Grit Year-End Note to Investors – Bronwyn Knight

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“It always seems impossible, until it’s done” – Nelson Rolihlahla Mandela

It has been a year to remember! We set the benchmark high and achieved our goals without exception. Looking back, it almost seems surreal, but here we are – listed on the London Stock Exchange {“LSE”) with tremendous new deals and opportunities coming to fruition!

2018 will be remembered as a year of achieving what, to many, seemed impossible.

Calendar year operational highlights

  • First Ghanaian office acquisition
  • Further expansion and diversification of the Mozambican portfolio
  • Further office acquisitions in Ghana
  • Successful listing on the main market of the LSE
  • US$132.2 million fresh capital raised as part of the LSE listing
  • Portfolio occupancy rate maintained at 96.7%
  • Ninth consecutive dividend distribution of US$12.19 cps for FY18
  • Dividend yield of 8.3% on the LSE, 9.2% on the JSE and 8.7% on the SEM

Portfolio highlight

  • Property portfolio now comprises a total of 22 investments independently valued at US$588.10 million
  • Weighted Average Lease Expiry (WALE) increased 8.8% to 7.4 years (2017: 6.8 years)
  • Weighted Average Annual Rent Escalations at 3.1% (2017: 3.5%)
  • Weighted Average Net Rental per m² per month amounts to US$18.2 (2017: US$19.3)
  • Gross Lettable Area (“GLA”) equates to 308 157m2(2017: 142 899 m2)
  • EPRA Operating Cost to Income ratio (including associates) of 15.6% (2017: 27.5%)
  • EPRA Portfolio occupancy rate at 96.7% (2017: 96.9%)
  • EPRA NAV growth of 6%

Our listing on the Main Market of the London Stock Exchange is no doubt the standout achievement of 2018. We announced our intention to seek a Main Market listing in February of 2018 and successfully listed on 31 July, becoming the first and to date, only pan-African property company to do so.

This was frankly the hardest thing this team has ever done. Despite a consolidation in emerging and frontier market investors, endless frustrations to align accounting interpretations between Mauritius, London and Johannesburg and countless meetings with potential investors across the world, we managed to achieve the impossible, raising US$132.2 million in the process.

The listing provided us with capital to execute on a significant pipeline and reduce debt, allowing further headroom for growth. It further aligned our reporting withBest Practice Recommendations by the European Public Real Estate Association (EPRA) and readers will notice that we now report under EPRA guidelines, not IFRS.

The EPRA underlying principle is that NAV reported in the financial statements under IFRS does not provide stakeholders with the most relevant information on the fair value of the assets and liabilities, within an ongoing real estate investment company, with a long‐term investment strategy. The objective of adjusted EPRA NAV is to therefore highlight the fair value of net assets held on an ongoing and long‐ term basis.

The added transparency and assurance provided by the LSE listing attracted not only new institutional shareholders based in the UK, but increased investments by African pension funds as well. As a result of the LSE listing, we’ve had approaches from several blue-chip international companies wanting to partner on their corporate real estate needs on the continent.

Some of these propositions are significant and can only be unlocked by having partners to invest alongside Grit. Having several African pension funds as anchor investors and equity partners is therefore a significant touchstone in our ongoing evolution.


Having long-only investors has significant benefits but does impact liquidity. This is something the team has been working on improving over the past number of years. The LSE listing assisted in increasing Grit’s liquidity, given that the shares are fungible across all three exchanges.

In December 2017, Grit was a constituent of the SEM-10 Index, comprising the ten largest eligible shares of the Official Market of the SEM. I am proud to share with you that at the time of writing Grit has been included in the following additional indices and index tracker funds:

  • S&P Africa Frontier (Global)
  • Cloud Atlas AMI series BIG 50 EX-SA ETF

Based on current liquidity averages, Grit should qualify for inclusion in the FTSE/JSE All Share Index (JSE ALSI) at the next review in March.

Inclusion in the JSE ALSI is a prerequisite for inclusion in any of the other JSE indices, which means we could qualify for inclusion in the FTSE/JSE All Property Index as well as the FTSE/JSE SA Listed Property Index in 2019.

Given current market capitalisation and liquidity, Grit should also qualify for inclusion in the FTSE Frontier Index (UK) and the MSCI Frontier Markets Index and MSCI Emerging Frontier Markets ex South Africa IMI indices next year.


Our strategy has always been to steer clear of in-vogueinvestment destinations on the continent, preferring investment grade and relatively higher growth economies.

We now have a geographically diversified footprint across the continent and have built significant local know-how, partnerships and track record in these territories over the past four years. It is therefore reasonable to assume that most expansions will be as a result of us leveraging our expertise within these countries. Having said that, there are still expansion countries on the horizon, but our focus will likely be adding assets to the current support infrastructure. This strategy maximizes our current abilities, reducing operating costs.

As we continue to build first-hand experience of the markets we operate in, we will refine our focus. The portfolio is now of a scale that lends itself to capital recycling, as we focus on further alignment of asset classes suitably underpinned by property fundamentals in each country or node of operation.

We continue to strive towards a self-imposed soft exposure limit of 25% of the portfolio to a particular country and 25% exposure to a specific asset class.

As mentioned earlier, several investment opportunities will be too large for Grit to take on-balance sheet in its entirety. Although these are currently in the very early stages of negotiation, it is likely that Grit will co-invest alongside large institutional investors, and asset manage the facility providing additional potential upside to our growth in net asset value growth.

Several opportunities to increase net asset value growth are currently being extracted from the portfolio. These include:

– Refurbishing and retenanting of Anfa Place Shopping Centre, due for completion in June 2019 with significant revaluation upside expected

– Additional rooms at Victoria Beachcomber in Mauritius as well as a conference center at our Tamassa resort operated by Lux, which is expected to lead to an upgrade from a four star to a five-star hospitality rating

– The development of Phase Two of our logistics warehouse in Nairobi, Kenya on the back of tenant demand

– The sale of our interest in Buffalo Mall in Naivasha, Kenya.

In addition, further revaluation uplift is expected on our Mozambican portfolio based on improved macro-economic conditions in that country.

The increase in scale of our portfolio and the fact that we are multi-banked, allow us to negotiate firmly on competitive rates for debt funding, and a further reduction in cost of debt from 5.78% to 5.75% has been negotiated.

We are currently reviewing the merits of a credit rating with the relevant ratings agencies, with the view of tapping the bond market as an alternative capital source. I strongly believe that bonds provide the opportunity to unlock capital from African pension funds, which will stimulate real estate investment and deepen debt capital markets on the continent.


We have a track record of paying nine consecutive distributions since listing, having distributed a total US$12.19 cents per share for the financial year ending 30 June 2018.

Based on current performance and prevailing macro-economic conditions in the countries and regions of operation, we expect distribution and net asset value growth to be within the guidelines provided at financial year end.

Our targeted total return is a minimum of 12.0% and dividend growth is targeted at between 3% and 5% annually.


On a personal note, this was the year we said goodbye to Sudan, who died from age-related complications on 19 March this year. At the time of his death, he was one of only three living northern white rhinoceroses in the world, and the last known male of his subspecies. Grit will continue to honor his legacy through our support of The Last Man Stands tournament in Kenya (

I wish to thank our founding chairman, Mr Sandile Nomvete for his support, advice and friendship over the years. We have been business partners long before the dream of Grit began taking shape and I wish him only the best.

In addition, I want to thank the board for their ongoing guidance, through a period of tremendous growth and the vigorous process of listing on the LSE.

On behalf of Grit I welcome our new shareholders to the Company and wish to thank all shareholders for their encouragement and support in what was a watershed year for the Company.

Our tagline for 2019 is Designed to Perform. These are big words, promising big things, creating high expectations on a worldwide stage where we are being watched closely. I’m not scared of this. I’m not afraid of the unknown. In fact, I am looking forward to it!

Lastly, a sincere thanks to Team Grit and your families for making this organization truly great. You are the embodiment of our ethos: Grit is passion and perseverance, for long‐term sustainability and goals. It’s the day in, day out.

Success comes when you have a team that gives everything, even though some of the most challenging hours, days and nights.

I am consistently humbled by the loyalty, passion and determination that drives Grit’s ethos and the individuals that make up this organization.

Thank you to a truly remarkable team!

Bronwyn Knight

Chief Executive


This report has been prepared by Grit Real Estate Income Group Limited (“Grit” or the “Company”) solely for your information and should not be considered to be an offer or solicitation of an offer to buy or sell or subscribe for any securities, financial instruments or any rights attaching to such securities or financial instruments. In particular, this report does not constitute an offer to sell, or the solicitation of an offer to acquire or subscribe for, securities in any jurisdiction where such offer or solicitation is unlawful.

All information and statistics provided in this report relating to targeted acquisitions or post-targeted acquisitions status is predicated on information available to the Company at the time of printing of this report. Such information may be subject to change dependant on final negotiations and documentation related to such targeted acquisition.

This report contains certain statements which are, or may be deemed to be, ‘forward-looking statements’. By their nature, these forward-looking statements and the facts contained therein are subject to a number of known and unknown risks, uncertainties and contingencies, many of which are beyond Grit’s control or influence, and actual results and events could differ materially from those currently being anticipated as reflected in such statements. These forward-looking statements speak only as of the date of this publication. Past performance should not be taken as an indication or guarantee of future results and no representation or warranty, express or implied, is made regarding future performance. Except as required by any applicable law or regulation, the Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this publication to reflect any change in Grit’s expectations or any change in events, conditions or circumstances on which any such statement is based. Accordingly, undue reliance should not be placed on any such forward-looking statements.

Forward-looking statements have not been reviewed by external auditors and are the responsibility of the Board of Directors of the Company.

All targets mentioned in this report are targets only and are not guaranteed. These targets are based on a number of bases and assumptions which may or may not materialize and have not been assessed or validated by the auditors.

Nothing in this report should be viewed, or construed, as “advice”, as that term is used in the South African Financial Markets Act, 2012, and/or Financial Advisory and Intermediary Services Act, 2002 and/or the equivalent legislation in the United Kingdom, United States of America or in the Republic of Mauritius.