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GRIT REAL ESTATE INCOME GROUP LIMITED - Conclusion Of Development Agreement In Relation To Anfa Place Shopping Centre Refurbishment

Release Date: 26/06/2019 08:00
Code(s): GTR     PDF:  
 
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Conclusion Of Development Agreement In Relation To Anfa Place Shopping Centre Refurbishment

GRIT REAL ESTATE INCOME GROUP LIMITED
(Registered by continuation in the Republic of Mauritius)
(Registration number: C128881 C1/GBL)
SEM share code: DEL.N0000
JSE share code: GTR
LSE share code: GR1T
ISIN: MU0473N00036
(“Grit” or the “Company” or the “Group”)

CONCLUSION OF DEVELOPMENT AGREEMENT IN RELATION TO ANFA PLACE SHOPPING CENTRE REFURBISHMENT

1.  INTRODUCTION

    Shareholders are advised that, the Company, through its wholly-owned subsidiary Grit
    Services Limited (“GSL”), entered into a development agreement (“Development
    Agreement”) with Freedom Property Fund and DIF Co Limited, both wholly-owned
    subsidiaries of Grit, and Boyzana International Limited (the “Developer”), a wholly-owned
    subsidiary of Gateway Delta Development Holdings Limited (“Gateway Delta”), on terms
    in which GSL appointed the Developer to manage and execute the refurbishment works
    to the Company’s Anfa Place Shopping Centre in Morocco (“Development”). Gateway
    Delta is a property development company that undertakes property developments in
    Africa.

2.  CLASSIFICATION OF THE AGREEMENT

    The Government Employees Pension Fund (“GEPF”) holds 27.6% of the issued share
    capital of Grit. The GEPF also holds 48.53% of the issued share capital of Gateway Delta,
    the holding company of the Developer. Since the GEPF is a material shareholder of Grit
    and of Gateway Delta, the JSE Limited (“JSE”) has determined that Gateway Delta is a
    related party of Grit as it is an associate of a material shareholder. Accordingly, the
    Development Agreement constitutes a small related party agreement for purposes of the
    JSE Listings Requirements.

    Given that the Development Profit (defined below) is less than 5% of Grit’s USD market
    capitalisation, the Listing Rules of the Stock Exchange of Mauritius Ltd (“SEM”) and the
    Listing Rules of the London Stock Exchange (“LSE”) relating to the treatment of related
    party transactions shall not apply in this case.

3.  FAIRNESS OPINION

    The directors of the Company appointed BDO (South Africa) Inc as the independent expert
    (“Independent Expert”) to compile a fairness opinion on the Development Agreement in
    terms of paragraph 10.7 of the JSE Listings Requirements. The Independent Expert has
    considered the terms and conditions of the Development Agreement and is of the opinion
    that the terms and conditions of the Development Agreement are fair to the shareholders
    of the Company. A copy of the fairness opinion is available for inspection at the Company’s
    registered office for a period of 28 days from the date of this announcement.

4.  RATIONALE

    The rationale for appointing Gateway Delta to undertake the Development is as follows:
    -    Gateway Delta assumes the full development risk, which largely mitigates the
         potential delivery risk for Grit;
    -    Gateway Delta provides development funding (there are few, if any, other developers
         in Africa that are able to do this), which will enable Grit to pursue the Development
         without introducing potential volatility in returns to shareholders;
    -    the management of Gateway Delta have significant expertise in project management
         and delivery of assignments within Africa; and
    -    Grit holds a 19.98% shareholding in Gateway Delta; therefore, Grit can recoup a
         portion of the Development cost.

5.  CONTRACT PRICE

    The total contract price payable by GSL in terms of the Development Agreement is the
    fixed sum of USD25,088,033 (“Contract Price”), which comprises of the following direct
    costs (to be recovered by the Developer at zero margin): (i) contractor cost of
    USD8,980,684; (ii) consultant costs of USD1,720,926; (iii) development costs (including
    tenant installation costs and mall operating costs) of USD7,315,906; (iv) value-added tax
    of USD3,366,193; and (v) financing costs of USD700,000. The balance being the
    Development Profit is payable to the Developer.

    The development management profit payable to the Developer in terms of the
    Development is USD 3,004,324 (“Development Profit”).

    The Contract Price, including the Development Profit, is payable within 30 days of delivery
    of a certificate by the project manager to GSL certifying that the Development, except for
    minor outstanding work and defects, has been completed.

6.  CONDITIONS PRECEDENT AND EFFECTIVE DATE

    The Development Agreement is not subject to any conditions precedent and is effective
    immediately.

7.  WARRANTIES AND OTHER SIGNIFICANT TERMS OF THE AGREEMENT

    The Development Agreement contains representations and warranties by each of the
    parties to the Development Agreement in favour of each other which are standard for
    agreements of this nature.

    The Development Agreement provides for variations, guarantees and penalties which are
    standard for agreements of this nature.

By Order of the Board

26 June 2019

FOR FURTHER INFORMATION PLEASE CONTACT:

Grit Real Estate Income Group Limited
Bronwyn Corbett, Chief Executive Officer                       +230 269 7090
Darren Veenhuis, Head of Investor Relations                    +44 779 512 3402
Morne Reinders, Investor Relations                             +27 82 480 4541

Maitland/AMO – Communications Adviser
James Benjamin                                                 +44 20 7379 5151
Vikki Kosmalska                                                Grit-maitland@maitland.co.uk
Jason Ochere

finnCap Ltd – UK Financial Adviser
William Marle / Scott Mathieson / Matthew Radley (Corporate    +44 20 7220 5000
Finance)
Mark Whitfeld (Sales)                                          +44 20 3772 4697
Monica Tepes (Research)                                        +44 20 3772 4698

Perigeum Capital Ltd – SEM Authorised Representative
and Sponsor
Shamin A. Sookia                                               +230 402 0894
Kesaven Moothoosamy                                            +230 402 0898

PSG Capital – JSE Sponsor and Corporate Adviser
David Tosi                                                     +27 21 887 9602

The Company’s LEI is: 21380084LCGHJRS8CN05

NOTES:

Grit Real Estate Income Group Limited is a leading pan-African real estate company focused
on investing in and actively managing a diversified portfolio of assets in carefully selected
African countries (excluding South Africa). These high-quality assets are underpinned by
predominantly US$ and Euro denominated long-term leases with a wide range of blue-chip
multi-national tenant covenants across a diverse range of robust property sectors.

The Company is committed to delivering strong and sustainable income for shareholders, with
the potential for income and capital growth. The Company is targeting an annual dividend yield
in US$ of 8%+ and a net total shareholder return inclusive of net asset value growth of 12.0%+
per annum.*

The Company currently holds primary listings on both the Main Market of the London Stock
Exchange (LSE: GR1T) and on the Main Board of the Johannesburg Stock Exchange (JSE:
GTR), while its listing on the Official Market of the Stock Exchange of Mauritius Ltd is termed
as a secondary listing (SEM: DEL.N0000).

Further information on the Company is available at http://grit.group/

*These are targets only and are not a profit forecast, there can be no assurance that they will be met.

Directors:

Peter Todd+ (Chairman), Bronwyn Corbett (Chief Executive Officer)*, Leon van de Moortele
(Chief Financial Officer)*, Ian Macleod+, Nomzamo Radebe, Catherine McIlraith+, David Love+,
Sir Samuel Esson Jonah+, and Bright Laaka (Permanent Alternate Director to Nomzano
Radebe)

(* Executive Director) (+ independent Non-Executive Director)

Company secretary: Intercontinental Fund Services Limited

Registered address: c/o Intercontinental Fund Services Limited, Level 5, Alexander House,
35 Cybercity, Ebène, 72201, Mauritius

Transfer secretary (South Africa): Computershare Investor Services Proprietary Limited

Registrar and transfer agent (Mauritius): Intercontinental Secretarial Services Limited

Corporate advisor and JSE sponsor: PSG Capital Proprietary Limited

Sponsoring Broker: Axys Stockbroking Ltd

SEM authorised representative and sponsor: Perigeum Capital Ltd

This notice is issued pursuant to the LSE Listing Rules, JSE Listings Requirements, SEM
Listing Rule 11.3 and the Mauritian Securities Act 2005. The Board of the Company accepts
full responsibility for the accuracy of the information contained in this communiqué

Date: 26/06/2019 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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