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
Nick Montgomery / Chris Leek /
Matthew Riley
|
020 7658 6000
|
Singer Capital Markets (Broker)
James Maxwell / Alaina
Wong
|
020 7496 3000
|
Appleby Securities (Channel Islands) Limited
(Sponsor)
Andrew Weaver / Michael
Davies
|
01534 888 777
|
FTI
Consulting
Richard Gotla / Dido Laurimore / Oliver
Parsons
|
020 3727 1000
|
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
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
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