Grit lifts profits from operations by 57.3% to R261 million

Sector diversification, asset management helped to manage challenges in the retail sector

GRIT, THE LONDON-listed Africa-focused income distribution group with a secondary listing on the JSE, lifted profit from operations by 57.3 percent to $17.3 million (R261.1m) in the six months to end-June.

“Grit delivered a return of 12.4 percent from the portfolio, despite currency headwinds and significant corporate activity, including a listing and capital raise on the London Stock Exchange (LSE) on July 31, 2018, chief executive Bronwyn Corbett said yesterday.

“Country and sector diversification and asset management initiatives helped us to manage challenges in the retail sector,” she said.

A final dividend of 6.95 cents per share brought the full-year dividend to 12.20c, an increase of 0.1 percent, equating to an annual dividend yield of 9.55 percent on the JSE and 8.81 percent on the LSE.

Income-producing asset value increased 28.5 percent to $825.2m, following the deployment of the $132.2m raised during the LSE listing.

Total lettable area increased by 9.96 percent to 338 854 square metres and the property portfolio now comprises 25 investments across seven countries and five asset classes.

Some $600m of pipeline targets had been identified, and agreements had been concluded on 13 of these assets, which were collectively valued at $470m across both completed assets and development opportunities.

Pretax profit increased to $39.5m from $30.5m, up by 29.5 percent, despite a 20.7 percent increase in financing costs (attributable to increased Libor rates and the impact of new debt from acquisitions).

“The quality of Grit’s diversified portfolio and strong multinational tenant base have again helped us deliver a strong set of results and… leaves us confident of continuing to deliver attractive returns,” Corbett said.

Some 93.6 percent of revenue is from multinational tenants, and 95.4 percent of income is in US dollars, Euros or linked currencies.

Significant leasing activity took place at Anfa Place Mall, in Casablanca, Grit’s largest asset by value. Pre-letting and re-tenanting activities had reduced vacancies at Anfa Place Mall to 12.9 percent.

Strategic vacancies of 20 percent were maintained during its redevelopment. New tenants include new anchor tenant Alpha 55, a well-known Moroccan brand, while food and entertainment offerings have also been increased.

The relaunch of the centre took place post the balance sheet date on September 12 and was not fully reflected in the reporting year valuations.

Further positive reversions in asset valuation and income generation were expected.

The company introduced the Macau Casino to Mall de Tete on a new five-year lease and concluded a new five-year lease with VIP Spar as anchor tenant in Zimpeto Square shopping mall in Maputo.

It acquired another 20 completed units leased to Barloworld at VDE corporate accommodation compound in Tete, Mozambique, including the remaining 15.5 hectares of land earmarked for further development at a total price of $3.6m.