Rent collection and operational update

RNS Number : 9047Y

Grit Real Estate Income Group

18 May 2021

 

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")

RENT COLLECTION AND OPERATIONAL UPDATE

Grit Real Estate Income Group Limited, a leading pan-African real estate company focused on investing in 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, today provides a rent collection and operational update for the four months ended 30 April 2021.

Bronwyn Knight, Chief Executive Officer of GRIT Real Estate Income Group Limited, commented:

" We produced a robust rental collection performance of 89.5% in the four months to 30 April 2021. Our near term focus remains on further reducing vacancies and achieving a Group LTV below 45%.  

Whilst we remain confident that the Group will deliver superior and sustainable total returns for our shareholders, we are maintaining an appropriately cautious stance on income distributions for financial year to 30 June 2021 in light of the short term uncertainty produced by the ongoing COVID-19 pandemic.

We are continuing to actively engage with a number of development finance institutions and are assessing a wide number of options to fund our refocused investment pipeline of high-quality accretive assets leased to multi-national corporates and attracting hard currency rental streams ."

Rent collection update

The Group has collected 89.5% of Grit attributable contracted rental revenue for the four months ended 30 April 2021 (from 91.4% collected over the six months to 31 December 2020), impacted by slower collections in the hospitality and office segments but offset by improvements in retail.

The Group's corporate accommodation, industrial, office and other investments sectors, which collectively represent approximately 52.4% of the Group's economic interest in property assets as at 31 December 2020, continue to be largely unaffected to date with consistent rent collection and robust leasing demand.

Collections in the hospitality sector for the four months to 30 April 2021 were 74.4% of contracted revenue (80.2% for the six months to 31 December 2020).

Collections for the four months to 30 April 2021 in the retail segment improved to 91.7% of contracted rental (from 84.1% in the six months to 31 December 2020).

Sector collection details

	Office	Retail	Corp.  Accom.	Hospitality	Light Industrial	Total Jan to Apr 2021	Total July to Dec 2020
Contracted rent	100%	100%	100%	100%	100%	100%	100%
Rent deferrals	0%	(0.3%)	0%	(6.9%)	0%	(1.5%)	(2.9%)
Rent concessions	0%	(2.2%)	(7.6%)	(13.0%)	0%	(4.9%)	(4.4%)
Expected collection rate *	100.0%	97.5%	92.4%	80.1%	100%	93.5%	92.7%
Actual Collection rate (as % of contracted rent)	90.0%	91.7%	98.3%	74.4%	99.2%	89.5%	91.4%
Movement in debtors balances (excl. agreed deferrals)	10.0%	5.8%	(5.9%)	5.7%	0.8%	4.0%	1.3%

* Expected collection value after adjusting for agreed rent deferrals and rent concessions

Revenue and vacancy rate update

The headline collection rates are impacted by movements in the value of the Group's aggregate contracted revenue. Over the past 18 months, a significant number of leases in the retail segment expired resulting in both increasing vacancy and reduced rental rates upon renewal. Grit's retail sector contracted revenues for the 10 months to 30 April 2021 have reduced 11.5% versus the comparable prior year period, however strong cost control has largely offset revenue weakness, and the Group targets to reduce vacancies and recover revenue over the short and medium term. The r etail sector accounts for 28.5% of consolidated Group contracted revenue.

The Group's EPRA vacancy rate fell to 7.3% at 31 March 2021 (from 8.0% reported as at 31 December 2020) predominantly as a result of a new 649 m² office lease to Total in Commodity House Phase 1 (Mozambique) and a number of leases signed in AnfaPlace Shopping Centre. The Company is currently negotiating additional leases and expects to further reduce the vacancy rate by 30 June 2021.

Hospitality update

Grit does not assume direct hospitality operating risk by virtue of its triple net lease contracts with large hotel operators. Hospitality assets constitute 24.7% by value of the Group's economic interest in property assets.

Both Lux Hotel group and Beachcomber have received local wage subsidy, land rent support and more recently have qualified for liquidity support from the Mauritian government programme under the auspices of the Mauritian Investment Corporation ("MIC"). Rental payments to Grit have resumed, although collection rates continue to fluctuate while the Mauritian borders remain closed to tourist traffic and the operators await their respective full disbursements under MIC facilities.

Club Med has additionally been granted rent deferrals until the re-opening of the Cap Skirring Senegal resort, which is scheduled for October 2021.

The Company continues to expect further normalisation in collection rates over the coming months, and to collect 100% of the rents outstanding over the lease terms, however steady state collections for the hospitality assets are only expected once borders and resorts are fully operational again.

Drive in Trading guarantee update

The Company has faced further delays in its negotiations with the Public Investment Corporation on the restructure of its Drive in Trading guarantee and now expects to announce further details in the second half of 2021.

LTV update

As a result of extended Covid-19 lockdowns, timing of the recovery in property valuations across the portfolio remains uncertain. With slower progress in its guided LTV reduction strategies to its near term target of 45%, the Company now does not expect meaningful movement in its Group LTV by 30 June 2021 (from the previously reported 49.3% at 31 December 2020).

Dividend update

In light of this short term uncertainty produced by the ongoing COVID-19 pandemic, the Board does not expect to declare an extraordinary one-off quarter end dividend for financial year to 30 June 2021 as the conditions set out in its announcement on 15 February are not currently expected to be fully met. The Board will continue to further monitor these conditions and additionally the impact that recent Covid variants have on the hospitality sector scheduled re-opening and expected rental collection rates before deciding on its final dividend recommendation for the financial year to 30 June 2021. 

Mozambique: update on Total and Vale

Total continues to fully perform under the terms of its lease contracts with Grit in Maputo, southern Mozambique, for office space in Commodity House Phase 1 and corporate accommodation units within Acacia Estate, both leased to Total on long duration contracts. T he Company notes that on 26 April 2021, as a result of unrest and security concerns in the northern areas of Mozambique, Total withdrew its staff from the Afunji LNG site and declared force majeure under their LNG contracts pending restoration of security and stability in Cabo Delgado province.

On 20 January 2021, Vale announced its intention to divest of its Mozambique coal assets. The miner continues to support the Moatize coal project's ramp-up to 15 million tonnes per year in the second half of 2021 and 18 million tonnes per year in 2022. Vale currently leases from Grit 162 corporate accommodation units in the VDE housing estate and has over 3 years remaining on the current lease contract. Grit continues to proactively engage with Vale and looks forward to supporting them, or any prospective buyers of its Mozambique coal assets, in the provision of Grit's unique, high quality and fully self sufficient accommodation product.

Development Funding Institutions update

The Company recently updated and refined its pipeline acquisition targets and guided that funding for projects remaining on the target list are expected to be procured from Development Funding Institutions ("DFI's"). On 29 April 2021, the IFC, a division of the World bank published their sustainability findings ahead of final Investment Committee and Board approvals in relation to the targeted Orbit acquisition which can be accessed at the following link ( https://disclosures.ifc.org/project-detail/ESRS/45002/grit-reig ).  Further updates will be provided in due course.

FOR FURTHER INFORMATION PLEASE CONTACT:

Grit Real Estate Income Group Limited
Bronwyn Knight, Chief Executive Officer	[e-mail]
Darren Veenhuis, Chief Strategy Officer
Maitland/AMO - Communications Adviser
James Benjamin	[phone]
	[e-mail]
finnCap Ltd - UK Financial Adviser & Broker
William Marle / Giles Rolls / Teddy Whiley (Corporate Finance)	[phone]
Mark Whitfeld / Pauline Tribe (Sales)	[phone]
Monica Tepes (Research)	[phone]
Perigeum Capital Ltd - SEM Authorised Representative and Sponsor
Shamin A. Sookia	[phone]
Kesaven Moothoosamy	[phone]

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 Dollar 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 a primary listing on the Premium segment of the Main Market of the London Stock Exchange (LSE: GR1T)), and a secondary listing on the Official Market of the Stock Exchange of Mauritius Ltd (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:

Directors : Peter Todd⁺   (Chairman),   Bronwyn Knight   (Chief Executive Officer)*,   Leon van de Moortele   (Chief Financial Officer)*,   Jonathan Crichton⁺, Sir   Samuel Esson Jonah⁺,   Nomzamo Radebe,   Catherine McIlraith⁺,   David Love⁺, 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

c/o Intercontinental Fund Services Limited, Level 5, Alexander House, 35 Cybercity, Ebene, 72201, Mauritius

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

SEM Sponsoring broker : Capital Markets Brokers Ltd

SEM authorised representative and sponsor: Perigeum Capital Ltd

UK Transfer secretary : Link Assets Services Limited

This notice is issued pursuant to the FCA Listing Rules, SEM Listing Rule 15.36A 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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