Grit Real Estate Income Group has released an update on rent collection figures for the period March to July 2020, for which 85.4% of rent has been received.
The pan-African real estate investor said the figure includes pre-paid rent that was collected in the period – 77.4% without it. Short-term concessions amounted to 7.9% of contracted rental revenue over the period, primarily from retail assets. Rent deferrals has been agreed on 14.7% of rent, which are now due in the next financial year and beyond.
The company, which owns a portfolio of 47 assets across Africa predominantly let to blue-chip multi-national tenants, said it had collected 100% of rent from its corporate accommodation, industrial and office assets that represent 48% of its portfolio.
Rent deferrals were mainly agreed in the hospitality sector, which makes up 18.8% of the portfolio. Rent collections in Mauritius were postponed due to government legislation for six months until September 2020, at which time normal rentals resume and outstanding balances accumulated over the period to September become collectable over the subsequent 16 months.
Grit does not have direct hospitality exposure as a result of its fully servicing triple net lease rental contracts with international leisure operators and the lease contracts are underwritten by the holding companies of the respective operators.
Rent concessions have mainly come in the retail sector, which accounts for 32.1% of the portfolio. The most significant impact has been in AnfaPlace shopping mall, in Morocco, which faced severe disruption as a result of its closure on 19 March 2020. Trading resumed on 25 June 2020 at the mall, which is the largest asset in the portfolio and makes up around 10% of Grit’s revenue as at 31 December 2019.
The three-month closure and rent concessions will result in lower revenues in the company’s current financial year. Grit said it was providing a combination of further concessions and rent deferrals to tenants for the period through to 31 December 2020, as the mall returns to normalised levels of trade.
Debt covenants
As a precautionary measure, Grit has engaged with its lenders about an extension to loan to value (LTV) and interest cover covenants and interest holidays on loans attached to Covid-19 impacted properties.
The group’s lowest currently imposed LTV covenant stands at 53%. The board said it expects downward pressures on its 30 June 2020 property valuations, predominantly in its retail and hospitality assets, but said it expects to maintain sufficient covenant headroom after adjusting for these impacts.
JSE de-listing
The company completed its de-listing from the Johannesburg Stock Exchange on 29 July 2020 and is now primary listed on the London Stock Exchange, with a secondary listing on the Stock Exchange of Mauritius.
On 3 August 2020, the company’s LSE stock quote was changed to Sterling, and is intending to move to the premium listing segment on the LSE. To facilitate the group’s eligibility for inclusion in the FTSE UK Index Series, the group is also exploring the possibility of redomiciling its corporate seat to Guernsey.
QuotedData published an initiation note on Grit Real Estate in July. You can read it here.
GR1T : Grit Real Estate collects 85.4% of rents