Grit Real Estate Income Group is a leading pan-African real estate company focused on investing in and actively managing a diversified portfolio of assets in carefully selected African countries (excluding South Africa). The group recently moved to the premium segment of the London Stock Exchange and has a market capitalisation of £165 million.
The company published their half year results on 15th February, and we were delighted that the CEO Bronwyn Corbet and the Chief Strategy Officer Darren Veenhuis were able to provide an introduction to the company and update on recent events. A recording of the webinar is available here.
The presentation started with a run through of some of the facts that make Africa an attractive area for investment: there is a large and growing population; good underlying GDP growth in many countries, increasing middle/upper class population and rising infrastructure investment. Bronwyn then outlined the key elements to the business model. Grit focuses on robust tenants that are either part of blue-chip multinational groups or Government backed entities such as embassies. Leases are signed in hard currencies of either the US dollar or Euro with an average lease term of 5.2 years. The third part of the strategy is to be present in a several of the most developed and developing African countries with already established solid legal systems.
Seven years after its formation the group owns properties worth $850m across 8 countries listed here in their order of importance: Mozambique, Mauritius, Zambia, Morocco, Ghana, Kenya, Botswana and Senegal. Half of the assets are in countries with investment grade debt and half in countries described as emerging or growth economies. The 15 largest tenants account for 70% of revenues and include such high-quality names as: Beachcomber, Total, Vale, Vodacom, The US Embassy, Tullow Oil and Club Med. Across the sectors the split is roughly 50% in light industrial and corporate accommodation, 25% in hospitality and 25% in retail. The strategy is to reduce the retail exposure although there is still good demand for retail space as the penetration of internet shopping is a long way behind developed markets.
All property companies have been impacted to greater or lesser degrees by Covid. Grit has also suffered but their property portfolio has proved to be pretty resilient. At the end of December, over 90% of contracted revenues had been collected. Previously deferred revenues from Club Med have…
