REG - Grit Real Estate Inc - LLR co-investment into Orbit logistics asset-Kenya

Grit Real Estate IncomeAnnouncement

20/05/2022 07:00

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RNS Number : 1666M  Grit Real Estate Income Group  20 May 2022

 GRIT REAL ESTATE INCOME GROUP LIMITED

 (Registered in Guernsey)

 (Registration number: 68739)

 LSE share code: GR1T

 SEM share code: DEL.N0000

 ISIN: GG00BMDHST63

 LEI: 21380084LCGHJRS8CN05

 ("Grit" or the "Company" and, together with its subsidiaries, the "Group")

 

 

CO-INVESTMENT BY LETLOLE LA RONA LIMITED INTO ORBIT AFRICA WAREHOUSING AND
MANUFACTURING FACILITY, NAIROBI, KENYA

 

 

The board of Directors (the "Board") of Grit Real Estate Income Group Limited,
a leading pan-African income real estate company, focused on investing in,
developing and actively managing a diversified portfolio of assets underpinned
by predominantly US$ and Euro denominated long-term leases with high quality
multi-national tenants, today announces the introduction of Letlole La Rona
Limited ("LLR") as a 30% co-investor to Grit's industrial facility in Nairobi,
Kenya (the "Asset"), currently tenanted to Orbit Products Africa Ltd ("Orbit")

LLR, a variable rate loan stock company listed on the Botswana Stock Exchange,
recently defined a "Go-To-Africa" strategy and described its intentions to
form strategic partnerships with credible and experienced African investment
entities. LLR's current portfolio is predominantly comprised of Botswanan
premium-grade industrial warehouse assets, and while today's transaction not
only marks LLR's first acquisition outside of the country, it also positions
LLR as a preferred funding partner alongside Grit to make further
yield-enhancing industrial sector investments that create positive social and
environmental impacts. The Company sees significant opportunities across
Africa in this structurally undersupplied asset class and expects to make
further investments over the short and medium term alongside its partners and
African focused development finance institutions ("DFIs") that are expected to
enhance value to Grit's shareholders.

LLR has signed a conditionally binding agreement to subscribe to a 30%
shareholding in the Mauritian holding entity of the Asset (the "Transaction")
(currently 100% owned by Grit), and an injection of approximately US$7.23
million via a shareholder loan to the Mauritian holding entity, being its
pro-rata share of equity contributions to date. Grit will realise an
acquisition fee of US$ 600,000 from LLR upon completion of the Transaction and
Grit will also earn an annual asset management fee of 0.5% of the value of the
Asset as a result of the asset management agreement now concluded. The
Transaction is subject to LLR shareholder, local regulatory and Asset
financier approvals, which are currently underway. Grit expects to utilise the
cash proceeds, from the repayment of its pro rata shareholder loan, towards
further increasing the Company's interests in Gateway Real Estate Africa by 31
July 2022 (as recently announced by Grit - link here
(https://polaris.brighterir.com/public/grit/news/rns/story/w6d0qgx) ).

The Asset, originally acquired after Grit raised US$31.5 million in perpetual
notes and US$25 million in debt from the International Finance Corporation
("IFC") (the investment arm of the World Bank), forms part of a broader
industrial sector focused investment strategy being pursued by the Company.

The total investment in the Asset is expected to be US$53.6 million (incl.
VAT), comprising the initial sale and leaseback on a new 25-year US dollar
denominated triple net lease to Orbit at a net acquisition yield of 9.60%
alongside the redevelopment and the expansion of the facility at an attractive
contractual development yield of 16.0%. The Company continues to expect the
investment to be accretive to Grit's NAV and earnings from inception and to
realise attractive sustainable capital value enhancement and rental income
growth.

 

The Asset upgrades are additionally expected to create long lasting positive
social, economic and environmental benefits for local communities, whilst the
property will also benefit from being significantly improved to today's modern
FMCG industry standards and achieving an IFC EDGE green building
certification. The redevelopment and expansion is expected to be completed in
the fourth quarter of 2023 when it will be let on a new 20-year triple net
lease to Orbit.

Grit holds a minority stake of 30% in LLR, which is classified as an associate
in Grit's consolidated accounts.

Bronwyn Knight, CEO of Grit Real Estate Income Group Limited, commented:

"We are pleased today to welcome LLR as co-investor to the Orbit facility,
which is expected to deliver enhanced sustainable value to Grit's
shareholders, whilst creating long lasting positive social, economic and
environmental benefits for local communities.

 

This landmark transaction provides opportunities for Grit to collaborate
further with LLR as one of the Group's preferred funding partners for further
yield-enhancing industrial sector investments that create positive social and
environmental impacts, as LLR rolls out its Go-To-Africa strategy.

 

The Board continues to see a structural undersupply of quality industrial
sector assets across the African continent and expects to make further
accretive investments over the short and medium term that will deliver further
value to our shareholders."

 

By Order of the Board

20 May 2022

 

The information contained within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulation (EU no.
596/2014) (as amended) as it forms part of UK domestic law by virtue of the
European union (withdrawal) act 2018 and other implementing measures. Upon the
publication of this announcement, this inside information is now considered to
be in the public domain.

 

FOR FURTHER INFORMATION, PLEASE CONTACT:

 Grit Real Estate Income Group Limited
 Bronwyn Knight, Chief Executive Officer                             +230 269 7090
 Darren Veenhuis, Chief Strategy Officer and Investor Relations      +44 779 512 3402

 Maitland/AMO - Communications Adviser
 James Benjamin                                                      +44 7747 113 930 / +44 20 7379 5151
 Alistair de Kare-silver                                             Grit-maitland@maitland.co.uk (mailto:Grit-maitland@maitland.co.uk)

 finnCap Ltd - UK Financial Adviser
 William Marle/Teddy Whiley (Corporate Finance)                      +44 20 7220 5000
 Mark Whitfeld/Pauline Tribe (Sales)                                 +44 20 3772 4697
 Monica Tepes (Research)                                             +44 20 3772 4698

 Perigeum Capital Ltd - SEM Authorised Representative and Sponsor
 Shamin A. Sookia                                                    +230 402 0894
 Kesaven Moothoosamy                                                 +230 402 0898

 Capital Markets Brokers Ltd - Mauritian Sponsoring Broker
 Elodie Lan Hun Kuen                                                 +230 402 0280

NOTES:

Grit Real Estate Income Group Limited is the leading pan-African real estate
company focused on investing in, developing and actively managing a
diversified portfolio of assets in carefully selected African countries
(excluding South Africa). These high-quality assets are underpinned by
predominantly US$ and Euro denominated long-term leases with a wide range of
blue-chip multi-national tenant covenants across a diverse range of robust
property sectors.

The Company is committed to delivering strong and sustainable income for
shareholders, with the potential for income and capital growth.

The Company holds its primary listing on the Main Market of the London Stock
Exchange (LSE: GR1T and a secondary listing on the Stock Exchange of Mauritius
(SEM: DEL.N0000).

Further information on the Company is available at www.grit.group

Directors:

Peter Todd+ (Chairman), Bronwyn Knight (Chief Executive Officer)*, Leon van de
Moortele (Chief Financial Officer)*, David Love+, Sir Samuel Esson Jonah+,
Nomzamo Radebe, Catherine McIlraith+, Jonathan Crichton+, Cross Kgosidiile and
Bright Laaka (Permanent Alternate Director to Nomzamo Radebe).

(* Executive Director) ((+) independent Non-Executive Director)

Company secretary: Intercontinental Fund Services Limited

Registered office address: PO Box 186, Royal Chambers, St Julian's Avenue, St
Peter Port, Guernsey, GY1 4HP

Registrar and transfer agent (Mauritius): Intercontinental Secretarial
Services Limited

SEM authorised representative and sponsor: Perigeum Capital Ltd

UK Transfer secretary: Link Assets Services Limited

Mauritian Sponsoring Broker: Capital Markets Brokers Ltd

This notice is issued pursuant to the FCA Listing Rules and SEM Listing Rule
15.24 and the Mauritian Securities Act 2005. The Board of the Company accepts
full responsibility for the accuracy of the information contained in this
communiqué.

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