REG-Grit Real Estate Income Group Acquisition of controlling interest of Gateway Real Estate African Limited ('GREA') and African Property Development Managers Limited ('APDM')

Grit Real Estate IncomeAnnouncement

26/07/2023 07:15

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   Grit Real Estate Income Group (GR1T)
   Acquisition of controlling interest of Gateway Real Estate African Limited
   ('GREA') and African Property Development Managers Limited ('APDM')

   26-Jul-2023 / 07:00 GMT/BST

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   GRIT REAL ESTATE INCOME GROUP LIMITED

   (Registered in Guernsey)

   (Registration number: 68739)

   LSE share code: GR1T

   SEM share codes (dual currency trading):                                  

   DEL.N0000 (USD) / DEL.C0000 (MUR)

   ISIN: GG00BMDHST63

   LEI: 21380084LCGHJRS8CN05

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

    

    

   ACQUISITION OF CONTROLLING INTERESTS IN GATEWAY REAL ESTATE AFRICA LIMITED
      (“GREA”) AND AFRICAN PROPERTY DEVELOPMENT MANAGERS LIMITED (“APDM”)

                                        

    

   The board of  Directors (the  “Board”) of  Grit Real  Estate Income  Group
   Limited are pleased to announce the  conclusion of the final phase in  the
   acquisition of controlling interests in GREA and APDM from Gateway  Africa
   Real Estate Limited (“Gateway Partners”) and Prudential Impact Investments
   Private Equity  LLC (“Prudential”).  Grit now  owns a  direct interest  of
   51.48% in GREA and a 78.95% shareholding in APDM. The respective remaining
   balances are held  by the  Public Investment Corporation  of South  Africa
   (PIC).

    

   GREA successfully completed  several developments  during the  three-phase
   acquisition timeframe which  has materially derisked  the transaction  for
   Grit shareholders. Notable project deliveries include:

     • Adumah Place, Ghana (winner of “API Best Commercial Office development
       2022”),
     • ADC data centre, Nigeria,
     • Rosslyn Grove US embassy accommodation, Kenya (winner of the “API best
       high end development award in 2022”),
     • The Precinct  Office park,  Mauritius (the  first 5  star green  rated
       office park in the Indian Ocean region),
     • Curepipe Artemis Hospital, Mauritius.

   The financial results of GREA and APDM are to be consolidated with  Grit’s
   and are expected to have a positive  impact on both the value of  reported
   investment properties,  Group  LTV  and future  growth  rates  and  income
   distributions to the Group.

    

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

   “Concluding the acquisition of controlling interests in GREA and APDM  are
   significant milestones  towards  our Grit  2.0  vision of  setting  global
   benchmarks in Africa. The  acquisitions support Grit's  ongoing transition
   towards a  more resilient,  accretive and  African impact  focussed  asset
   base. These are expected to deliver value creation and growth opportunites
   in net asset  value and  income to the  benefit of  all our  stakeholders,
   including the people of Africa.

    

   Grit additionally gains access to GREA’s substantial pipeline of accretive
   development opportunities while the controlling interest in APDM  provides
   Grit with  an  opportunity  to  earn  substantial  development  and  asset
   management fees  from internal,  joint  venture partners  and  third-party
   clients."

    

   Further detail on Phase 3 of the acquisition of controlling interests in
   GREA and APDM:

    

   Phase 3  of  the  acquisition, whereby  Grit  acquired  Gateway  Partners’
   remaining 13.61% interest in GREA and  1% interest in APDM for a  combined
   cash payment of USD33.9 million,  became unconditional and share  transfer
   was lodged, following  receipt of  the Mauritius  Prime Minister’s  Office
   consent which was the final condition precedent.

    

   Additionally, Grit has acquired a  2.85% interest in GREA from  Prudential
   for USD5.5 million.

    

   Immediately after these acquisitions, and prior to the vesting of the APDM
   incentive, Grit owns 51.48% of GREA and a 78.95% shareholding in APDM.

    

   Across the three phases, Grit has paid an aggregate of USD77.6 million for
   the total  increased  31.50%  shareholding  in  GREA,  settled  through  a
   combination of cash and share  issuance (covered under the prospectus  and
   circular issued in Q4 2021).

   Details of Phase 3 of the transaction

    1. Acquisition of the additional 16.47% interest in GREA:

   The Gross Assets the subject of the transaction are USD174.1 million.

   The profits attributable to the transaction are USD2.9 million.

    2. Acquisition of additional 1% interest in ADPM:

   Gross Assets the subject of the transaction are US$0.01 million.

    3. Impact on Grit

   Grit now has the ability to direct additional activities in GREA that are
   expected to create value, including: 

     • Balance sheet optimisation and disposal of non-core assets
       specifically reducing exposures to the retail segment. Such asset
       recycling would be expected to free up for redeployment into new
       project opportunities within GREA. 
     • When combined with Grit's balance sheet, GREA's current low leverage
       would be expected to result in a reduction of consolidated Grit Group
       LTV by approximately 2.90 percentage points.
     • Whilst GREA is expected to remain relatively lowly geared, its
       construction debt facilities are amortising and are relatively
       expensive compared to Grit's debt facilities. There is potential to
       utilise Grit’s credit standing to provide GREA with cheaper debt
       funding and, crucially, the ability to recycle operational cashflow
       into new projects rather than debt repayments, thereby securing
       enhanced levels of growth.

    4. GREA key individuals

     • Gregory Pearson, Chief Executive Officer
     • Krishnen Kistnen, Chief Financial Officer
     • Andre Janari, Chief Investment Officer 
     • Craig Glutz, Head of Developments
     • Shevira Bissessor, Chief Operating Officer

   The management team and staff have become employees of the Group and are
   now participants of the Grit long-term incentive plan.

   By Order of the Board

    

   26 July 2023

    

   FOR FURTHER INFORMATION, PLEASE CONTACT:

   Grit Real Estate Income Group Limited                      
   Bronwyn Knight, Chief Executive Officer                   +230 269 7090
   Darren Veenhuis, Investor Relations                       +44 779 512 3402
                                                              
   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  impact
   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 dual currency trading secondary listing on
   the Stock Exchange of Mauritius (SEM: DEL.N0000 (USD) / DEL.C0000 (MUR))

   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+,  Catherine McIlraith+, Jonathan Crichton+,  Cross
   Kgosidiile and Lynette Finlay+.

   (* 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, 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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   Dissemination of a Regulatory Announcement, transmitted by EQS Group.
   The issuer is solely responsible for the content of this announcement.

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   ISIN:          GG00BMDHST63
   Category Code: ACQ
   TIDM:          GR1T
   LEI Code:      21380084LCGHJRS8CN05
   Sequence No.:  260103
   EQS News ID:   1688071


    
   End of Announcement EQS News Service

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