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Grit Real Estate Income Group: Big yields blue-chip asset base

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.
Grit Real Estate Income Group: Big yields blue-chip asset base

Grit has a strong management team, with more than 59 years’ African experience cumulatively. The portfolio has grown to US$642mln from US$210ln in 2015, and the company achieved its LSE main board listing in July 2018.

Full report is available via Capital Network website
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Grit Real Estate Income Group Timeline

CN Research
June 27 2019

Related Researches

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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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June 11 2019

Primary Health Properties (LON:PHP) is a real estate investment trust (REIT) that holds a portfolio of 484 primary health facilities in the UK (94% of the portfolio) and Ireland (6%). The business model is to manage the properties for rental income and to grow the portfolio over time. The asset base has some attractive characteristics for yield-focused investors:

  • 90% government-backed rent
  • 99.5% occupancy rate
  • Weighted average unexpired lease time: 13.4 years

This stable rental income base has allowed PHP to pay a steadily growing dividend, with increases every year since listing in 1997.

We would normally expect a 'safety' play like PHP to offer commensurately lower returns to shareholders; however, PHP has achieved a 14.1% annual total shareholder return over the last five years, versus 4.6% for the UK REIT sector. In this report we examine PHP's strong financial returns in terms of:

  • Solid rental income yield on property
  • Low-cost ratio

We also examine PHP relative to sector peers on other characteristics such as lease terms and rental escalations.

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June 27 2019

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.

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