REG-Grit Real Estate Income Group BUSINESS UPDATE, ESTABLISHMENT OF LARGEST EMBASSY ACCOMMODATION PLATFORM IN AFRICA AND CHANGE IN FINANCIAL YEAR-END
18/06/2025 15:45
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Grit Real Estate Income Group (GR1T)
BUSINESS UPDATE, ESTABLISHMENT OF LARGEST EMBASSY ACCOMMODATION PLATFORM
IN AFRICA AND CHANGE IN FINANCIAL YEAR-END
18-Jun-2025 / 15:37 GMT/BST
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GRIT REAL ESTATE INCOME GROUP LIMITED
(Registered in Guernsey)
(Registration number: 68739)
LSE share code: GR1T
SEM share code (dual currency trading): DEL.N0000 (USD) / DEL.C0000(MUR)
ISIN: GG00BMDHST63
LEI: 21380084LCGHJRS8CN05
(“Grit” or the “Company” and, together with its subsidiaries, the "Group")
BUSINESS UPDATE, ESTABLISHMENT OF LARGEST EMBASSY ACCOMMODATION PLATFORM
IN AFRICA AND CHANGE IN FINANCIAL YEAR-END
Grit Real Estate Income Group Limited, a leading Pan-African real estate
company focused on investing in, developing and actively managing a
diversified portfolio of assets underpinned by predominantly US Dollar and
Euro denominated long-term leases with high quality multi-national
tenants, is pleased to provide the following business update on the
Group’s strategic initiatives.
1. INTRODUCTION
Notwithstanding persistent macro-economic headwinds, Grit remains firmly
focused on advancing its strategic priorities, which are underpinned by
prudent financial management and a consistent approach to operational
efficiency.
These initiatives include ongoing disposals, the establishment of an
enhanced embassy accommodation platform, a landmark partnership with Broll
Property Group (“Broll”) resulting in streamlined operations and reducing
overheads over the medium term, and new growth opportunities.
2. OPERATING ENVIRONMENT
2.1 African market liquidity pressure
Global macro-economic uncertainty, driven by tariff wars following the
United States policy changes, has had significant negative impact on
emerging market liquidity, including in the geographies where Grit
operates.
In addition to capital outflows, tenant decisions on expansion
opportunities have resulted in Grit adopting a more conservative approach
to business operations, including tenant risk. In Mozambique, in
particular, socio-political instability has further contributed to a
slow-down in corporate expansion.
Valuation headwinds
Evolving demand and supply dynamics, particularly within the retail
sector, alongside sustained elevated interest rates in the United States,
have led to a reassessment of fair value estimates for real estate assets
in general across the continent.
While select impact-driven real estate sub-asset classes - including light
industrial, diplomatic accommodation, business process outsourcing (BPO)
facilities, and data centres - are expected to show greater resilience,
the Group anticipates continued pressure on valuations, with retail
properties remaining particularly exposed given the prevailing
macro-economic conditions.
Consequently, market rental rates continue to face downward pressure,
influenced by inflation, rising unemployment, and increased import duties,
all of which have eroded consumer purchasing power within the retail
sector.
3. OPERATIONAL UPDATE
3.1 Asset performance
New leases concluded in the 2025 financial year to date comprise a
combined gross lettable area (“GLA”) of 36,778 m2, which include expired
leases totalling a GLA of 33,483 m2. In some instances, such as in
Mozambique, these leases were renewed at reversionary market rates for
longer lease tenures of five years.
EPRA occupancy rates across the portfolio (excluding assets held for sale)
increased to 92.15% (May 2025) from 89.77% (June 2024).
3.1.1 Retail sector: Leasing activity continues to show traction with
leases concluded at Anfa Place Mall and retail assets in Zambia with
vacancies in the sub-asset class reducing from 14.2% (June 2024) to 12.9%
(May 2025).
3.1.2 Hospitality sector: Performance remains robust and in line with
projections, supported by >80% occupancy at Tamassa Resort and Club Med
Cap Skirring Resort.
3.1.3 Office sector: The Precinct, the Group’s five-star Green star-rated
office development in Mauritius is fully let, with continued strong demand
from tenants.
Inaugurated on 30 April 2024, Eneo at Tatu Central, a mixed-use
development in Kenya is widely considered as the BPO hub of East Africa
and is currently 91.6% tenanted.
3.1.4 Light industrial: The sector continues to provide strong and
sustainable returns to the wider portfolio. In Kenya, the Group is
experiencing currency devaluation pressure, which is impacting tenants
such as Orbit Products Africa Limited.
3.1.5 Diplomatic and corporate accommodation: Demand for units remain
healthy despite global uncertainties and US policy changes, elaborated on
in point 6.1 below.
3.1.6 Healthcare sector: Whilst a small contributor to the portfolio
performance, prospects remain attractive.
Grit’s core portfolio of higher-yielding, impact real estate assets
continued to perform in line with expectations.
3.2 Impact of Broll Partnership
In line with the Grit 2.0 strategy, the Group has concluded a strategic
partnership effective from 1 February 2025 with Broll, who will assume
responsibility for the property and facilities management of Grit’s assets
valued at approximately US$812 million.
This partnership is expected to deliver annual cost savings of
approximately US$1 million and streamline operational efficiencies,
enabling the Group to focus on its core expertise in impact real estate
development and strategic asset management, retaining key tenant
relationships.
3.3 Delays in development projects
Notwithstanding the successful recapitalisation of the Group’s development
subsidiary, Gateway Real Estate Africa (“GREA”), the timing delay of the
recapitalisation process (detailed in the RNS announcement of 1 November
2024) resulted in operating pressure, and the deferral of several
contracted development projects.
4. FINANCIAL UPDATE
The Group remained committed to lowering both the overall level and cost
of debt during the financial year, supported by sustained engagement with
existing lenders. Alongside the successful negotiation of refinancing
terms, efforts are underway to secure agreements with prospective new
funding partners. While these discussions are progressing, any resulting
benefit to Grit’s cost of funding is only expected to materialise in the
next financial year.
The Group’s disposal process remains on track, with an additional US$200
million of non-core assets identified. Negotiations are at an advanced
stage on the disposal of Tamassa Lux Resort and Artemis Curepipe Hospital
for a combined US$73.7 million, as well as on Anfa Place Mall and certain
other retail assets.
Administration expense reductions and group cost optimization
Grit progressed with the reduction of administration costs to a ratio of
1.5% of income producing assets. During the financial year to date, it
maintained its moratorium on new hires and streamlined operational
efficiencies through its transaction with Broll. The full impact of these
actions will only reflect from the 2026 financial year onwards.
The Group remains on track to reduce administration costs to 1% of income
producing assets over the medium term.
NAV impact
As guided in the HY25 results, the higher-for-longer interest rate
environment and asset revaluations, particularly in the retail sector, are
expected to continue putting pressure the Group’s IFRS Net Asset Value
(“NAV”).
As at 31 December 2024, the Group reported an IFRS NAV of US$37.68 Cents
Per Share (“cps”). However, the anticipated disposals outlined in point 4,
along with other corporate actions - including the equity issuance
detailed in point 6.2 - are expected to have a material impact, resulting
in an adjusted IFRS NAV of approximately US$33.17 cps.
5. CONFIRMATION OF DISPOSAL STRATEGY
Shareholders are referred to the announcements published on 2 September
2024 and 14 February 2025 where the Group provided updates on the
identification of non-core assets as well as its disposal strategy.
Notwithstanding global market uncertainty and African market liquidity
pressures, the Group reiterates its commitment to the implementation of
its accelerated strategy to reduce debt and the weighted average cost of
borrowings which includes the disposal of non-strategic assets.
6. CREATION OF LARGEST EMBASSY ACCOMMODATION PLATFORM IN AFRICA AND
EQUITY ISSUE
Shareholders are referred to the Group’s financial results for the year
ended 30 June 2024, published on RNS on 31 October 2024 (“the financial
results”) inter alia advising shareholders that Diplomatic Holdings Africa
Ltd ("DH Africa"), Verdant Ventures LLC and Verdant Property Holdings Ltd
(together "Verdant”) entered into a Framework Agreement to combine their
diplomatic housing businesses into a single, scalable entity, which will
retain the DH Africa name (the “Transaction”).
DH Africa is the Group’s dedicated diplomatic real estate sub-structure
and is currently wholly owned by Grit’s development subsidiary, GREA.
Verdant is a US-based real estate development company established in 2016
to provide high–quality real estate projects across Africa, primarily
focused on high-security diplomatic housing developments.
The Board of Directors (the "Board") of Grit today announces the
fulfilment of the outstanding conditions and essential implementation
steps, now rendering the Transaction unconditional.
6.1 Rationale for the Transaction
In terms of its Grit 2.0 strategy, the Group significantly simplified its
operational structure. The core portfolio is now largely grouped into
sector-focused subsidiaries, with extensive future development
opportunities owned within GREA where they can attract co-funding and
investment.
GREA and Verdant co-developed the award-winning Elevation Diplomatic
Residences in Addis Ababa, Ethiopia (“DH Ethiopia”) as well as the Rosslyn
Grove Diplomatic Apartment and Townhouse Complex in Nairobi, Kenya (“DH
Kenya”).
The combined entity (DH Africa) will provide a much larger, scaled
specialist platform, to better service diplomatic clients including the US
Government, as well as other sovereign clients.
The US State Department’s reform plan aims to streamline operations and
modernise US diplomatic engagement. DH Africa will be better positioned to
act on this initiative with a strong US based partner, particularly in
strategically important regions like Africa, which DH Africa could benefit
from.
6.2 Transaction details and issue of Equity
The Transaction consists of DH Africa increasing its equity interest in DH
Ethiopia and DH Kenya to 99.99%, together with securing access to DH
Ghana, a 108-unit diplomatic development in Accra, Ghana originated by
Verdant. As settlement for DH Africa’s additional interest in the three
projects, DH Africa will issue shares to Verdant, whereby Verdant will
take a significant minority stake in DH Africa. In addition, Grit will
acquire Verdant’s asset management and development management contracts
(the “Acquisition”).
As consideration for the Acquisition, Grit will issue 24,742,277 new
ordinary shares of no-par value (“Ordinary Shares”) to Verdant at an issue
price of US$33.90 cps.
Applications have been made with the FCA, the LSE and the SEM for the
listing of 24,742,277 new Ordinary Shares to the Official List of the FCA,
for admission to trading on the Main Market of the LSE and for admission
to trading on the Official Market of the SEM with effect from 20 June
2025 ("Admission").
Immediately following Admission, the Company's issued share capital will
consist of 519,834,616 Ordinary Shares, including 246,782 Ordinary Shares
held in treasury, meaning there are 519,587,834 Ordinary Shares with
voting rights. This figure may be used by shareholders to determine the
denominator for the calculation by which they will establish if they are
required to notify their interest in, or a change to their interest in,
the Company under the FCA's Disclosure Guidance and Transparency Rules.
6.3 DH Africa post the Transaction
Following the implementation of the Transaction, DH Africa’s portfolio
will consist of three income producing assets located in Mozambique, Kenya
and Ethiopia independently valued at US$206.9 million, with a loan to
value ratio of 32.2%, and a portfolio weighted average lease expiry rate
(“WALE”) of 5.2 years, secured predominately by long-term, AAA-rated
leases from the US Government.
Further, DH Africa has secured an additional two development projects,
with a combined project cost of US$130 million, adding to the platform's
scale and geographic diversification.
DH Africa will be consolidated into Grit. The enhanced substructure will
provide Grit with further exposure to relatively high-yielding assets as
well as the ability to capture development fees and access to asset
management income.
Bronwyn Knight, CEO and co-founder of Grit commented:
“This milestone transaction provides further momentum to our Grit 2.0
strategy, positioning us to capture growth opportunities in targeted
sectors through the establishment of specialised sub-structures.
“These will be supported by long-term funding partners who share our
commitment to unlock and generate high quality impact investment in
Africa.”
Greg Pearson, CEO and co-founder of GREA commented:
“Following the successes of our existing collaborations and the alignment
in our strategic goals, this transaction is a natural progression to
creating enhanced synergies through a scalable, specialist sub-structure,
consolidating our market leadership in this sector.”
Scott Friesen, Managing Director and co-founder of Verdant Ventures:
“Verdant Ventures was founded to build best-in-class diplomatic housing
while creating significant social impact through job training and
employment opportunities. We’re excited about this transaction, which
represents the largest pooling of diplomatic housing assets in Africa,
paving the way for continued service to our tenants, healthy financial
returns, and life-changing social impact. “
7. CHANGE TO ACCOUNTING REFERENCE DATE AND FINANCIAL YEAR END
The Group announces a change to its accounting reference date and
financial year end from 30 June to 31 December. The change of financial
year end is effective immediately.
The Board considers that this change will better align the reporting
period to the operations of the business across all subsidiaries in the
Group, as following this change all Group companies will follow the same
accounting reference date. In addition, following a mandatory audit firm
rotation, the change will allow the Company’s recently appointed auditors,
MacIntyre Hudson LLP with Baker Tilly CI Audit Limited sufficient time to
better understand the Group and complete their planning to ensure an
efficient audit.
Accordingly, the Company’s next audited financial statements will be
prepared for the 18-month period ending 31 December 2025 and will be
required to be published on or before 30 April 2026.
In accordance with the UK Listing Rules, the Company will publish
unaudited interim accounts for the period ending 30 June 2025 on or before
30 September 2025.
Thereafter, the Company will publish each year its unaudited interim
results for the 6 month ending 30 June by 30 September, and its audited
financial statements for the 12 months ending 31 December by 30 April in
accordance with the Disclosure Guidance and Transparency Rules.
This notification is made in accordance with UK Listing Rule 6.4.15.
8. STRATEGIC PRIORITIES
As the Group continues to advance its strategic agenda, its key priorities
remain firmly aligned with long-term value creation:
• Optimising capital allocation: The Group remains focused on disposing
of non-core assets and redeploying proceeds towards debt reduction and
reinvestment into higher-yielding, core assets, supporting sustainable
long-term growth.
• Strengthening financial metrics: Continued efforts to lower
loan-to-value (LTV) ratios and improve Interest Coverage Ratios (ICR)
are designed to enhance financial resilience and support more
favourable funding terms.
• Streamlining operations: The consolidation of assets into
sector-specific structures enables more focused management, unlocks
co-investment opportunities, and drives greater funding efficiency as
demonstrated by the DH Africa transaction.
• Enhancing operational efficiency: Through strategic outsourcing and
the application of technology, the Group is realigning its operational
model to deliver targeted cost reductions. These initiatives are
guided by the objective of reducing ongoing administrative costs to
1.0% of total income-producing assets over the medium term.
Together, these priorities are laying the foundation for a more resilient
and agile business, well-positioned to deliver on its long-term strategic
ambitions.
9. OUTLOOK
With robust frameworks in place to support impactful real estate
investments across Africa, Grit is well-placed to capitalise on
high-yielding opportunities, expand its strategic partnerships, and
reinforce its reputation as a leading Pan-African real estate player.
The Board remains confident in the Group's ability to deliver sustainable
long-term growth and value creation over the medium term.
By order of the Board
18 June 2025
FOR FURTHER INFORMATION, PLEASE CONTACT:
Grit Real Estate Income Group Limited
Bronwyn Knight, Chief Executive Officer +230 269 7090
Morne Reinders, Investor Relations +27 82 480 4541
Cavendish Capital Markets Limited – UK Financial Adviser
Tunga Chigovanyika /Teddy Whiley (Corporate Finance) +44 20 7220 0500
Justin Zawoda-Martin / Daniel Balabanoff / Pauline Tribe +44 20 3772 4697
(Sales)
Perigeum Capital Ltd – SEM Authorised Representative and
Sponsor
Shamin A. Sookia +230 402 0894
Darren Chinasamy +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 woman led
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 1 http://grit.group.
Directors:
Peter Todd (Chairman), Bronwyn Knight* (Chief Executive Officer), Gareth
Schnehage *(Chief Financial Officer), David Love, Catherine McIlraith,
Cross Kgosidiile, Nigel Nunoo and Lynette Finlay.
(* Executive Director) (Independent Non-Executive Director)
Company secretary: Intercontinental Fund Services Limited
Corporate service provider: Mourant Governance Services (Guernsey) Limited
Registered address: PO Box 186, Royal Chambers, St Julian's Avenue, St
Peter Port, Guernsey GY1 4HP
Registrar and transfer agent (Mauritius): OneLink Limited
UK Transfer secretary: Link Market Services Limited
SEM authorised representative and sponsor: Perigeum Capital Ltd
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: UPD
TIDM: GR1T
LEI Code: 21380084LCGHJRS8CN05
Sequence No.: 393194
EQS News ID: 2157336
End of Announcement EQS News Service
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