Pan-African property investment firm Grit real estate plans to delist from the Johannesburg stock exchange in the course of the month.
The London and Mauritius listed real estate firm which has a 50 percent ownership in Kenya’s Buffalo Mall and Imperial Warehouse has cited the excessive cost and administrative burden placed on the company from being listed on three exchanges which will be reduced as a result of the delisting.
According to Quoted Data, trading in shares on the JSE is illiquid and has been for an extended period of time and Grit believes it does not offer commensurate benefits and erodes shareholder value.
In the aftermath, the group intends to move trading in its shares up to the Premium Listing Segment of the Main Market of the LSE, to facilitate its eligibility for inclusion in the main FTSE UK Index series.
“This will improve liquidity in the company’s shares and further diversify its shareholder base. Grit received shareholder approval for the delisting at a general meeting on 10 July 2020,” says research on the firm by Marten & Co.
The firm’s investment strategy has been to take advantage of Africa’s growth potential by gaining exposure to markets with growth potential while substantially de-risking through US dollar and euro-denominated leases to blue-chip multinational corporations, including government embassies. Furthermore, the company prefers countries where debt can be secured at relatively inexpensive rates.
“Grit will only operate in jurisdictions it regards as safe, where it has the ability to move money into the country and repatriate money to Mauritius and where there is no risk of expropriation of funds,” says the research.
According to Quoted Data, the firm’s management believes that reasonable assumptions on its retail portfolio are for a 10% to 15% drop in valuations.
Grit says its loan to value (LTV) could increase to the high-40% mark with a worst-case scenario LTV of 52.5%. The group’s most restrictive debt covenant stipulates a group LTV of 53%.
The firm has indicated that it is in advanced discussions, with its lenders to extend LTV and interest cover covenants and introduce ‘Covid relief’ for an 18-month period, as a precautionary measure.