Grit Real Estate Income Group, the pan-African real estate investor and developer, has secured new $306m borrowing facilities, as it streamlines its debt structure.
The sustainability-linked term loan and revolving credit facility (which is the largest real estate sector transaction to date in Sub-Saharan Africa, excluding South Africa) consolidates seven existing loans into a single facility.
A syndication of banks, including Standard Bank of South Africa, ABSA Group and Nedbank Group, are participating in the multi-jurisdictional debt facility, which covers Grit’s assets and debt facilities in Mozambique, Zambia, Ghana and Senegal and a corporate level revolving credit facility.
The facility is linked to Grit’s carbon emission reduction and gender equality targets, creating financial incentives to transform assets and to deliver further enhanced positive impact investments.
As at 31 December 2021, Grit had a total of $409.2m in outstanding debt, made up of $362.9m reported and $46.2m held within its associates. This new facility replaces $279.1m of existing debt and secures additional funding earmarked for the group’s Club Med Senegal hotel redevelopment project.
Bank of China’s $76.4m Zambian facility (which matured earlier this year) is now being fully repaid.
The binding transaction is subject to final regulatory approvals and is expected to be implemented by the end of October 2022. Further details include:
- $66m of the total facility will be drawn and priced in Euros with the remaining balance dispersed in USD, achieving better synergies with the group’s overall Euro asset exposures.
- The weighted average facility tenor is 4.3 years, which will result in an increase to Grit’s weighted average debt expiry profile to over 3.73 years (from 1.25 years currently).
- The weighted average interest spread over base rates has increased from 525bps (on replaced debt) to 559bps on the new facility. The company said that the cross-collateralisation and link to sustainability targets meaningfully contributed to limiting Grit’s increase in credit spreads despite material upward pricing pressure in the broader high yield debt market in 2022.
- The group currently has interest rate swaps and collars over notional debt exposures of $100m that expire after October 2023 and is implementing additional hedges over $100m notional as part of this refinance, utilising basis swaps and interest rate collars.
Excluded from the syndication are debt maturities on the State Bank of Mauritius facilities totalling $57.0m (which have already been extended to 31 March 2025), AnfaPlace Mall debt (which has also been extended to March 2025) and the Kenyan asset facilities, which are to be separately refinanced.
Bronwyn Knight, chief executive, commented:
“Our debt refinance brings enhanced scale, diversification, tenor, and optimal funding costs to our broader debt portfolio. By refinancing almost all our existing debt exposures into a single sustainability-linked facility, we are streamlining our loan management process and bolstering our commitment to our ESG targets, including carbon emission reduction and gender equality.
“The cross-collateralisation and link to sustainability targets in the new facility meaningfully contributed to limiting Grit’s increases in credit spreads despite material upward pricing movements in the broader high yield debt market in 2022.
“Standard Bank of South Africa and our other debt financing partners have shown strong support for the Grit business model and potential and have assisted us in setting new benchmarks with today’s landmark sustainability-linked refinance transaction, the largest of its kind for the real estate sector in sub-Saharan Africa (excluding South Africa).
“Grit’s family of strong partnerships across the African continent enable us to deliver smart real estate focused business solutions and sustainable value for our shareholders, whilst also delivering positive impact to the people of Africa.”
GR1T : Grit Real Estate secures $306m debt refinance