For release 9th 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 £1.0 million structured as £400,000 on completion and two further payments of £300,000 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 £305,000 to £320,000 per annum
As at 31 March 2019 the assets were valued at £9.1 million. Following receipt of the £1.0 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 £115,000 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
