Grit Real Estate Income Group, the pan-African real estate company, has suspended payment of its dividend for four weeks.
The company said the interim dividend of US$5.25 cents per share will now be paid on 30 April 2020 and was postponed due to delays with central bank processes and moving cash balances to Mauritius, where it is headquartered.
Grit said the majority of monthly and quarterly rental collections from its 47-asset portfolio had continued uninterrupted.
Anfa Place Shopping Centre and the group’s five hospitality properties are currently experiencing significant business interruption but, save for a few minor supply chain interruptions and isolated tenant stress in the retail sector, the remainder of the portfolio remains largely unaffected to date.
Impact on portfolio
The group’s hospitality portfolio, which accounts for 18.8% total net asset value as at 31 December 2019, is largely unaffected due to its fully servicing triple net lease rental contracts with international leisure operators that are underwritten by the holding companies of the respective operators.
Grit said the hospitality groups have all implemented cashflow mitigation actions, and whilst Grit might experience delays in the timing of payments, it expects that these groups will continue to have sufficient support and liquidity to continue settling their obligations in due course.
Grit’s retail portfolio has been hit harder. A number of retail stores, restaurants and entertainment venues have closed across Morocco, and the Anfa Place Shopping Centre has closed with only the food, pharmacy, banking and telecommunications retailers remaining open within the centre.
Grit said it was providing support programmes, including rental concessions to tenants affected by the government enforced closures within the company’s centre. The state of emergency is also expected to delay completion of some tenant installations which shall result in delays to lease start dates within the mall.
Edcon, a South African fashion retailer, is facing financial stress. The Edcon group represents 1.2% of Grit’s total group rental income. Grit said it was in discussions with a well-known international retail brand to take up any space that might become available within Grit’s Zambian malls.
Across Grit’s Zambian and Mozambique retail portfolios only minor temporary store closures to date. Due to their tenant base of predominantly basic needs retailers, it is not expected that the likely forced shutdowns will incapacitate the operations of the centres.
Financial position
Grit’s loan-to-value (LTV) was 43.9% at 31 December 2019, with a weighted average debt maturity of 2.84 years. The company has no debt maturities before May 2021 save for a $15m bullet instalment payment due in October 2020.
The group’s lowest imposed LTV covenant stands at 53%, implying headroom of US$74.8m as at 31 December 2019.
The group’s lowest imposed EBITDA covenant stands a 2x against 2.29x as at 31 December 2019, headroom in excess of US$10m.
Grit has exercised a number of cash preserving strategies including a stop to all non-essential expenditure, considering its target execution dates on a number of the announced pipeline opportunities and refocusing on a non-core asset disposal and other asset recycling opportunities.
GR1T : Grit Real Estate suspends dividend