hy2020 results presentation - grit · light industrial llr other investments 38.6% 20.6% 13.5%...

HY2020 RESULTS PRESENTATIONFOR THE SIX MONTHS ENDED

31 DECEMBER 2019 COMMODITY HOUSE II

Ι 2

BRONWYN CORBETTChief Executive OfficerBCom (Acc), CA(SA)

• 2019 EY Entrepreneur of the Year Award Winner (Exceptional Category, Southern Africa)

• 2015 Top CA(SA) under 35 Award Winner

Proceedings

LEON VAN DE MOORTELEChief Finance OfficerBcompt (Hons), CA(SA)

Introduction

Existing Portfolio

Financial Review

Outlook

Q&A

Annexures

Growth & Pipeline

Introduction

Ι 4

Grit is a leading pan-African (excluding South Africa) real estate companyfocused on investing in and actively managing a diversified portfolio of assets underpinned by predominantly US$ and Euro denominated long-term leases

with high quality multi-national tenants

Grit has a full suite of on-the-ground capabilities and has a proven ability to generate attractive African returns for a sound risk profile given the quality

of tenants and security of cash flows

Ι 5

The African Opportunity

Why Africa2nd

largest continent in the World

50%urbanisation

by 2030

2.4 Bn+population by 2050

1.2 Bn+population

54countries

3.6%SSA GDP Growth

2020(e)

Key Trends

Key Insights

Urban Growth Rates Rapidly Increasing Urbanisation Supply of Grade A Real Estate: Africa vs. Rest of the World1

Source: McKinsey & Company. 2010. Lions on the move, The Progress and Potential of African Economies, Executive Summary. [ONLINE] Available at: https://www.mckinsey.com/featured-insights/middle-east-and-africa/lions-on-the-move. [Accessed 10 February 2020]. IMF. 2019. Real GDP Growth, Annual percent change. [ONLINE] Available at: https://www.imf.org/external/datamapper/NGDP_RPCH@WEO/OEMDC/ADVEC/WEOWORLD/AFQ. [Accessed 7 February 2020].PWC. 2019. Real Estate 2020: Building the future. [ONLINE] Available at: https://www.pwc.com/realestate. [Accessed 7 February 2020].

RISING INFRASTRUCTURAL

DEVELOPMENT

INCREASINGECONOMIC GROWTH

STRONG POPULATIONGROWTH

GROWING MIDDLE CLASS

https://www.mckinsey.com/featured-insights/middle-east-and-africa/lions-on-the-move

https://www.imf.org/external/datamapper/NGDP_RPCH@WEO/OEMDC/ADVEC/WEOWORLD/AFQ

https://www.pwc.com/realestate

Ι 6

HARD CURRENCY LEASES

DIVERSIFIED AFRICA

TENANT QUALITY

Grit Group Strategy

* Only a target and not a profit forecast and there can be no assurance that it will be met. forward-looking statements and the assumptions underlying

such statements are the responsibility of the Board of directors and have not been reviewed or reported on by the Company’s external auditors.

PROPERTY INVESTMENTTargeted 12% US$ total return* underpinned by hard currency leases, guarantees and contracted rental escalations with multinational tenants.

PROPERTY DEVELOPMENTUp to 20% of GAV** in property development and development prefunding.

ASSET MANAGEMENT & CO-INVESTMENTOpportunities to co invest into direct real estate portfolios with Asset Management fees charged on full asset value.

De-risked approach to capturing significant parts of the value chain

** Measured at time of investment.

Ι 7

38.6%

20.6%

13.5%

14.0%

6.4%

Geographic Split (HY2020)1

Mozambique

Mauritius*

Morocco*

Zambia

Ghana

Kenya

Botswana*

OtherInvestments

32.1%

25.1%

18.8%

17.2%

3.4%

Sectoral Split (HY2020)1

Retail OfficeHospitality Corp. AccommLight Industrial LLROther Investments

1 Split by Asset Value, Grit proportionate ownership

Grit Real Estate Income Group at a glanceGeographic & sectoral diversification

PORTFOLIO HIGHLIGHTS #

# as at 31 December 2019

US$860.1massets2

92.8%Multinational

tenants

94.1%income hard

currency

97.4%EPRA

Occupancy

4.7 years

WALE (by GLA)

2.7%weighted

average lease escalation

FINANCIAL HIGHLIGHTS #

41.9%PROPERTY LTV

c8.5%current US$

dividend yield

6.07%WACD

12%US$ targeted total return

INVESTMENT HIGHLIGHTS

Our High-quality Tenants

2 total income-producing assets

*36% of Grit’s portfolio is in Investment

Grade African countries

1 split by Asset Value, Grit proportionate ownership

Ι 8

quality portfolio• Geographic & sector diversification• Low vacancy & long-term leases • Target 50% in investment grade countries• In-country asset & property management

Business Approach

relationships• Multi-bank strategy• Supportive anchor shareholders• Ability to access pipeline• Blue-chip multinational tenants

risk mitigants• Sustainable hard currency income • Political Risk Insurance• Margins of safety • Proven ability to raise capital

talented people• Internal, strong & experienced executive

management• High quality new hires• Continuous staff development

v

Strong relationships combined with comprehensive risk control

Ι 9

De-risked Investment Strategy

Prioritisation of assets with USD

or USD/Euro denominated

leases

Prioritisation of long-term

leases with blue chip

multinational tenants

Robust relations with

the Central Bank, hedging & monitoring

policies

Target stable jurisdictions

that satisfy our key investment

criteria1

Reputable experienced in-

country partners and

property managers

Defined diversification

strategy in place2

Comprehensive Political Risk

Insurance (PRI) cover in place

Marginsof

SafetyRepatriation of funds

Political risk& macro-

economicsLand tenure

Ability to raise debt

CounterpartyHard currency

030201 04 05 06

Notes:1 – i.e. stable governance/political maturity, strong USD/FDI inflows, USD-based economies, high growth rates, acceptable sovereign ratings and outlook by ratings agencies, solid economic fundamentals, clear tax regime2 – i.e. target not more than 25% of the GAV Group in any single investment; target not more than 25% of the GAV of the Group in any single country

CURRENCYRISK

TENANCY RISK

REPATRIATIONRISK

COUNTRYRISK

OPERATIONALRISK

OVEREXPOSURE RISK

POLITICALRISK

Ι 10

HY2020 Highlights (31 December 2019)

Robust financial and operational performance.

US$ 860.1 mln

HY2019: US$796.4mln

SEM – 9.6%JSE – 10.3%LSE – 9.6%

Additional VDE units delivered profit

attributable to Group of

$6.1mln

6. Inclusive of development profit share and property revaluation growth

2. EPRA NAV excludes deferred tax on Property

3. Based on minimum dividend target of US$12.25cps, 31 Dec 2019 exchange rates and share prices on respective exchanges

5. Excluding corporate facilities 8. Driven by reductions in Libor post Refinance. WACD has dropped to 5.98% by December 2019

4. US$10.7m (HY2019) vs. US$7.3m (HY2018) driven by escalations & acquisitions

1. A 7.9% increase with the property Portfolio increasing to 45 assets

7. Includes adjustments for deferred tax, unrealised FX movements and straight lineleasing adjustments

US$1.447

HY2019: US$1.431

+47.3%

41.9%

HY2019: 40.5%

+5.8%

HY2019: +20.6%

6.07%

FY2019: 6.44%

Total Income Producing Assets1

WACD8

Growth in Profit from operations4Dividend Yield3EPRA NAV2

Property LTV5 First Prefunding Project6

Adjusted EPRA Earnings per share

growth7

HY2019: +75.7%

Ι 11

Strategic Objectives

Operational cost efficiency improvement

Pipeline Conversion & Funding

Redomicile & Premium Listing

Review of Listing Locations

Morocco REIT (Anfa)

Advancement of AM Strategy (LLR)/Paradise

1.

2.

3.

4.

5.

6.

Existing Portfolio

Ι 13

Portfolio Characteristics

32.1%

25.1%

18.8%

17.2%

3.4%

2.6% 0.8%

Sectoral Split (HY2020)1

Retail OfficeHospitality Corp. AccommLight Industrial LLROther Investments

38.6%

20.6%

13.5%

14.0%

6.4%

3.5%

2.6%0.8%

Geographic Split (HY2020)1

Mozambique Mauritius*

Morocco* Zambia

Ghana Kenya

Botswana* Other Investments


*36% of portfolio is in Investment Grade African countries

Multinational Tenants1

92.8%

Hard Currency3

94.1%

Contracted Escalation2

2.7%

WALE4

4.7 years

1. Forbes 2000, Other Global & pan African tenant (by revenue)

2. Weighted average annual escalation

3. Hard or pegged currency rental income

4. Weighted Average Lease Expiry (by GLA)

EPRA Occupancy

97.4%

KEY METRICS


Ι 14

Portfolio Key Metrics – Geographic * at 31 December 2019

Morocco Mozambique Ghana Mauritius Kenya ZambiaBotswana

(LLR) 5Other

Investments6 Total

Number of Properties/ Investments 1 9 3 5 2 3 20 3 46

Grit attributed Asset Value (USD '000) 1 109,201 312,028 51,503 166,245 27,965 113,275 21,112 6,393 807,722

Weighted Average Property Cap rate 8.3% 8.0% 7.6% 7.1% 8.3% 7.7% 9.0% - 7.8%

WALE *by GLA (years) 3.7 3.4 3.6 10.8 7.7 1.5 2.1 - 4.73

Weighted Average Lease Escalations (income) 3.3% 3.0% 2.8% 0.7% 4.0% 2.2% 6.8% - 2.7%

GRIT attributed Weighted Avg US$ Rental per m2 per month

$39.30 $25.09 $33.25 $13.21 $11.87 $19.11 $7.07 - $23.39

Full GLA (m2) 33,280 91,693 16,971 120,046 19,860 65,958 151,452 - 499,260

Grit attributed GLA (m2) 33,280 91,693 10,905 69,907 16,781 47,097 45,436 - 315,098

EPRA Operating Cost to Income Ratio2 74.0% 22.2% 13.1% 2.9% 19.6% 17.2% 10.1% - 18.6%

EPRA Vacancies3 (%) 11.7% 1.3% 1.6% 0.0% 0.2% 2.4% 2.1% - 2.6%

Weighted average cost of property debt (%) 5.1% 7.5% 8.3% 4.0% 7.0% 6.3% 7.0% - 6.3%

Debt to Property Value4 (%) 40.8% 44.6% 38.1% 41.9% 34.2% 41.6% 29.8% - 41.9%

1. Value as at 31 December 2019 at Grit proportionate ownership. Portfolio value includes land values for Imperial Ph2 and Buffalo Mall Ph2.2. Based on EPRA cost to income ratio calculation methodology 3. Vacancy is measured as a percentage of Total Estimated Rental Value, excludes those units under rental guarantee4. Excluding corporate facilities 5. LLR reflected separately to enable comparable analysis of portfolio against prior reporting period 6. Includes land owned by Grit (Imperial Ph 2) and associate properties owned by our development associate – Gateway Delta

Ι 15

Portfolio Key Metrics – Sectoral * at 31 December 2019

Retail Office Light Industrial HospitalityCorporate

AccommodationLLR5 Other

Investments6 Total

Number of Properties/ Investments 7 8 2 4 2 20 3 46

Grit attributed Asset Value (USD '000) 1 `259,622 201,980 27,839 151,543 139,233 21,112 6,393 807,722

Weighted Average Property Cap rate 8.0% 7.7% 8.1% 7.0% 8.3% 9.0% - 7.8%

WALE *by GLA (years) 2.6 4.3 5.7 11.0 3.7 2.1 -4.73

Weighted Average Lease Escalations (income) 2.8% 3.6% 3.2% 0.6% 2.1% 6.8% - 2.7%

GRIT attributed Weighted Avg US$ Rental per m2 per month

$27.49 $30.14 $10.57 $13.39 $22.23 $7.07 - $23.39

Full GLA (m2) 121,748 51,646 18,519 111,777 44,117 151,452 - 499,260

Grit attributed GLA (m2) 99,808 45,580 18,519 61,638 44,117 45,436 - 315,098

EPRA Operating Cost to Income Ratio2 33.2% 7.1% 9.3% 3.4% 16.9% 10.1% - 18.6%

EPRA Vacancies3 (%) 6.2% 1.2% 0.6% 0.0% 0.1% 2.1% - 2.6%

Weighted average cost of property debt (%) 6.1% 7.4% 6.7% 4.0% 7.4% 7.0% - 6.3%

Debt to Property Value4 (%) 42.1% 42.5% 34.5% 41.4% 43.7% 28.9% - 41.9%

1. Value as at 31 December 2019 at Grit proportionate ownership. Portfolio value includes land values for Imperial Ph2 and Buffalo Mall Ph2.2. Based on EPRA cost to income ratio calculation methodology 3. Vacancy is measured as a percentage of Total Estimated Rental Value, excludes those units under rental guarantee4. Excluding corporate facilities 5. LLR reflected separately to enable comparable analysis of portfolio against prior reporting period 6. Includes land owned by Grit (Imperial Ph 2) and associate properties owned by our development associate – Gateway Delta

Ι 16

Top 15 Tenants (as at 31 December 2019)

Rank1 Key Tenant Industry Income (% of Group Total) Tenant Grading Lease Covenant Lease Currency

1 Beachcomber Hospitality 11.4% Other Global Triple Net EUR

2 Vodacom Telecommunications 10.9% Forbes 2000 Double Net USD

3 Total Oil & Gas Exploration 7.5% Forbes 2000 Traditional USD

4 Vale Mining 7.3% Forbes 2000 Traditional USD

5 Lux Tamassa Hospitality 5.8% Other Global Triple Net EUR

6 US Embassy Consular 5.0% Other Global Traditional USD

7 Shoprite Retail 3.3% Forbes 2000 Gross USD/ZMW

8 Imperial Health Sciences Kenya Logistics 2.8% Pan African Triple Net USD

9 Tullow Ghana limited Oil & Gas Exploration 2.7% Other Global Traditional USD

10 Game / Massmart Retail 2.4% Forbes 2000 Gross USD

11 Barclays (ABSA Group) Financial Services 2.1% Forbes 2000 Traditional USD/MUR

12 International Retail Morocco Retail 1.9% Other Global Traditional MAD

13 Hollard Insurance 1.8% Other Global Traditional USD

14 Exxon Mobil Oil & Gas Exploration 1.7% Forbes 2000 Traditional USD

15 GCNET IT/Communication 1.4% Other Global Traditional USD

Total 67.8%

Majority of portfolio income generated from strength of multinational tenancies

1. Ranked by income

Ι 17

Portfolio Update – AnfaPlace Mall (Morocco)

OPERATIONAL UPDATE

➢ Repositioning and tenant mix well-received, mall stabilising and trading in line with expectations

➢ Increasing average rents, WALE, GLA and valuation, continually reducing vacancies

➢ Exit of problematic tenant underway, freeing up 1,893m2 of lettable space

➢ Single tenant occupies 5 street retail outlets (Pizza Pino, Meat Co, Little Bartons, Paradis du Fruit, Okku / Kasai)

➢ Principal driver of the US$1.3m bad debt impact in HY2020

OPERATIONAL KEY METRICS

Dec 2019 Dec 2018 Change Comment

USD Rent per m2 per month

US$39.30 US$35.38 +11.1%Premier retail space commanding higher

rentals

WALE (years) (GLA) 3.71 3.52 +0.19 yr Longer lease terms signed

GLA (m2) 33,280m2 31,934m2 +4.2% Optimized GLA, more rentable space

Vacancy (%) 11.7%* 20.1% -8.4% Positive letting activity

Valuation (US$m) $109,200,793 $92,167,535 +18.5% Positive valuation uptick

*Vacancy comprises of 6.2% retail area and the remaining 5.5% is storage area.

Ι 18

➢ Conditional agreement for the acquisition of a Moroccan-REIT (OPCI) vehicle that owns the

Massira Corner mixed use property

➢ OPCI’s to target further acquisitions of between EUR300m to EUR400m starting with:

• Exclusivity over an A-grade industrial asset in Meknes Industrial zone let to Aptiv Plc

• Memorandum of understanding for the development of a 350 key Club Med resort in Essaouira

• AnfaPlace Mall strategically positioned for inclusion to the OPCI

➢ Key cornerstone investors to take up shares alongside Grit in the OPCI structure.

Portfolio Update – Moroccan REIT

MOROCCAN REIT STRATEGY

ANNOUNCED ACQUISITION - MASSIRA CORNER (post-period)

➢ Prime corner site 16 500m2 mixed-use asset located in the center of Casablanca (flagship acquisition)

➢ Anchor tenants: Onomo Hotels (201 keys, 9 year triple net lease), H&M, Starbucks, Charles & Keith

➢ 69% hospitality / 31% retail (by area) – unlocks new strategic partnership with Onomo Hotels

Ι 19

➢ 60 additional units completed and handed over from October through

December 2019, leased to Vale on a newly executed five-year US$ lease.

➢ Development completed on time and on budget.

➢ Total construction costs amounted to US$9.3m (exclusive of VAT), profit share

amounted to US$4.6m & the 60 specific units were valued at US$17.4m.

➢ Overall increase in the value of the accommodation complex attributable to the

Group for the period was US$6.1m.

Portfolio Update – VDE Housing Estate (Mozambique)

OUTCOME OF FIRST PRE-FUNDING DEVELOPMENT AND PROFIT SHARE

PORTFOLIO UPDATE – FIRST PRE-FUNDING DEVELOPMENT

➢ Grit contracted, on a turnkey basis, for the delivery of 60 additional units to the scheme

➢ Grit provided forward funding to the developer in exchange for profit-share participation and a

mechanism to boost NAV growth

Ι 20

➢ Construction of 122 new GM rooms (Suites, Deluxe, Club)

➢ Renovation & Reconfiguration to 195 GM rooms (from 204) - Club, PMR

➢ Creation of a Gourmet Lounge, a Zen swimming pool, a Passworld, spa

➢ Extension and renovation of existing facilities (GO accommodation, cardio,

discovery area, swimming pool, bar, main restaurant, club house, etc.)

➢ Re-development budget capped at EUR28M

➢ Renovation and development works expected to commence by end of Q1 2020

Portfolio Update: Club Med Senegal (post-period)

REDEVELOPMENT PROJECT OVERVIEW

*Current lease & new development lease underpinned by a Club Med parent company guarantee

ACQUISITION UPDATE

➢ Transfer of shares and ownership taken on 27 January 2020

➢ Large-scale renovation project will re-position the resort

➢ Lease term is renewed on a 12-year triple net Euro lease*

Ι 21

Asset Management Opportunity – LLR (Botswana)

LLR CURRENT STATUS QUO

GRIT VALUE-ADD

STRATEGY

➢ Grit now owns 30% stake in LLR (up 23.75% from 6.25% initial stake)

➢ LLR Portfolio includes 20 assets, with an LTV of <35% (FY2019) & a strong cash position – US$20.6m*

➢ Opportunities for Asset Management initiatives

➢ Deployment of Grit’s IP, mentoring, expertise, partnerships, software solutions and best practices

➢ Optimal gearing and enhancement of current capital structure

➢ Deal-sourcing, disposals, attracting high quality multinationals, lease renewals and escalations

➢ Become the dominant real-estate player in the region, backed by strong institutional support (BDC)

➢ Enhancing a promising portfolio through AM initiatives to manage costs and boost returns

➢ Beneficiary of enhanced performance (via 30% stake)

*as at 31 December 2019

Financial Review

Ι 23

HY2020 Highlights (at 31 December 2019)

Robust performance

EPRA Property cost to income6

Debt refinance4WACD3EPRA NAV growth2

Gross Rental income growth

DividendAdmin cost to Total

Asset Value5

Adjusted EPRA earnings1

2. EPRA NAV excludes deferred tax on Property

3. As a result of movements in LIBOR and Mozambique refinance. At 31 Dec, WACD is at 5.98%

6. EPRA cost ratio incl associates

4. On Mozambique portfolio, effective interest rate reduced by 1.14%

1. Includes adjustments for deferred tax, unrealised FX movements and straight line leasing adjustments

5. Increased headcount and increase in professional fees, costs weighted in first half

US$5.67 cps

HY2019: US$5.36 cps (+5.8%)

+1.1%

HY2020: US$1.447HY2019: US$1.431

6.07%

FY2019: 6.44%

US$140 million Mozambique facility

+29.9%

HY2020: US$24.3mHY2020: US$18.7m

US$5.25cps

HY2019: US$5.25cps

2.1%

FY2019: 1.7%

18.6%

HY2019: 15.6%

Ι 24

EPRA NAV Bridge – HY20

* EPRA NAV cum dividend

Portfolio Performance

# Other non-cash items include non-distributable profits/(loss), non-controlling interest share in profit, movement in foreign currency translation reserve & treasury shares

Ι 25

5.585.95 6.07

5.25 5.25

6.176.12 6.12 6.95

0

2

4

6

8

10

12

14

FY16 FY17 FY18 FY19 HY20

US$

Cen

ts p

er s

har

e (C

PS)

Interim Dividend Final Dividend

Earnings Held Back

Distributable Income 31 December 2019

US$’000

Basic Earnings attributable to the owners of the parent 13,130

Add Back non-cash items:

- Straight-line leasing (non-cash rental) & right of use amortization 1867

- Total fair value adjustment on investment properties owned (486)

- Fair value adjustments included under income from associates (2,535)- Fair value adjustment on other investments (591)- ECL Provision 218- Unrealised foreign exchange gains or losses (non-cash) 403

- Fair value adjustment on other financial asset & instruments 416- Impairment of loan 904- Share based payments 90 - Movement in deferred tax 2,419- Depreciation and amortization 259

Items added back

- Acquisition costs not capitalized 1,131- Anfa costs not capitalised 324- LLR day one gain (2,066)

Other cash generation

- VAT and tax credits utilized 304 - Antecedent dividend 418

TOTAL DISTRIBUTABLE EARNINGS 16,203 Distributable earnings per share (US$ cps) 5.48

Weighted average shares in issue (‘000) 297,581

Final Distribution declared per share US$5.25 cps

11.7512.07 12.19

+2.7% +1.0%

1. Includes special dividend for FY17

2. Distribution flat on prior year, with a portion of earnings held

back for 2H2020

2

12.20

+0.1%

1

5.48

Ι 26

Loan to Value

51.0%49.2%

43.4% 43.9%

35.0% - 40.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

HY17 HY18 HY19 HY20 Post HY20

TARGET LTV

35-40%

LTV impacted by acquisition of the additional VDE units which were debt funded. LTV is expected to reduce towards the targeted 40% by the end of the financial year.

Ι 27

Weighted Average Cost of Debt

5.80%5.69%

6.31%

6.07%

5.0%

5.2%

5.4%

5.6%

5.8%

6.0%

6.2%

6.4%

6.6%

6.8%

7.0%

HY17 HY18 HY19 HY20 Post HY20 (Target)

% Interest Rate Hedged

68.80%

HEDGE MATURITY

3.79years

WACD declined to 6.07% (June 2019: 6.44%) as a result of active treasury management activities and downward movements in LIBOR over the reporting period.

Ι 28

Key Financial Metrics

15.6%

17.0%

18.6%

14.0%

15.0%

16.0%

17.0%

18.0%

19.0%

HY19 FY19 HY20

1.6% 1.5%1.3%

2.1%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

HY17 HY18 HY19 HY20

OPEX TO INCOME INCL. ASSOCIATES

ADMIN COST TO ASSET VALUE

1. Impacted by one off professional costs and increased staff compliment

ahead of acquisitions and premium listing

1

INTEREST COVER

NET EUR EXPOSURE

1.6

1.8 2.12.3

0.0

0.5

1.0

1.5

2.0

2.5

3.0

HY17 HY18 HY19 HY20

21.7

43.954.9

62.3 66.3

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

FY16 FY17 FY18 FY19 HY20

EUR

(‘0

00

s)

Ι 29

Debt Financing Overview

11.0%

11.6%

15.1%

25.3%

33.0%

DEBT EXPIRY PROFILE (HY2020) MULTI BANK STRATEGY (HY2020)

(Corporate facilities)

<5.0%

* BOC US$13.3 million facility expiring in Feb 2022 replaced post balance sheet date as part of the Mozambique refinance

DEBT MATURITY

PROPERTY WALE

2.94years

(HY2019: 2.40 years)

4.73years

29.6

0.4

20.0 16.9 24.9

38.9

258.10

-

50.0

100.0

150.0

200.0

250.0

300.0

Aug 2021 Sep 2021 Oct 2021 Feb 2022 Mar 2022 Apr 2022 Post June2022

US$

(‘0

00

s)

*

The Group has continued to develop strong relationships with financiers. The multi-bank approach adopted by Grit has continued, with the main banking partners being Bank of China, Standard Bank, ABSA Bank and SBM (Mauritius) Ltd.

Ι 30

Statement of Comprehensive IncomeGROUP

Condensed consolidated statement of comprehensive income - For the 6 months ended 31 Dec 201931 Dec 2019

(US$’m)31 Dec 2018

(US$’m)

Gross rental income 24.3 18.7

Straight-line rental income accrual (0.2) 0.6

Revenue 24.1 19.4

Property operating expenses (6.3) (4.0)

Net property income 17.8 15.4

Other income 3.0 0.1

Administrative expenses (including corporate structuring costs) (10.0) (8.2)

Profit from operations 10.8 7.3

Total fair value adjustment on investment properties 3.0 15.1

Total other fair value adjustment on other investments 0.0 0.0

Impairment of loan / financial asset (1.0) 0.0

Share-based payment expense 0.0 (0.1)

Share of profits from associates 12.6 7.7

Foreign currency gains / (losses) 0.1 (1.1)

Profit before interest and taxation 25.3 28.9

Interest income 2.4 6.7

Finance costs (12.6) (11.0)

Profit for the period before tax 15.1 24.6

Taxation (3.4) (3.6)

Profit for the period after tax 11.7 21.0

Gain / (loss) on translation of functional currency (1.4) (1.3)

Total comprehensive income 10.3 19.7

Ι 31

Condensed Statement of Financial PositionINCOME PRODUCING ASSETS

Condensed consolidated statement of financial positionAs at 31 Dec 2018

30 Dec 2019(US$’m)

31 Dec 2018(US$’m)

30 Dec 2019(US$’m)

31 Dec 2018(US$’m)

Movement

Assets

Non-current assets

Investment properties 596.0 552.8 596.0 552.8 44.3%

Deposits paid on investment properties 8.5 15.4 8.5 15.4 38.7%

Other investments 0 4.2 0 4.2 0.0%

Investments in associates 171.4 135.7 208.2 174.0 -13.6%

Other loans receivable 29.3 42.9 29.3 42.1 0.0%

Related Party loans receivable 12.5 0.1 14.6

Other non-current assets 26.6 13.1 0.5 0.5 9.1%

Total non-current assets 844.3 764.2 857.1 789.0 23.1%

Total current assets 68.4 69.7 3.0 7.4 100.0%

Total assets 912.7 833.9 860.1 796.6 28.0%

Equity and liabilities

Total equity attributable to ordinary shareholders

Ordinary share capital 454.1 443.2

Treasury shares reserve (18.4) (14.8)

Reserves (43.3) (27.4)

Equity attributable to owners of the Company 392.4 401.0

Non-Controlling interests 2.6 16.7

Total equity 395.0 417.7

Liabilities

Redeemable preference shares 12.8 12.8

Interest-bearing borrowings 369.1 201.5

Other non-current liabilities 59.5 44.9

Total non-current liabilities 441.4 259.2

Interest-bearing borrowings 15.0 123.4

Other current liabilities 61.2 33.6

Total current liabilities 76.2 157.0

Total liabilities 517.6 416.2

Total equity and liabilities 912.7 833.9

Growth & Pipeline

Ι 33

Asset Value Update

• Total Income Producing Asset Value

• US$860.13 million (+4.2%)

• Acquisitions completed:

• Additional 23.75% interest in Letlole

La Rona (LLR) (Botswana) Nov 2019

• 60 additional units at VDE Housing

Estate (Mozambique) Dec 2019

• Like for Like valuation increase:

• +2.9% with the independent portfolio

was valuation at 31 December 2019

1. FY17 includes restated figures as per financials2. Includes property loans receivable

488.5

642.3

825.2

860.1

200

250

300

350

400

450

500

550

600

650

700

750

800

850

900

950

1000

FY17 FY18 FY19 HY2020

US$

m

Total Income Producing Asset Value3

1

2

2

Ι 34

Pipeline - Summary

* Indicative estimates only using currently available indicative valuations and should not be relied upon as a forecast

ANNOUNCED PIPELINE ACQUISITION SUMMARY

Name Sector Country Type Anchor TenantProperty Yield

Deal ValueProvisional Valuation

* NAV increase

Share %

PwC Head Office Office Ghana Asset Acquisition PWC Ghana 8.50% US$ 20.3m US$ 20.5m US$0.2m 50.0%

Huawei Head Office Office Ghana Asset Acquisition Huawei 9.00% US$ 13.6m US$ 13.6m 50.0%

Grit Urban Logistics Industrial Kenya Greenfield To be confirmed 9.20% US$ 11.8m 100.0%

Orbit Africa (Ph I) Industrial Kenya Asset Acquisition Orbit Products Africa 9.24% US$ 32.2m US$ 32.4m US$0.2m 100.0%

Orbit Africa (Ph II) Industrial Kenya Greenfield Orbit Products Africa 11.20% US$ 9.11m US$ 16.3m US$7.2m 100.0%

St Helene Hospital Healthcare Mauritius Greenfield PDL (Artemis) 10.50% US$ 13.3m US$ 15.5m US$2.2m 86.6%

Coromandel Hospital Healthcare Mauritius Greenfield PDL (Artemis) 10.50% US$ 23.4m US$ 27.3m US$3.9m 86.6%

Massira Corner Mixed use Morocco Asset Acquisition Onomo Hotels, H&M 7.70% US$80.4m 100.0%

Cap Skirring development Hospitality Senegal Greenfield Club Med 7.5% - 8% EUR28m 100.0%

Club Med Essaouira Hospitality Morocco Greenfield Club Med 7.00% US$95.7m 100.0%

Medium term pipeline in excess of US$470 million, spread across multiple sectors with existing and new global tenants.

Ι 35

Announced Pipeline Acquisitions UpdateTarget Closing

Date:April 2020 Size (GLA): 5,176m2 Property Yield: 8.5%

Location: Accra, GhanaAcquisition

Costs$20.3m Avg Annual Escalation: 1.64%

Sector: Office WALE: 12.93 yearsAnchor Tenant lease

terms

PwC - (79% of GLA); 15years; Triple Net,

USD

PWC BUILDING

Target Closing Date:

April 2020 Size (GLA): 3,913m2 Property Yield: 9.0%

Location: Accra, GhanaAcquisition

Costs$13.6m Avg Annual Escalation: 2.38%

Sector: Office WALE: 4.39 yearsAnchor Tenant lease

terms

Huawei – (73% of GLA); 3.9 years (5+5 years);

Triple Net, USD

HUAWEI BUILDING


April 2020 Size (GLA):Ph 1 - 29,243m2

Ph 2 - 15,185m2Property Yield:

Ph 1 – 9.24%Ph 2 – 11.20%

Location: Mlolongo,

Nairobi, KenyaAcquisition

CostsPh 1 - $32.2mPh 2 - $9.11m

Avg Annual Escalation:Ph 1 - 2.0%Ph 2 – 2.0%

Sector: Industrial WALE:

Ph 1 - 25 yearsPh 2 – c.23

years

Anchor Tenant lease terms

Orbit Products Africa; 25 years; Triple Net

Lease; USD lease

ORBITAFRICA

(PHASE 1 & 2)

Ι 36

Announced Pipeline Acquisitions Update


April 2020 Size (GLA): 5,727m2 Property Yield: 10.5%

Location: Floréal, MauritiusDevelopment

CostsUS$13.3m

DevelopmentAvg Annual Escalation:

European HarmonisedCPI, min. of 2.0%

Sector: Industrial WALE: 15 yearsAnchor Tenant lease

termsPDL (Artemis), 15 years; Triple Net, EUR-linked

ST. HELENE HOSPITAL

(DEVELOPMENT)


June 2021 Size (GLA): 9,961m2 Property Yield: 10.5%

Location: Coromandel,

MauritiusDevelopment

CostsUS$23.4m

DevelopmentAvg Annual Escalation:

European HarmonisedCPI, min. of 2.0%

Sector: Healthcare WALE: 15 yearsAnchor Tenant lease

termsPDL (Artemis), 15 years; Triple Net, EUR-linked

COROMANDEL HOSPITAL

(DEVELOPMENT)


July 2020 Size (GLA): 16, 539m2 Property Yield: 7.7%

Location: Casablanca,

MoroccoAcquistion

Costsc.US$83.6m Avg Annual Escalation: 2.58%

Sector:Mixed-Use

(Hospitality & Retail)

WALE: 3.43 yearsAnchor Tenant lease

terms

Onomo Hotels, 7.4 years, renewable for a further 6

years, Triple Net, MAD

MASSIRA CORNER

Ι 37

Pipeline CharacteristicsNear term acquisition targets spread across multiple sectors with existing and new global tenants.

4.0%

25.8%

17.8%19.4%

33.1%

0.0% 0.0%

7.4%

20.5%

12.4%

26.5%

23.2%

2.8%

7.2%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Industrial Office Corporate Accommodation Hospitality Retail Specialised Mixed Use

Sector Exposure (%)

Existing Existing + Secured + Target

Outlook

Ι 39

SummaryKey Takeaways

Pipeline

Extensive pipeline of over US$470m1 of near-

term opportunities

Existing Portfolio

Performing Stronglyand expected to continue in

FY2020

Progressive Dividend

11consecutive distribution

payments made

Listing Structure

Premium Listingintended in 2020, JSE listing

being reviewed

Economies of Scale

In-country expertise potential to leverage existing

infrastructure

1. These are targets only and are not guaranteed. These targets are based on a number of bases and assumptions which may or may not materialize.

Robust Platform

Substantial investmentin market-leading team and

platform

Ι 40

Medium Term Policies & GuidanceGroup focus areas

Development exposures

Up to 20% of Group GAV

at the time of investment

Payout RatioDividends

Progressive Dividend Policy

Target Total Return Focus

12%¹Minimum with the potential for

incremental development returns over medium term

Share Buyback policy

Up to 4.9% of issued share capital

LTV target

Between 35% and 40%

1. These are targets only and are not guaranteed. These targets are based on a number of bases and assumptions which may or may not materialize.

Target a reduced ratio tobelow 90% over the

medium term

Annexures

Ι 42

Peer PerformanceTarget of 12% total USD return for Grit for FY20

3.9 3.9 3.83.6

8.5

9.6

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Global Americas AsiaPacific Europe Middle East Africa GRIT

Dividend Yield (%)

2015 2016 2017 2018 2019 2020 YTD

Grit

Source: National Association of Real Estate Investment Trusts (as at 03 February 2020) - Returns in USD terms

Global Americas Asia/Pacific Europe Middle East /Africa

Grit dividend yield calculated using USD-equivalent SEM price as at 31 December 2019. * Based on last issue price of US$1.27.

ESG Grit is actively managing its Environmental, Social and Governance risks and opportunities

Reduction of paper usage, committed to recycling and reducing carbon footprint at

all assets.

Aligning strategies and operations to UNGC standards

Environmental

GRIT STAFF IN NUMBERS

Upcoming Projects:ISO 45001 compliments the fundamental concepts of King IV corporate governance by focussing on risks and opportunities in terms of Occupational Health & Safety. Grit has started the process and aims to be fully compliant during the first quarter of 2021.

47%

of women employedoccupy managerial positions and above

Social

are womenlocal employees

43%

board members are women33%

Empowering the female working community through WWG networking

events and talks.

Governance

75% UK Corporate Governance Code*

National Code of Corporate Governance for Mauritius 2016

King IV Report (South Africa)

Board composition:83% Independent Non- Executive

Directors

*Full compliance to be achieved in 2020

Supporting All Life Matters, an NGO that provides a low-cost veterinary clinic, free

sterilization, a home for many stray animals, creates jobs for the local community.

Other CSRactions relate to:

Ι 44

Bronwyn Corbett

Chief Executive Officer

& Co-founder

B.Comm (Acc) (Univ. of Natal, PMB), CA(SA)Appointed to the board

on 12 May 2014

Bronwyn is a founding member and CEO of Grit Real Estate Income Group, the largest pan-African focused realestate group listed on the LSE, JSE and SEM (stock exchanges in London (UK), Johannesburg (South Africa) andPort Louis (Mauritius) respectively). Bronwyn has over 14 years’ experience in the real estate investment sector.She worked in a real estate investment firm for 4 years as Financial Director before joining Motseng InvestmentHoldings in April 2009 as CFO. Together with the CEO, she was instrumental in growing the company’s direct realestate exposure to ZAR2 billion within 3 years, before listing the portfolio on the JSE as Delta Property Fund –where she held the positions of CFO and CIO. Bronwyn was part of the executive team that grew Delta PropertyFund to a portfolio valued at ZAR12 billion in 4 years and converted the structure to a REIT. In 2014, she co-founded Delta International Property where she was appointed CEO. Under Bronwyn’s leadership, Grit hasconsistently achieved Dollar-based distribution exceeding 7%. She has driven the growth of the portfolio fromUS$140 million and two assets, to c.US$800 million and 46 assets across seven jurisdictions.

Leon van de Moortele

Chief Finance Officer

BCompt (Hons), CA(SA)Appointed to the board

on 30 June 2015

Leon joined Grit in April 2015 as CFO, where he has utilised his tax structuring knowledge and experience inoperating in Africa to expand the asset base of the group. After completing articles with PwC, Leon moved tothe Global Risk Management Services within PwC, where he become the Senior Manager in charge of DataManagement. In 2004, he moved to Solenta Aviation where he became Group Finance Director within 18months. During his tenure as Group Finance Director, the group expanded from 12 aircraft to 48 aircraft,operating in 8 African countries (South Africa, Mozambique, Algeria, Ghana, Gabon, Kenya, Tanzania and Coted’Ivoire).

Executive Members of the Board

Ι 45

Non-Executive Members of the Board

Peter Todd

Independent Non-Executive Chairman

Other Listed Directorships: 1Appointed to the board

on 14 August 2014

Appointed as chairman

on 13 April 2018

Peter is a qualified attorney and began his career as the senior tax manager at Arthur Andersen and Associatesin Johannesburg. He joined TWS Rubin Ferguson in 1993 as a tax partner and was instrumental in listing severalcompanies on the JSE.

In 2000, Peter established Osiris Group in the British Virgin Islands and Mauritius to provide internationalcorporate finance and administrative services to global clients. Peter has significant understanding of theproperty industry in the UK, South Africa and the rest of Africa.

Ian Macleod

Senior Independent Non-Executive Director


on 30 June 2015

Ian holds a BCom (Honours) in Real Estate Investment, Valuation and Development and has over 46 years ofexperience with financial institutions, including Standard Bank of South Africa and Nedbank with a specificfocus on Real Estate Credit Risk.

He has extensive knowledge of the real estate sector’s key role players, business sector and geographic nodes.Ian has managed portfolios in excess of ZAR80 billion during changing economic cycles and managingproblematic properties in economic downturns. Ian is a former Head of Credit for Real Estate for Standard BankSouth Africa Limited.

Ι 46


David Love

Independent Non-Executive Director


on 4 December 2018

David Love is a Fellow Chartered Accountant, qualifying with Deloitte, and holds a BCom and LLB (Hons First) inLand Law, Equity and Trusts. He has over 19 years’ experience in the real estate investment sector.

He has been instrumental in the completion of a number of high profile European real estate transactionsincluding the listing of Picton Property Income Limited on the LSE and the formation of a £1.4b UK PropertyAuthorised Investment Fund. David is currently the CFO of Knight Frank Investment Management.

Catherine McIlraith



on 24 November 2017

Catherine holds a Bachelor of Accountancy has been a member of the South African Institute of CharteredAccountants since 1992. She served her articles at Ernst & Young in Johannesburg and then joined theInvestment Banking industry. Catherine has held senior positions at Ridge Corporate Finance, BoE NatWest andBoE Merchant Bank in Johannesburg. In 2004 she joined Investec Bank Mauritius where she was Head ofBanking until 2010.

Catherine held various independent non-executive board positions in Mauritius including AfrAsia Bank Ltd, LesGaz Industriels Ltd and The Mauritius Development Investment Trust Co Ltd. She has also been a member ofthe Financial Reporting Council (FRC) and is a Fellow Member of the Mauritius Institute of Directors.


Ι 47


Sir Samuel EssonJonah, KBE, OSG



on 21 February 2019

Sir Samuel Jonah is one of Africa’s leading businessmen and internationally recognised as a leading businessexecutive. He obtained a Master’s degree in Management from Imperial College, London following which heworked for Ashanti Goldfields and became CEO of the company in 1986.

Sir Samuel Jonah was elected Foreign Member of the United States National Academy of Engineering in 2018.

An Honorary Knighthood was conferred on him by Her Majesty the Queen in 2003 and in 2006 he was awardedGhana’s highest national award, the Companion of the Order of the Star.

Nomfundo NomkosiNomzamo Radebe

Non-Executive Director


on 24 November 2017

Nomzamo Radebe is a qualified Chartered Accountant who has furthered her studies in real estate, with asuccessful career spanning over 20 years.

Nomzamo is the Chief Executive Officer of Excellerate Real Estate Services. She is a former Chief InvestmentOfficer of Pareto Limited, and prior to this, she worked as a Director and in the Sasol Group treasury unit as aTreasury Operations Manager. Nomzamo was awarded the IPM Business Leader of the year 2016 and the FiveStar Woman award by the Women Property Network in 2009.


Ι 48


Bright Laaka

Independent Non-Executive Director (Permanent Alternate)


on 29 November 2018

Bright has 16 years’ experience in Business Development, Sales and Marketing. He holds a BSc (Agric), MSCProduction Physiology and an MBA in Entrepreneurship.

Bright is the founder and CEO of Rural Development Alliance Group in South Africa. He is a member of the SABRICS Agribusiness, a technical advisory and business development working group, as well as Alpha AfricaFoundation, a non-profit organisation that primarily works in rural areas to improve the livelihood ofcommunity members.

Bright is also a former New Business Development Manager for two multinational companies listed on the NewYork Stock Exchange.

This report has been prepared by Grit Real Estate Income Group Limited ("Grit" or the “Company”) solely for your information and should not be considered to be an offer or solicitation of an offer to buy or sell or subscribe for any securities, financial instruments or any rights attaching to such securities or financial instruments. In particular, this report does not constitute an offer to sell, or the solicitation of an offer to acquire or subscribe for, securities in any jurisdiction where such offer or solicitation is unlawful.

All information and statistics provided in this presentation relating to targeted acquisitions or post-targeted acquisitions status is predicated on information available to the Company at the time of printing of this presentation. Such information may be subject to change depending on final negotiations and documentation related to such targeted acquisition.

None of the directors, officers or employees of Grit make any representation or warranty, express or implied, as to the accuracy or completeness of the information or opinions contained in this report.

This report is a summary only, and does not include all material information about Grit. This report contains certain statements which are, or may be deemed to be, 'forward-looking statements'. By their nature, these forward-looking statements and the facts contained therein are subject to a number of known and unknown risks, uncertainties and contingencies, many of which are beyond Grit’s control or influence, and actual results and events could differ materially from those currently being anticipated as reflected in such statements. These forward-looking statements speak only as of the date of this publication. Past performance should not be taken as an indication or guarantee of future results and no representation or warranty, express or implied, is made regarding future performance. Except as required by any applicable law or regulation, the Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this publication to reflect any change in Grit's expectations or any change in events, conditions or circumstances on which any such statement is based. Accordingly, undue reliance should not be placed on any such forward-looking statements.

Forward-looking statements have not been reviewed by external auditors and are the responsibility of the Board of Directors of the Company.

All targets mentioned in this presentation are targets only and are not guaranteed. These targets are based on a number of bases and assumptions. which may or may not materialize and have not been assessed or validated by the auditors. Nothing in this presentation should be construed as a profit forecast.Nothing in this report should be viewed, or construed, as "advice", as that term is used in the South African Financial Markets Act, 2012, and/or Financial Advisory and Intermediary Services Act, 2002 and/or the equivalent legislation in the United Kingdom, United States of America or in the Republic of Mauritius.

Disclaimer

Thank YouGrit Real Estate Income Group

Reg. No. C1288813rd floor, La Croisette Shopping Centre, Grand Baie 30517, Mauritius

Level 3, Alexander House, 35 Cybercity Ebene 72201, Mauritius

T +230 269 7090E [email protected]

mailto:[email protected]

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