Ground Rents Income Fund plc
(“GRIO”/ the “Company” / the “Group”)
FULL YEAR RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2021
Progress delivering strategy in the face of challenging market headwinds
Ground Rents Income Fund plc (the “Company”), the real estate investment trust (“REIT”) investing in long-term, ground rent assets across the United Kingdom, announces its audited full year results for the year ended 30 September 2021.
Key financial highlights
- Net Asset Value (“NAV”) of £99.7 million (30 September 2020: £102.6 million) or 103.1 pence per share (“pps”) (30 September 2020: 105.7pps), a decline of 2.7 pps.
- The NAV was positively impacted by the reversal of the £2.9 million provision in connection with Beetham Tower in Manchester and the share buy back. This was however offset by the uncovered dividend, valuation discounts relating to building safety works and general market uncertainty fuelled by regulatory headwinds.
- Independent portfolio valuation of £119.4 million 30 September 2021, a decrease of 3.9% compared to 30 September 2020.
- Dividends paid of £3.8 million or 3.96pps, which, together with the share buy back delivered a NAV combined total return of 1.3%
- From December 2021, annual dividend to be rebased to 3.0 pps which is expected to be fully covered by recurring earnings during the full year ending September 2022.
- Resilient balance sheet with a consolidated loan to value of 16.3%.
Key operational highlights
- Resolution of the complex historic litigation at Beetham Tower protects the Company and subsidiaries from related known litigation and freeholder obligations.
- Ground rent collection remained in line with pre-pandemic collection rates at 93.8%.
- 46% of Company's ground rent income due to be reviewed in the next five years of which 94% benefits from fixed or inflation-linked increases, providing a solid base for a progressive future dividend.
- Building remediation projects ongoing where successful Building Safety Fund applications on behalf of leaseholders should mitigate valuation discounts.
- Ancillary income fallen to £751,139 (30 September 2020: £1.2 million) due to a challenging insurance market that has restricted commissions, and lower aggregated consent fees due to subdued transaction levels in the residential apartment market.
- Significant work ongoing improving the liquidity of the ongoing portfolio and preparing for enhanced regulatory requirements, including new appointments with key service providers.
Commenting, Barry Gilbertson, Chair, Ground Rents Income Fund plc, said:
“The Company is operating in a challenging environment with a high level of regulatory and media scrutiny. Whilst the Government's leasehold reform programme and emerging building safety 'polluter pays' principle both still lack clarity, we are focussed on protecting shareholders' interests as well as delivering best in class residential asset management.
“Notwithstanding the range of headwinds, rising inflation expectations and an accommodative monetary policy have historically been supportive towards long-term, inflation-linked, heavily collateralised assets such as a ground rent portfolio. These economic circumstances should benefit the Company's underlying cash flows, with 71% of the portfolio's ground rent income having some form of inflation linkage.”
The accounts for the year ended 30 September 2021 are available below, and will shortly be available on Company's website, www.schroders.com/grio .