Ground Rents Income Fund PLC Asset Management Update (2057P)
October 09 2019 - 5:00AM
UK Regulatory
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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END
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