GRIT Real Estate Income (GRIT ) has come up against shareholder resistance to its renumeration policy at its annual general meeting (AGM), prompting a consultation as the company’s chief financial officer has taken medical leave. 

The £101m portfolio of specialist African real estate has been an ongoing disappointment to investors, losing money over one, three, and five years. The net asset value (NAV) has dropped 16% this year while the shares are down 34.8%, leaving the shares trading on an extremely wide discount of 71.8%.

A significant minority of disgruntled investors, totalling 28.6%, have now voted against an AGM resolution on the trust’s renumeration policy. The policy was widely unchanged this year, with no increase for executives and the board, but the wider workforce received a 5.1% increase. 

Major shareholders of the company include South African based Public Investment Corporation with 20.8%, M&G Investment Management with 14.7% and Ruffer with 4.7%. 

The trust said it was ‘committed to achieving a greater understanding of the underlying reasons that has seen some of the shareholders being unable to support this resolution’.

It will initiate a consultation with shareholders, including the dissenters, in the new year, with those wishing to participate in an online call asked to confirm their attendance.

Protest votes are part of a wider trend in the investment company sector, which has seen a wave of failed continuation votes this year, as shareholders have become increasingly vocal about performance and discounts.

This year has also seen a greater number of votes against individual board members, with a focus on diversity and tenure, which is exacerbated when share price performance has been weak.

Board and management shifts

On Tuesday the company announced some shifts in its senior personnel with Leon van de Moortele, the executive director and chief financial officer taking medical leave and board member Sir Sam Jonah retiring. 

GRIT said it will announce a temporary replacement for Van de Moortele and has plans in place to ‘ensure the smooth continuation of operations’ until that point.

Jonah will be replaced by Nigel Nunoo who is stepping in as independent non-executive director and member of the remuneration committee.

Nunoo worked for more than two decades at Prudential Finance, where he established the company’s presence in Africa.

Peter Todd, non-executive chair of GRIT, said he was grateful to Jonah for his ‘meaningful contribution to GRIT over the years’ and is ‘looking forward to working closely with Nigel’.

‘His extensive expertise in global markets and well-established network throughout the region will be a great support for GRIT’s continued growth and enhancing of shareholder value.’

In full-year results to the end of June, published in October, the value of the property portfolio declined 4.5%, predominantly as a result of asset disposals that offset the fund taking an increased interest in Gateway Real Estate Africa. GRIT took another 25% in the group, meaning it now owns just over half of the private real estate development company.

The fair value of the portfolio declined 0.8% ‘against a backdrop of global economic uncertainty, once again demonstrating relative stability in the portfolio’, said Bronwyn Knight, chief executive of the trust. 

Knight added the past financial year was a ‘transitory year’ for the group with sales of non-core assets, reduction of debt, and debt refinancing.

She said Gateway successfully delivered its ‘award-winning Precinct office park and Artemis Curepipe hospital developments’, and is on track to bring in the ENEO Tatu City call centre facility on time – mid-2024 - and in budget.

Global interest rate volatility provided a headwind to the property portfolio’s operating performance, where a 5.7% increase in operating income was ‘impacted by significantly rising finance costs’.

‘Our focus will remain on sustainably growing distributable income and enhancing capital growth while continuing to target key portfolio metrics such as lowering the loan-to-value, vacancy, and cost factors, and further strengthening the balance sheet and liquidity position through focused asset recycling initiatives,’ Knight commented.