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GRIT Real Estate - The next level

GRIT Real Estate - The next level

GRIT Real Estate Income Group (LON:GR1T), the leading pan-African real estate company, has released a trading update for its financial year ending June 2019. The company is on track to deliver its targeted 12% total shareholder return for FY June 2019, and an increased dividend. Furthermore, the occupancy rate stands at 97.2%, and 95% of expiring Gross Lettable Area has been renewed or replaced.

Against a mixed backdrop, with headwinds from EUR/USD translation effect and some weakness in the African retail sector, this performance fully delivers on the expectations set out at the time of the London listing in August 2018.

The company states that it has an identified pipeline of investment opportunities totalling US$600m, from existing tenants and other multi-nationals operating in Africa. This pipeline compares with an existing portfolio of US$796m (December 2018), i.e. a near doubling of the asset base.


The statement indicates that the company will consider options for financing these investments, in the short and medium term.

The company has also outlined initiatives to drive incremental returns on investment, which could enable the company to exceed its 12% TSR target in future years, in our view. Measures include: 1) Participating in risk-limited development opportunities, as a route to enhancing NAV growth without impacting the dividend. 2)Opportunities to provide Asset Management services internally and to external property owners, to drive fee generation and to reduce the group's operating cost ratios.

GRIT offers a 9.2% dividend yield, and the prospect of good ongoing NAV growth. We believe that the FY June 2019 performance also demonstrates the robustness of GRIT's business model.

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Grit Real Estate Income Group Timeline

CN Research
June 27 2019

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October 03 2018

Grit Real Estate Income Group (LON:GR1T) is a multi-listed (LSE, JSE, SEM) property company with a focus on selected African countries with a combination of economic growth, investment friendly policies and political stability. Rental income is underpinned by a blue-chip multinational tenant base, hard currency leases, and high occupancy rates.

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January 29 2019

Custodian REIT (LON:CREI) released its quarterly net asset value (NAV) updated on 29 January. This was in line with our expectations.

NAV Total Return +1.0% in the quarter. Portfolio net initial yield (a measure of property income yield) of 6.6%. Balance sheet gearing remains low at LTV (loan-to-value) ratio of 24.7%.

We believe that all of the key dynamics remain intact to sustain continuing strong shareholder returns.

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March 05 2019

GRIT Real Estate Income Group (LON:GR1T) is a pan-African (excluding South Africa) real estate company, generating high levels of US dollar and euro-denominated rental yield underpinned by a blue-chip tenant base.

The company has achieved good progress since its London Stock Exchange (LSE) listing in July 2018. Results for the half-year ended 31 December (released 14 February) showed gross rental income +25.9% year-on-year and group loan-to-value down to 43.4% (full-year to June 2018: 51.4%). Furthermore, the ratio of administration costs to asset value was reduced to 1.3% from 1.4%. We believe this can go below 1% as the portfolio continues to grow.

Performance has been achieved in spite of pockets of significant weakness in the African retail sector, highlighting the value of GRIT's diversification strategy. We provide some outlines of the strategy on page 2 (p2).

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