THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 596/2014 (WHICH FORMS PART OF DOMESTIC UK LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("EUWA")) ("UK MAR"). UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, SUCH INSIDE INFORMATION (AS DEFINED IN UK MAR) IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
19 November 2024
Ground Rents Income Fund plc (‘GRIO’ or the ‘Company’)
DISPOSAL OF LARGEST ASSET
Ground Rents Income Fund plc announces the sale of its largest asset, a freehold ground rent interest at Lawrence Street in York, for a price of £7.9 million. This price is in line with the unaudited independent portfolio valuation as at 30 September 2024 and reflects a net initial yield of 4.2% based on the current annual rent of £356,455. The asset is operated by Vita Student as purpose built student accommodation, and has been acquired by the long leaseholder. The disposal is in line with the Company’s new Investment Policy to sell assets where possible to optimise the net realisation value of the Company's investments.
The asset formed part of the security for the Company’s loan from Santander UK plc ('Santander'). The new loan terms, agreed as part of a refinancing in March 2024, require all proceeds from charged asset disposals to be used to repay debt. Following the loan repayment and based on the unaudited independent portfolio valuation as at 30 September 2024, the value of the remaining assets charged to Santander total £31.1 million and the bank Loan to Value (‘LTV’) will be approximately 38.6% compared with a LTV covenant ratio of 50%. The consolidated group LTV following the repayment will be approximately 18.9%.
On the same basis, the Interest Cover Ratio (‘ICR’) will be approximately 495% compared with a ICR ratio covenant of 200%. As set out in the circular issued on 24 October relating to the continuation of the Company (https://schro.link/griocircular), the current preferential interest rate hedging expires in January 2025, prior to the loan maturing in July 2026. Following expiry of the hedging, and assuming the current SONIA rate of 4.7%, the ICR would be approximately 238% compared with a reduced covenant level, effective from January 2025, of 160%.
Further assets are being marketed for disposal and a full update on progress implementing the new Investment Policy will be included in the forthcoming year-end results that the Company aims to release in December.
Enquiries:
Schroder Real Estate Investment Management Limited
Matthew Riley / Chris Leek
020 7658 6000
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
FTI Consulting
Richard Gotla / Oliver Parsons
0203 727 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.
In November 2023 the previous Government published a consultation on restricting existing residential ground rents payable, without compensation to freeholders (the ‘Consultation’).