Grit Real Estate, which invests in pan-african real estate assets (ex South Africa) has reported a 6.3% increase in EPRA net reinstatement value (NRV – one of the new EPRA reporting metrics for property companies replacing EPRA net asset value (NAV)) – over the six months to the end of December 2020.
This increase (from US$1.171 to US$1.244) was primarily down to currency movements positively impacting property valuations. Total income producing assets were valued at US$849.2m (June 2020: US$823.5m), with like-for-like property values rising by 2.2%.
The group’s retail properties fell in value by 3.7% as that sector continues to struggle. All other sectors (office, hospitality, corporate accommodation and light industrial) saw valuation gains in the period. The like-for-like increase in the value of Grit’s hospitality assets (which comprise four hotels in Mauritius and a hotel in Senegal) was largely down to the euro’s performance against the dollar.
Gross rental income was flat, at US$31.6m for the period, while adjusted EPRA earnings per share was down 44.2% to US$3.16 cents per share. Rent collection for the period was 91.4%, with office and light industrial achieving above 100% collection rates (due to some tenants paying annually in advance).
The relatively strong rent collection figures have enabled Grit to reinstate its dividend and declare an interim dividend of US$1.5 cents per share for the period. The board also said it aims to pay a one-off quarterly dividend in 2021, dependant on sustained strong cash collections and continued progress on reducing the group’s loan to value (LTV) ratio.
Group LTV reduced to 49.3% from 50.2%, as a result of part asset disposals and reductions in debt balances. The LTV is expected to fall further over the coming months towards the group’s near-term target of 45%.
Portfolio highlights
Grit’s property portfolio comprises a total of 54 investments across eight countries and five property sectors, with 88.7% of revenue earned from multinational tenants and 93.0% of revenue produced in hard currency (US dollar, euro or pegged currencies).
EPRA portfolio occupancy rate declined to 92.0% as at 31 December 2020 (June 2020: 94.1%) as a result of increasing vacancies in retail assets. The group said leasing activity was improving and it was confident that vacancies would be materially filled once COVID restrictions were lifted in each of the countries of operation.
Meanwhile, weighted average annual contracted rent escalations was 2.9% (June 2020: 2.8%).
Enhanced listing structure
Grit has taken a number of steps to enhance its corporate structure with the ultimate aim of facilitating its inclusion in the UK FTSE Index series and improving liquidity in its shares. In the past few months, it has moved its corporate domicile from Mauritius to Guernsey, stepped up to the premium listing segment of the London Stock Exchange and converted to a sterling quotation. The group also de-listed from the Johannesburg Stock Exchange last year, making the London Stock Exchange its primary listing.
GR1T : Grit Real Estate reports 6.3% increase in NAV