenants and third parties.
Knight said the acquisition is expected to deliver additional value to shareholders “from the potential optimisation of the balance sheets of Grit and GREA”.
Grit has a primary listing on the main board of the London Stock Exchange and a secondary listing on the Stock Exchange of Mauritius. It delisted from the JSE’s AltX in July 2020. Its portfolio includes hospitality, retail, corporate offices, corporate accommodation and light industrial assets across Senegal, Morocco, Mauritius, Mozambique, Zambia, Botswana, Kenya and Ghana.
The majority of its revenue is generated from dollar-denominated and euro-denominated long-term leases.
Publication: Business Day
Writer: Denise Mhlanga