Grit Real Estate Income Group, the pan-African real estate company, has subscribed to its share of a $100m capital call from its development subsidiary GREA (Gateway Real Estate Africa), which will use the funds to construct US Embassy-let diplomatic housing and other real estate.
To fund the $51.5m capital call, the company sold its interest in Bora Africa (its pan-African industrial and logistics platform) and part of its interest in Acacia Estate (a diplomatic housing asset in Mozambique) to GREA.
GREA’s other shareholder, the Public Investment Corporation of South Africa (PIC), has also agreed to subscribe to its share of the capital call ($48.5m). The funds will provide GREA with the opportunity to develop new industrial and logistics assets and enable it to expand its diplomatic housing portfolio.
Grit will dispose of a 99.9% interest in Bora Africa, its wholly-owned subsidiary that invests in logistics, light industrial, manufacturing and digital infrastructure properties, to GREA for $50.7m (the independently appraised property valuation). It will also sell to GREA a 48.5% interest in Acacia Estates for $19.6m (also the independently appraised property valuation). Grit will retain a 5.0% interest in Acacia Estates.
The remaining cash proceeds (following the GREA capital call of $51.5m) amounts to $18.8m and will be used to reduce the Grit’s debt and replenish its working capital facilities.
Bronwyn Knight, chief executive of Grit, commented: “The disposal of properties at or close to book value achieves the board’s strategy of additional asset recycling and further reinforces the group’s audited net asset value at 30 June 2023. By concluding the GREA Capital Raise with these proceeds, the group (including GREA) receives a cash injection of $48.5m from the PIC’s subscription at NAV. This equity will be invested by GREA into further development projects that are expected to meaningfully contribute to ESG impact, accelerated NAV growth and fee income generation to the group as is contemplated under the Grit 2.0 strategy.”
The disposals are considered related party transactions for the purposes of the Listing Rules and are together considered a Class 2 transaction, and shareholder approval will be sought.