Gateway To Success in Africa – Asset Magazine

Greg Pearson, a co-founder of the only JSE-listed pan African invested property fund, Grit Real Estate, has spread his wings and found quick success with Gateway Real Estate Africa on the continent.

“Many property businesses have battled in 2020 as they’ve tried to compete while managing their way through a global pandemic. I’m proud to say that Africans have dealt with this crisis exceptionally well which has helped Gateway to have achieved many positives and to have actually been very successful this year,” he says.

Greg was formerly a director of Grit which listed in 2014 with R2.2bn of assets and was then called Delta international. Grit had more than R7bn worth of assets across seven African countries when it delisted from the JSE earlier in 2020.

Since forming Gateway Real Estate Africa in January 2018, Greg and his team have raised and deployed capital into development projects in Ethiopia, Ghana, Mauritius, Morocco and Mozambique.

The company currently owns a $150m portfolio which includes a stake in Anfa Place shopping mall in Casablanca, Morocco as well as Metroplex Mall in Uganda. It also has $350m worth of property under construction in Africa which it is looking to roll out over the next two years. The company is based in Mauritius, a country which had relatively very few Covid-19 cases.

“We have managed to do more business in the past six months than in the two years before that,” Greg says. Gateway has chosen specific types of tenants which include growing businesses in Africa. Two types that stand out are businesses which provide data centre services and corporate accommodation for mostly American investors and embassy buildings.

In terms of its development assets, 30% are embassies or embassy related, 20% are logistics and industrial properties and 20% are data centres. It is also developing hospitals in Mauritius. The group also has a long-term relationship with Liquid Telecom, a Nigerian company. “We work with partners who have big balance sheets. As long as there is a corporate lease in place, we can do any real estate solution,” Greg says.

The company isn’t tied to any specific property type and is prepared to deliver an array of property classes, including bespoke retail. He has learned a lot about African real estate from his work at Grit. He made contacts in varied African commercial property markets. In Mauritius, Greg explains that there is a need for high-end healthcare facilities. Notably there was a lack of oncology facilities in the country. As a result, Gateway managed to bring an Indian oncology services provider to Mauritius to become one of its tenants. Gateway may list once it has $600m worth of assets, Greg says.

During the property company listings boom between 2014 and 2017, funds worth around as little as R2bn managed to list as investors chased the opportunity to buy into real estate investment trust (Reit)s. Pearson built up a contacts base in the early days of Grit and can expect original tenants to follow his Gateway Real Estate Africa.

Gateway like Grit tries to sign tenants on long dollar-denominated leases as they are reliable tenants which will pay their rent on a regular basis, removing uncertainty from the company. So far Gateway’s investors have mostly included institutions from the United Arab Emirates and the US. Its only South African investor is the Public Investment Corporation (PIC). Greg says the company plans to allocate capital raise to South African institutions in 2021.

The company remains sector agnostic but focused on multiple African geographies for developments and any acquisition of already built properties. The only asset type which doesn’t appeal to Gateway is large retail. “It’s not for us. It requires too much special management and capital too compete in Africa,” Greg says. Gateway is nevertheless developing a strip mall in Uganda in partnership with French multinational, Carrefour.

“Ultimately, to succeed on the continent, you need to work with counter parties in Africa as a whole,” Greg says. Part of Gateway’s cutting edge is that its properties meet global standards of health and safety, especially in Mozambique where it is developing high-end logistics and warehousing properties.

The company has also redeveloped Anfa Place, the Moroccan shopping mall, it co-owns with Grit. Greg says his team has worked in 40 countries and this long term, deep experience bodes well for Gateway and its investors.

Publication: Asset Magazine

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