Grit Real Estate Income Group has concluded the final phase in the acquisition of controlling interests in developer Gateway Real Estate Africa (GREA) and asset manager APDM.
Grit now owns a direct interest of 51.48% in GREA and a 78.95% shareholding in APDM, following the acquisition of stakes owned by Gateway Partners and Prudential. The respective remaining balances are held by the Public Investment Corporation of South Africa (PIC).
Since Grit’s three-stage acquisition (which started in 2021), GREA has successfully completed several developments that have materially derisked the transaction for Grit shareholders. Notable project deliveries include:
- Adumah Place, Ghana,
- ADC data centre, Nigeria,
- Rosslyn Grove US embassy accommodation, Kenya,
- The Precinct Office park, Mauritius, and
- Curepipe Artemis Hospital, Mauritius.
The financial results of GREA and APDM are to be consolidated with Grit’s and are expected to have a positive impact on both the value of reported investment properties, group LTV and future growth rates and income distributions to the group.
When combined with Grit’s balance sheet, GREA’s current low leverage would be expected to result in a reduction of consolidated Grit group LTV by approximately 2.90 percentage points.
Construction debt facilities are more expensive than what Grit is able to secure, so there is the potential for Grit to provide cheaper debt funding than is currently available and recycle operational cashflow into new development projects rather than debt – thereby enhancing levels of growth.
Grit now has the ability to direct additional activities in GREA that are expected to create value. Proceeds from its non-core asset disposal programme (specifically focused on retail) are expected to be deployed into new project opportunities within GREA.
Bronwyn Knight, chief executive of Grit, commented: “Concluding the acquisition of controlling interests in GREA and APDM are significant milestones towards our Grit 2.0 vision of setting global benchmarks in Africa. The acquisitions support Grit’s ongoing transition towards a more resilient, accretive and African impact focused asset base. These are expected to deliver value creation and growth opportunities in net asset value and income to the benefit of all our stakeholders, including the people of Africa.
“Grit additionally gains access to GREA’s substantial pipeline of accretive development opportunities while the controlling interest in APDM provides Grit with an opportunity to earn substantial development and asset management fees from internal, joint venture partners and third-party clients.”
Further detail on phase 3 of the acquisition of controlling interests in GREA and APDM
Grit acquired Gateway Partners’ remaining 13.61% interest in GREA and 1% interest in APDM for a combined cash payment of US$33.9m. Additionally, Grit acquired a 2.85% interest in GREA from Prudential for US$5.5m.
Immediately after these acquisitions, and prior to the vesting of an APDM incentive, Grit owns 51.48% of GREA and a 78.95% shareholding in APDM.
Across the three phases, Grit has paid an aggregate of US$77.6m for the total increased 31.50% shareholding in GREA, settled through a combination of cash and share issuance.
GR1T : Grit Real Estate completes acquisition of developer