Grit Real Estate, the only JSE-listed Africa-focused property fund, saw its income-producing assets increase 16.7% from $508m to $592m during the last six months of 2017.
The pan-African group transferred various properties during the second half of the year, which enabled it to meet its dividend forecast.
Chief finance officer Leon van de Moortele said the company had clinched various long-term leases where tenants paid in US dollars or euros. This meant Grit was able to pay dividends in hard currency and South African investors could buy into the share as a rand hedge.
Grit, which on Thursday released financial results for the six months to December, declared a dividend of $0.607 per share for the reporting period. The company forecast growth in dividends of 3% to 5% on the prior year’s full-year distribution of 12.07c per share. Regardless of the rand having strengthened in recent months, fund managers with a long-term view on listed property are diversifying their holdings across the sector.
Grit’s African investment strategy is to invest in assets underpinned by predominantly dollar- and euro-denominated medium- to long-term leases with high-quality global graded tenants delivering sustainable income and growth, according to CEO Bronwyn Corbett.
Its income-producing assets worth R7.15bn have exposure to Morocco, Mozambique, Mauritius, Kenya and Zambia.
During the reporting period, it entered the Botswana market.
Rental income from associates increased 82% from the first six months of the 2017. The rental income increase included the effect of hard currency-based rental escalations. Operating costs were maintained at expected levels.
Van de Moortele said Grit was assessing an opportunity in Ghana. He said Ghana had benefited from a turnaround in commodity prices and had been on Grit’s radar as a potential investment destination since the company listed three-and-a-half years ago.
Stanlib property analyst Lawrence Koikoi said Grit had positioned itself as a defensive investment even though it operated in Africa, which had been seen to be risky in the past. "Grit continues to prove itself as a defensive play despite operating in tough markets. Credit must be given to management for putting together a portfolio of good assets with long leases and limited vacancies. As a stock, Grit could rerate over time, provided its underlying portfolio continues to grow without compromising quality," he said.
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