Ground Rents Income Fund plc ('GRIO', or the 'Company')

 UPDATE ON UNAUDITED INDEPENDENT VALUATION AS AT 31 MARCH 2025 AND PORTFOLIO ACTIVITY

Ground Rents Income Fund plc ('GRIO', or the 'Company') provides an update on its unaudited independent portfolio valuation as at 31 March 2025 and ongoing portfolio activity.

Independent valuation

The unaudited independent portfolio valuation prepared by Savills Advisory Services Limited ('Savills') as at 31 March 2025 was £56.8 million, representing a like-for-like reduction over the six-month period (net of disposals) of £6.4 million, or 10.1% (30 September 2024: £71.5 million or £63.2 million on a like-for-like basis). The valuation reflects a net initial yield of 8.3% and a Years Purchase ('YP') multiplier of 11.3 (30 September 2024: 7.0% and 13.4 YP).

97% of the portfolio valuation is subject to the industry-wide Material Valuation Uncertainty Clause ('MUC') due to ongoing uncertainty relating to building safety and leasehold reform (30 September 2024: 97%).

The valuation includes a negative adjustment of £5.3 million for building safety and £6.3 million for leasehold reform risk (30 September 2024: £6.1 million and £5.7 million respectively). The aggregate negative valuation adjustment now totals £11.6 million (30 September 2024: £11.8 million).

Since the interim period end the number of properties affected by building safety related defects and associated negative valuation adjustments has reduced from 22 to 21 (30 September 2024: 22). Further projects are due to conclude before the financial year end, though some projects face delays associated with the widely reported industry-wide difficulties in obtaining necessary approvals from the new Building Safety Regulator.

Further detail on the unaudited independent portfolio valuation and its impact on the Company's net asset value will be included in the forthcoming interim results for the period ended 31 March 2025.

Disposals

The Company has recently completed or unconditionally exchanged contracts to sell two commercial ground lease assets in Birmingham and Corby for a combined price of £1.05 million. This represents a 14% discount to the independent valuation as at 30 September 2024 of £1.22 million.

Since the beginning of the financial year (1 October 2024) to today's date, the Company has completed or exchanged on disposals totalling £9.2 million (inclusive of the abovementioned £1.05 million), with most of the proceeds allocated towards debt repayment. As a result of a recent repayment of £3.0 million in March 2025, the Company's current loan balance is £9.0 million. Following the debt repayment and based on the independent valuation as at 31 March 2025, the Company's consolidated loan to value, net of cash of £4.6 million, is 8%, and is fully compliant with the loan covenants.

Further disposals are under negotiation, or are being marketed, with a combined valuation as at 31 March 2025 of £6.8 million. However, very low transactional volumes persist across the residential ground rent market, largely due to the industry-wide uncertainty relating to building safety and leasehold reform. This means the outcome of the planned disposals remains uncertain.

Leasehold reform

In January 2025, the High Court granted the Company and other freeholders permission to pursue a Judicial Review of the Government's decisions regarding the enfranchisement provisions of the Leasehold and Freehold Reform Act 2024 (the 'Act'). The Board believes the provisions fail to fairly balance the legitimate interests of landlords and leaseholders. A substantive hearing is scheduled for four days in July 2025.

The legal proceedings have prompted the Government to publish "technical corrections" to its Impact Assessment of the new Act which may benefit the upcoming hearing because the costs to freeholders have been found to be higher.

In parallel with the legal claim, the Government continues its phased implementation of other provisions within the Act. These new provisions extend leaseholders' rights to manage their properties and to permit them to extend their lease or buy their freehold without having to wait for two years after purchasing their property. These reforms are aimed at simplifying the residential leasehold sector and are generally supported by the Company.

Later this year, the Government is due to consult on various aspects of the Act and further reform the leasehold system, including addressing 'unregulated and unaffordable ground rents', via a new Leasehold and Commonhold Reform Bill.

This announcement contains inside information for the purposes of the UK version of the Market Abuse Regulation ('MAR') which forms part of UK law by virtue of the European Union (Withdrawal) Act 2018; as amended. Upon publication of this announcement, the inside information is now considered to be in the public domain for the purposes of MAR.

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Enquiries:

Schroder Real Estate Investment Management Limited

Matthew Riley / Chris Leek

020 7658 6000

Singer Capital Markets (Financial Adviser & 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

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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'). This represented a significant shift in the Government's approach to leasehold reform and led the Company's independent valuer, Savills, in conjunction with other valuers and the Royal Institution of Chartered Surveyors, to adopt a Material Valuation Uncertainty Clause ('MUC') across the entire residential ground rent market. The Company submitted a comprehensive response to the Consultation in January 2024 and has kept shareholders informed of the Government's leasehold reform agenda, including various regulatory announcements, which can be found at: www.groundrentsincomefund.com

Since November 2023, political upheaval resulted in an accelerated Leasehold and Freehold Reform Act (the 'Act'), enacted in May 2024, which may represent a better outcome than the worst-case scenarios contemplated in the Consultation.

The new Government has emphasised a more measured approach to reforming, what it acknowledges to be 'an incredibly complicated area of property law'. Consequently, it intends to take the necessary time to ensure that reforms are 'fit for purpose'. It remains committed to implementing the Act and intends to introduce further reform to provide homeowners with greater rights and protections. This includes addressing 'unregulated and unaffordable' existing ground rents payable and to make commonhold the default tenure for new apartments in the future.

The Company is taking legal action to safeguard shareholder interests against what it understands to be unlawful provisions in the Act, particularly to do with enfranchisement, and is engaging positively with the new Government to advocate for reform that fairly balances the interests of the Company's shareholders and leaseholders.

At a General Meeting of the Company held on 18 November 2024 over 72% of total voting capital was voted, of which shareholders representing approximately 92% of the votes cast supported the strategy to deliver the Company's Investment Policy. The next Continuation Vote is to be held on or before 17 November 2027.

Please see the Company's website for more information: www.groundrentsincomefund.com

The person responsible for arranging the release of this announcement on behalf of the Company is Matthew Riley, a member of Company Secretarial team of the Company.

Ends.