REG - Ground Rents Inc Fnd - Half year report

Ground Rents Income FundAnnouncement

20/07/2023 07:00

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RNS Number : 5844G  Ground Rents Income Fund PLC  20 July 2023

20 July 2023

 

Ground Rents Income Fund plc

 

INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2023

 

Ground Rents Income Fund plc (the 'Company') announces its unaudited interim
results for the six months ended 31 March 2023, which are available on the
Company's website, www.groundrentsincomefund.com
(https://www.schroders.com/en-gb/uk/individual/funds-and-strategies/investment-trusts/ground-rents-income-fund-plc/)
.

 

Barry Gilbertson, the Company's Chair, commented:

 

"The significant activity carried out by the Board and Schroders over the past
several years means there is a clear strategy to address the complex headwinds
relating to Building Safety and Leasehold Reform, and thereby to optimise
value for shareholders, whilst demonstrating best-in-class residential asset
management. We will continue to provide a high level of transparency on
progress implementing our strategy."

 

Financial Highlights:

 

·      Portfolio value increased £1.9 million, or 1.7%, to £110.9
million (30 September 2022: £109.0 million), with 16% (30 September 2022:
21%) of the portfolio by value subject to the same Material Uncertainty Clause
('MUC') as in the 2022 Annual Report relating to assets impacted by building
safety related defects.  These impacted assets were subject to a negative
valuation adjustment of £9.3 million (30 September 2022: negative £11.4
million).

 

·      Progress made understanding the practical and financial impact of
the Building Safety Act 2022 on the portfolio, with a further reduction in the
asset value impacted by the MUC to 15% post period end.  Despite this
progress, from discussion with the Company's Auditors, the uncertainty that
led to the Modified Auditor's Report within the 2022 Annual Report remains
unchanged.

 

·      NAV of £90.2 million, or 94.3 pence per share ('pps'), an
increase of £1.7 million, or 1.8 pps (30 September 2022: £88.5 million, or
92.5 pps).

 

·      Positive NAV total return of 3.3% (year to 30 September 2022:
negative 7.4%).

 

·      Group Loan to Value ('LTV') of 18.9% with £21 million of drawn
debt, and an effective interest rate of 3.3%.

 

·      Following the launch of a consultation in December 2022, an EGM
was held in April 2023, with all proposals passed including a Continuation
Vote in December 2024 and a new Investment Policy focussed on optimising value
through a controlled and orderly asset realisation, together with a continued
focus on delivering best-in class residential asset management.

 

·      Dividends paid over the period of £1.2 million or 1.25 pps. New
dividend policy approved by shareholders with dividends to be paid on a
semi-annual basis moving forward. As set out in the 2022  Annual Report,
while the Modified Auditor's Report remains in place, all future dividend
payments must be withheld, despite the Company having significant
distributable reserves, cash available to pay dividends, and good visibility
on earnings.

 

Market context:

 

·      The six month period continued to be a challenging period due to
the complex issues arising from the introduction of the Building Safety Act
2022 (the 'BSA'), the most significant regulatory reform to the UK's built
environment in almost 40 years.

 

·      Under the so-called 'Polluter Pays' principle, the Government has
introduced a legally binding pledge ('Pledge') that obliges residential
developers to remediate, at their own cost, all life-critical fire-safety
defects of buildings 11 metres and over in height that they developed or
refurbished in England over the last 30 years. This includes reimbursing
public funds where relevant. To-date, 49 developers, including the top ten
largest house builders in the UK, have signed the Pledge. At the time of
writing, seven of these developers are relevant to the Company's portfolio
across 11 of the 23 currently affected assets. The Government has also
enhanced protections available to landlords who did not develop their assets,
such as the Company, from defective building practices.

 

Enquiries:

 

Schroder Real Estate Investment Management Limited

Nick Montgomery / Matthew Riley / Chris Leek

020 7658 6000

 

FTI Consulting

Richard Gotla / Dido Laurimore

0203 727 1000 / Schroderrealestate@fticonsulting.com
(mailto:Schroderrealestate@fticonsulting.com)

 

Singer Capital Markets (Broker)

James Maxwell / Alaina Wong (Investment Banking)

Sam Greatrex (Sales)

020 7496 3000

 

Appleby Securities (Channel Islands) Limited (Sponsor)

Andrew Weaver / Michael Davies

01534 888 777

 

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