REG-Grit Real Estate Income Group Business Update

Grit Real Estate IncomeAnnouncement

13/12/2024 08:00

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   Grit Real Estate Income Group (GR1T)
   Business Update

   13-Dec-2024 / 08:00 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" or the "Group")

    

    

                              AGM BUSINESS UPDATE

    

   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 ahead of its Annual General Meeting (“AGM”).

    

   The AGM will be held at Unity  Building, The Precinct, M2 Junction,  Grand
   Baie, Mauritius at 14h30 Mauritian time (10h30 United Kingdom time) today.
    

    

    

   GREA capital raise and GEPF investment

    

   The Group’s development subsidiary,  Gateway Real Estate Africa  (“GREA”),
   successfully concluded  its  US$100  million  recapitalisation,  with  the
   Public Investment  Corporation of  South Africa  SOC Limited  (“PIC”),  as
   previously announced, on behalf of  the Government Employees Pension  Fund
   (“GEPF”), injecting US$48.5 million in equity.

   The effective draw-down date  of the recapitalisation  was on 27  November
   2024.

   This investment  followed  regulatory  approval  from  the  South  African
   Reserve Bank (“SARB”),  which requires  GREA to redomicile  to Kenya.  The
   redomiciliation is underway and is expected  to be finalised early in  the
   2025 calendar year.

   The proceeds of this recapitalisation will reduce GREA’s cost of debt  and
   finance higher-yielding development projects aligned with Grit’s strategic
   focus by: 

   i. Advancing Grit’s simplified 2.0 structure.
   ii. Aggregating  sector-focused  portfolios  in  light  industrial,   data
       centres,  logistics   and   warehousing,  diplomatic   and   corporate
       accommodation, healthcare,  and  commercial office  parks  focused  on
       hard-currency leases and predominantly global or multinational tenants
       that provide significant employment opportunities on the continent.
   iii. Reduced cost of funding.
   iv. Disposal of non-core assets.
   v. Pioneering   impact   and    sustainable   real   estate    investments
      across Africa.

    

   GREA  earmarked  as  GEPF’s  strategic  platform  for  its  rest-of-Africa
   investments and  appointment of  GEPF representative  to GREA’s  board  of
   directors

    

   The GEPF  has  furthermore  recognised GREA's  consistent  performance  in
   delivering value to its  shareholders, viewing it  as a strategic  vehicle
   for its  real  estate  investments  across  the  rest  of Africa,  with  a
   continued commitment to this partnership.

   Consequently, the Board is  pleased to announce that  Mr Zethu Msindo  was
   appointed as a representative of the GEPF to the board of GREA with effect
   from 12 November 2024.

    

   Landmark strategic partnership with Broll Property Group

    

   In line with  the Grit  2.0 strategy, the  Group has  entered a  strategic
   partnership with Broll Property Group, 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.

   The effective date of this partnership  will be 1 February 2025,  preceded
   by a seamless transition phase to ensure uninterrupted operations.

    

   Diplomatic Housing Africa

   As disclosed in the full year  consolidated results for the year ended  30
   June 2024,  published on  RNS and  the website  of the  Stock Exchange  of
   Mauritius Ltd  on 31  October 2024,  Diplomatic Holdings  Africa Ltd  ("DH
   Africa") and Verdant Ventures and Verdant Property Holdings Ltd  (together
   "Verdant”) entered into a Framework Agreement to combine their  diplomatic
   housing businesses into a single, scalable entity, DH Africa.

   The  combined  entity  will  provide  a  much  larger,  scaled  specialist
   platform, to better service Diplomatic clients including the US Government
   with Verdant  Ventures as  well  as other  Sovereign clients  and  further
   simplifies the Group’s structure.

    

   The transaction is expected to conclude  either in December 2024 or  early
   in the first quarter of the 2025 calendar year and will strengthen  Grit’s
   exposure to  high-yielding, resilient  real estate  assets while  enabling
   development fee capture and asset management income streams.

   Additionally, the Acacia Transaction has  been completed, in line with  no
   material changes  to  the  information provided  to  shareholders  in  the
   Circular released 29  January 2024,  subsequently GREA’s  95% interest  in
   Acacia was transferred to DH Africa.

    

   Drive In Trading Related Party Transaction

   The Company has concluded the transaction agreements to term out the Drive
   in Trading (“DiT”) obligation over 3 years, as detailed in Note 41 of  the
   FY2024 Integrated Report.

   In summary,  the  Company  and  the  PIC  each  took  ownership  of  their
   proportionate share of DiT’s 23.25 million Grit Ordinary Shares  (Security
   Shares) with the Guarantee  Agreement to be discharged  upon a payment  of
   US$17.5 million by  the Company to  the GEPF/PIC. Terms  have been  agreed
   with the PIC for the payment  of this outstanding balance, which has  been
   termed out to  a 3-year maturity  at an interest  rate of 3M  SOFR plus  a
   spread of 5.28%. The PIC is a shareholder of reference by virtue of  their
   23.6% shareholding in the Company and the conversion of this payment to  a
   loan is therefore a related party  transaction as defined in UKLR  8.2.1R.
   The Board extensively reviewed the transaction at the time and believe  it
   to be fair and reasonable  as far as the  security holders of the  Company
   are concerned. The Directors were also advised of the fair and  reasonable
   assessment by the Group’s sponsor, Cavendish Capital Markets Limited,  who
   provided written confirmation as required by UKLR 8.2.1R(3).
    

   Recognition for excellence

   Grit was  named  Africa’s  best  real estate  investment  manager  at  the
   prestigious Euromoney Real Estate Awards  2024, with Euromoney citing  the
   Group’s diverse portfolio, high occupancy and strong financial  discipline
   as key growth drivers.

   Other key differentiators that motivated the award include Grit’s industry
   leading sustainability  and  gender equality  initiatives,  alongside  its
   strategic asset management activities.
    

   Strategic priorities

   As the  Group  continues to  deliver  on  its strategic  agenda,  its  key
   priorities remain:

     • Optimising capital  allocation:  Grit  remains  focused  on  divesting
       non-core assets and  recycling the  proceeds into  debt reduction  and
       investments  in  higher-yielding  core  assets,  ensuring  sustainable
       long-term growth;
     • Strengthening financial  metrics: Reducing  LTV ratios  and  enhancing
       Interest Coverage  Ratios  (ICR)  to support  negotiations  for  lower
       funding costs, improving overall financial resilience;
     • Streamlining operations:  Consolidating  assets  into  sector-specific
       substructures, enabling focused management, attracting  co-investment,
       and driving funding efficiencies; and
     • Enhancing operational efficiency: Grit remains committed to realigning
       operations through  strategic outsourcing  and leveraging  technology.
       These initiatives aim to achieve targeted cost reductions in line with
       the Group’s stated objective to reduce ongoing administrative costs as
       a percentage of total  income-producing assets to a  ratio of 1.0%  in
       the medium term.

   These strategic priorities  position the  Group to achieve  a more  robust
   financial  and  operational   framework  in  support   of  its   long-term
   objectives.

    

   Conclusion

   The Group remains firmly focused  on executing its strategic  initiatives,
   which are underpinned by disciplined financial management and  operational
   excellence.   Recent   developments,   including   the   successful   GREA
   recapitalisation, the  imminent establishment  of  an enhanced  DH  Africa
   platform,  and  the  landmark  partnership  with  Broll  Property   Group,
   highlight significant strides in streamlining operations, reducing  costs,
   and unlocking new growth opportunities.

   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

    

   13 December 2024

    

    

    

   FOR FURTHER INFORMATION, PLEASE CONTACT:

   Grit Real Estate Income Group Limited                      
   Bronwyn Corbett, Chief Executive Officer                  +230 269 7090
   Group Investor Relations                                  ir@grit.group
                                                              
   Cavendish Capital Markets Limited - UK Financial Adviser   
   James King / Tunga Chigovanyika / Teddy Whiley (Corporate +44 20 7220 5000
   Finance)
   Justin Zawoda-Martin / Daniel Balabanoff / Pauline        +44 20 3772 4697
   Tribe (Sales)
                                                              
   Perigeum Capital Ltd - SEM Authorised Representative and   
   Sponsor
   Shamin A. Sookia                                          +230 402 0894

   Darren Chinasamy                                          +230 402 0885
                                                              
                                                              
   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 Corbett (Chief Executive
   Officer) *, Gareth Schnehage (Chief Financial Officer) *, David
   Love+, Catherine McIlraith+, Cross Kgosidiile, Lynette Finlay+ and Nigel
   Nunoo+.

   (* 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: UPD
   TIDM:          GR1T
   LEI Code:      21380084LCGHJRS8CN05
   Sequence No.:  364910
   EQS News ID:   2050509


    
   End of Announcement EQS News Service

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