Acquisitions Update

RNS Number : 0574B

Grit Real Estate Income Group

28 January 2020

 

GRIT REAL ESTATE INCOME GROUP LIMITED (Registered by continuation in the Republic of Mauritius) (Registration number: C128881 C1/GBL) SEM share code: DEL.N0000 JSE share code: GTR LSE share code: GR1T ISIN: MU0473N00036 ("Grit" or the "Company" or the "Group")

ACQUISITIONS UPDATE

Further to the Company's previous announcements (Pipeline Acquisitions Update, released on 25 October 2019 and Acquisition of Club Med Cap Skirring Hotel in Senegal through a sale and leaseback, released on 24 July 2019), the board of Directors (the "Board") of Grit is pleased to announce today the completion of the acquisition of Club Med Cap Skirring Hotel ("Club Med") and to also provide an update on other acquisitions.

The Company is making good progress on a number of potential opportunities with existing tenants and partners, including Club Med and other high-quality multi-national companies operating across the African continent. These attractive prospective acquisitions, underpinned by predominantly US$ and Euro denominated long-term leases, will facilitate further diversification of the Company's portfolio and are each expected to be accretive, whilst delivering economies of scale benefits across the countries the Company already operates in.

The Company is continuing to explore a number of financing options to fund its attractive and accretive pipeline.

Bronwyn Corbett, Chief Executive Officer of Grit, commented:

"Concluding this first transaction with Club Med is a significant milestone and I look forward to progressing a number of the other opportunities with them across Africa, delivering real estate solutions and creating further value for Grit's shareholders and for Club Med.

I am also pleased to report that the Company's cost of debt continues to decline, helped by reductions in LIBOR. Furthermore, the Group's high-quality diversified portfolio and strong multi-national tenant base leave us confident of providing shareholders with strong and sustainable income, with the potential for income and capital growth."

COMPLETION OF ACQUISITION OF CLUB MED CAP SKIRRING HOTEL IN SENEGAL

Further to the announcement on 24 July 2019, the Company, following the satisfaction and/or waiver of the conditions precedent in the sale and purchase agreement, signed the completion agreements on 27 January 2020 with Club Med SAS, which provided for the conversion of the EUR4.0 million shareholder's loan into equity and, when combined with a further pre-development expense to be incurred by Club Med SAS, increased the total acquisition from EUR15.6 million to EUR16.2 million, subject to an adjustment based on the final balance sheet and the related profit and loss accounts of Société Immobiliére et de Gestion Hôteliére du cap Skirring (as stated in the Company's announcement on 24 July 2019).

The Company has taken transfer of the shares and effective ownership of the Cap Skirring Hotel asset on 27 January 2020.

Furthermore, subject to all development and regulatory approvals being forthcoming, the Company expects to commence with the renovation and development works, which are capped at a cost of EUR28.0 million, by the end of Q1 2020.

The large-scale renovation project of the 4-trident hotel, which has traded successfully since opening in 1971, will re-position the resort in line with modern standards and provide an unrivalled offering in the Senegalese leisure market. Upon completion of the development works, the lease term is renewed in the form of a 12-year triple net Euro lease underpinned by a Club Med parent company guarantee.

COMPLETION OF ADDITIONAL CORPORATE ACCOMMODATION UNITS AT VDE HOUSING ESTATE, TETE, MOZAMBIQUE

Grit, through its subsidiary company, Delta Tete Limitada, appointed Vale Dos Embondeiros Limitada ("VDE") in the turnkey delivery of 60 additional corporate accommodation units upon the 25-hectare property owned by the company in Tete, Mozambique. The additional units further consolidate the scheme and add to the 142 corporate accommodation units which are leased on a long-term basis.

The 60 additional units have since been successfully completed and were handed over from October through December 2019, with Vale Mocambique Limitada ("Vale")  taking occupation on the back of a newly executed five-year US$ lease. The development was completed on programme and within the budgeted US$13.7 million contract value.

Knight Frank's formal valuation of the additional 60 units in December 2019 has been confirmed at US$17.35 million, representing a valuation uplift over the value at 30 June 2019 of US$3.65 million (an increase of 26.6%).

DEVELOPMENT FUNDING AND ACQUISITION OF ST HELENE AND COROMANDEL HOSPITALS, MAURITIUS

Shareholders are advised that the conditions precedent related to the transaction are ongoing with no change to the estimated closing date of the transaction, being 31 March 2020. Subject to regulatory approvals, the commencement of development works is still expected to take place towards the end of Q1 2020.

ACQUISITION OF 50% SHAREHOLDING IN PWC AND HUAWEI HEAD OFFICE, ACCRA, GHANA

Shareholders are advised that the target completion date for the conditions precedent to be fulfilled or waived on the PWC and Huawei Head Office transactions has been extended to 28 February 2020 (previously 31 December 2019). Simultaneously, Grit's exclusivity over the opportunities with Goldkey Properties Limited has been extended until 28 February 2020.

ACQUISITION OF UP TO 100% SHAREHOLDING IN ORBIT AFRICA WAREHOUSE, NAIROBI, KENYA

Shareholders are advised that the conditions precedent related to the transaction are ongoing with no change to the target closing date of the transaction, being 31 March 2020.

By order of the Board

28 January 2020

FOR FURTHER INFORMATION PLEASE CONTACT:

Grit Real Estate Income Group Limited
Bronwyn Corbett, Chief Executive Officer	[phone]
Darren Veenhuis, Head of Investor Relations	[phone]
Morne Reinders, Investor Relations	[phone]
Maitland/AMO - Communications Adviser
James Benjamin	[phone]
Vikki Kosmalska	[e-mail]
Jason Ochere
finnCap Ltd - UK Financial Adviser
William Marle / Scott Mathieson / Matthew Radley (Corporate Finance)	[phone]
Mark Whitfeld (Sales)	[phone]
Monica Tepes (Research)	[phone]
Perigeum Capital Ltd - SEM Authorised Representative and Sponsor
Shamin A. Sookia	[phone]
Kesaven Moothoosamy	[phone]
PSG Capital - JSE Sponsor and Corporate Adviser
David Tosi	[phone]

The Company's LEI is: 21380084LCGHJRS8CN05

NOTES:

Grit Real Estate Income Group Limited 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). 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 is targeting a net total shareholder return inclusive of net asset value growth of 12.0%+ per annum.*

The Company currently holds primary listings on both the Main Market of the London Stock Exchange (LSE: GR1T) and on the Main Board of the Johannesburg Stock Exchange (JSE: GTR), while its listing on the Official Market of the Stock Exchange of Mauritius Ltd is termed as a secondary listing (SEM: DEL.N0000).

Further information on the Company is available at http://grit.group/

*        This is a target only and not a profit forecast and there can be no assurance that it will be met. Any forward-looking statements and the assumptions underlying such statements are the responsibility of the Board of Directors and have not been reviewed or reported on by the Company's external auditors.

Directors:

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

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

Company secretary: Intercontinental Fund Services Limited

Registered address: c/o Intercontinental Fund Services Limited, Level 5, Alexander House, 35 Cybercity, Ebène, 72201, Mauritius

Transfer secretary (South Africa): Computershare Investor Services Proprietary Limited

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

Corporate advisor and JSE sponsor: PSG Capital Proprietary Limited 

SEM authorised representative and sponsor: Perigeum Capital Ltd

This notice is issued pursuant to the LSE Listing Rules, JSE Listings Requirements, SEM Listing Rule 11.3 and the Mauritian Securities Act 2005.  The Board of the Company accepts full responsibility for the accuracy of the information contained in this communiqué.

 

END

 

 

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