Ground Rents Income Fund PLC Asset Management Update (2057P)

TIDMGRIO

RNS Number : 2057P

Ground Rents Income Fund PLC

09 October 2019

For release 9(th) October 2019

Ground Rents Income Fund Plc

("GRIO" or the "Company")

Asset Management Update regarding

1) Headlease restructure and 2) Renegotiation of supplier agreements

VITA Headlease restructure

Ground Rents Income Fund Plc announces that conditional contractual arrangements have been entered into with VITA Group ("VITA") in relation to six of the Company's Purpose-Build Student Accommodation ground rent assets. A summary of the terms is as follows:

-- The Company will enter into new headleases of between 112 and 250 years unexpired term with VITA which will, in turn, assume a direct relationship with underlying tenants and remove the Company's day-to-day management responsibilities

-- VITA will pay the Company GBP1.0 million structured as GBP400,000 on completion and two further payments of GBP300,000 payable on the first and second anniversaries

-- The income profile and review cycle of the portfolio will remain unchanged with a combination of five and ten yearly inflation-linked rent reviews. Following a rent review , which occurred contemporaneously to this transition, the rent paid by VITA has increased from GBP305,000 to GBP320,000 per annum

As at 31 March 2019 the assets were valued at GBP9.1 million. Following receipt of the GBP1.0 million payment the asset value is expected to remain broadly unchanged which reflects a gross ground rent yield of 3.5% on the reviewed rent. Completion of the transaction is subject to the expiry of statutory pre-emption notices.

Renegotiation of supplier agreements

Key supplier agreements are being reviewed to drive operational efficiencies. As a result the agreement between the Company and its principal property manager has been renegotiated to generate additional net income to the Company of approximately GBP115,000 per annum.

James Agar, Fund Manager of Ground Rents Income Fund Plc, commented:

"The VITA restructure demonstrates the benefit of active asset management. The staged nature of the payments and increased rent support, in conjunction with efficiencies from supplier agreement renegotiations, has demonstrable positive impact on the net operating income from the portfolio."

Contacts

Schroder Real Estate Investment Management Limited

James Agar / Chris Leek

020 7658 6000

N+1 Singer (Broker)

James Maxwell / Ben Farrow

020 7496 3000

Tavistock (Media)

James Whitmore / Jeremy Carey

020 7920 3150

Appleby Securities (Channel Islands) Limited (Sponsor)

Andrew Weaver / Zim Ceko

01481 755 600

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October 09, 2019 05:00 ET (09:00 GMT)