REG - Ground Rents Inc Fnd - Student Ground Rent Asset Disposals

Ground Rents Income FundAnnouncement

23/02/2024 07:00

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RNS Number : 1784E  Ground Rents Income Fund PLC  23 February 2024

Ground Rents Income Fund plc

(the 'Company')

 

STUDENT GROUND RENT DISPOSAL AT 4% PREMIUM TO LATEST VALUATION

Ground Rents Income Fund plc announces the sale of its freehold ground rent
interests in Bristol and Exeter, for a combined price of £3.45 million.  The
assets currently generate annual rent of £113,991 and are operated by Vita
Student ('Vita') as purpose built student accommodation.  The price
represents a 4% premium to the 30 September 2023 independent valuation of
£3.30 million and reflects a net initial yield of 3.1%.  The assets are
being acquired by the Company's long leaseholder.

Both assets were acquired from Vita in February 2014 for £2.42 million and
were part of a six asset headlease restructure that generated an apportioned
receipt of £354,000 for the subject assets.

The disposal is in line with the Company's change of strategy, approved by
shareholders in 2023, to realise assets in a controlled, orderly and timely
manner.  Further disposals are planned, with significant work ongoing to
improve the liquidity of the underlying portfolio, but uncertainty relating to
leasehold reform means that transactional volumes are very low across the
ground rent sector.  The disposal proceeds will be used to repay debt and
also act as a cash reserve against possible building safety related costs and
expenses.

As set out in the AGM notice and Circular, a full update on progress
implementing the strategy and leasehold reform will be provided with the
Company's year-end accounts that are due to be issued before 30 June 2024.

For further information: 

 Schroder Real Estate Investment Management Limited         020 7658 6000

 Nick Montgomery / Chris Leek / Matthew Riley
 Singer Capital Markets (Broker)                            020 7496 3000

 James Maxwell / Alaina Wong
 Appleby Securities (Channel Islands) Limited (Sponsor)     01534 888 777

 Andrew Weaver / Michael Davies
 FTI Consulting                                             020 3727 1000

 Richard Gotla / Dido Laurimore / Oliver Parsons

 

Notes to editors:

Ground Rents Income Fund plc is a closed-ended real estate investment trust,
listed on The International Stock Exchange and traded on the SETSqx platform
of the London Stock Exchange.

Schroder Real Estate Investment Management Limited (the 'Manager') was
appointed as the Company's Alternative Investment Fund Manager in May 2019 to
support the Company's Board with the headwinds related to building safety and
leasehold reform.

During the first half of 2023 the Board and Manager carried out an extensive
shareholder consultation on proposals to change the Continuation Vote
mechanism included in the Articles dating from 2012, as well as proposed
changes to the Investment Policy.  These proposals received strong support
from shareholders and resulted in a new Continuation Resolution and Investment
Policy.  The new Investment Policy adopts a strategy of realising the
Company's assets in a controlled, orderly and timely manner for shareholders,
whilst continuing to deliver best-in-class residential asset management
including fairness, transparency, and affordability for leaseholders.

On 9 November 2023, the Government published a consultation on restricting the
level of ground rent which leaseholders in England and Wales pay for existing
leases.  The consultation represents a significant shift in the Government's
approach to leasehold reform and could have a materially adverse impact on the
value of the Company's underlying portfolio.  The Company submitted a
comprehensive response to the consultation on 17 January 2024 and has,
inevitably, further delayed the work required to finalise the year end
accounts.  The Company has kept shareholders informed of this consultation,
including through a regulatory announcement made on 20 November 2023, which
can be found at: https://tisegroup.com/market/news/330499
(https://tisegroup.com/market/news/330499)

The potential outcome and timing of further legislative change following the
Government consultation remains highly uncertain, and the Company will notify
shareholders when there is further clarity.  The Company is also in
discussions with its lender regarding an extension of its loan facility that
expires in January 2025, and expects to provide an update on progress within
the forthcoming accounts.

The Annual General Meeting ('AGM') of the Company will be held on 11 March
2024 at 9.30 am at 1 London Wall Place, London, EC2Y 5AU.  Full details are
set out in the AGM Notice posted to shareholders and may be downloaded at the
following link:
http://www.rns-pdf.londonstockexchange.com/rns/2992D_1-2024-2-15.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/2992D_1-2024-2-15.pdf)

Due to ongoing work relating to leasehold and building safety reform the
Company will delay the release of its year-end audited accounts from early
2024 to during the quarter ending 30 June 2024.  This extension has been
approved by Companies House and The International Stock Exchange Authority
Limited.  The Company expects to hold a separate Extraordinary General
Meeting in advance of 30 June 2024, at which the Accounts will be presented to
shareholders and shareholder resolutions relating to the Accounts will be
proposed.

See the Company's website for more information:

groundrentsincomefund.com
(https://www.schroders.com/en-gb/uk/individual/funds-and-strategies/investment-trusts/ground-rents-income-fund-plc/)

 

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