Africa's largest pension fund is supporting Grit Real Estate Income Group's $100 million (R1.8 billion) capital-raising effort for the property company's real estate division across the continent.
The Public Investment Corporation (PIC), which manages approximately R3 trillion in savings for the Government Employees Pension Fund (GEPF) of South Africa, is providing Grit with a $48.5 million (R880 million) cash infusion for its Gateway Real Estate Africa (GREA) unit.
This unit will handle property development across the continent, excluding South Africa, Bloomberg reported.
According to GREA CEO Greg Pearson, "The cash-equity injection will be used to reduce the unit's more expensive debt. Over the medium term, funds will be deployed into risk-mitigated and accretive development projects, with yields in excess of 10%."
As property companies in Africa face challenges in pricing and development, the GEPF remains a reliable investor in major projects, including some of the continent's most valuable assets, like the V&A Waterfront in Cape Town and Waterfall City in Johannesburg.
With the continent's rapidly growing population and urgent need for infrastructure, property developers are contending with high construction costs and difficulties in securing reliable tenants.
GREA is now focusing on more secure, high-yield developments in sectors like healthcare, light industry, diplomatic housing, business process outsourcing centres, and data centres.
Pearson added that while GREA is exploring opportunities across Africa, it is currently prioritizing East Africa, with some potential projects in West Africa, particularly in diplomatic housing and data centres. The company’s leases are predominantly in stable currencies such as the dollar and euro, with multinational tenants.
In an effort to streamline its portfolio, GREA is also evaluating the possibility of exiting assets like large-format shopping malls, minority interest properties, and fully developed projects, according to Pearson.
Grit has been active in Africa since 2018, with notable holdings including Elevation Residence in Ethiopia, a $77 million housing development for U.S. diplomats, and Kenya’s largest business-process outsourcing centre, valued at $48 million.
Looking ahead, the company plans additional projects, including another housing development for U.S. diplomats and a second BPO centre in Kenya.
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