Investment Trust Insider on Grit Real Estate Income – James Carthew: 8%-yielding Grit builds on London listing
Last July a sizeable new fund joined the London-listed investment companies sector, Grit Real Estate Income (GR1T). This website (Citywire) reported the listing but I haven’t seen much written about it since, so I thought I’d take another look as it’s an interesting fund and yet another example of the sector expanding into new and unexpected directions.
GR1T is a £332 million commercial property company investing in Africa outside South Africa, which has a large real estate sector.
Africa is not well covered by investment companies and those funds that have focused on the continent have not covered themselves in glory. The £45 million Africa Opportunity Fund (AOF) has had some issues, Zimbabwe-focused Masawara de-listed last year, as did Tiso Blackstar, and PME Africa is tiny.
That does not mean that we should write off this vast land mass, however. The frontier markets funds have plenty of exposure, encouraged by Africa’s enormous potential. GR1T is of a different scale and, hopefully, quality to the funds that have gone before it.
GR1T is targeting a yield of 8.25% and total returns of 12% a year, both in US dollars. At the end of December 2018, it held 25 assets spread across seven countries – Mozambique, Mauritius, Morocco, Zambia, Ghana, Kenya and Botswana. It is also diversified by type of property, with significant allocations to retail, offices, hospitality and corporate accommodation.
The focus is on high quality property and blue-chip multinational tenants, which represent 93% of income. The majority of its assets attract income in US dollars or Euros but GR1T does have some exposure to local currencies, some of which is hedged.
The average yield used to value the portfolio at the end of last year was 8.6%. The average length of leases in the portfolio is more than 6% and the rental agreements provide for an average 3.1% a year uplift in income. The vacancy rate of the portfolio at the end of January was 3.4%.
GR1T began to build its portfolio in July 2014. It listed… read more here