Ground Rents Income Fund PLC · LSE:GRIO
Ground Rents Income Fund — FY2024 Earnings Presentation
32 slides from Ground Rents Income Fund's earnings presentation, January 2025
Slide 1: Ground Rents Income Fund PLC (GRIO) Full year results to 30 September 2024
January 2025 GROUND RENTS INCOME FUND PLC (GRIO) Full year results to 30 September 2024 Marketing material. Chris Leek Investment Manager
Slide 2: Overview and Financial Results
OVERVIEW AND FINANCIAL RESULTS
Slide 3: Executive Summary
Executive Summary Implementing strategy with strong support from shareholders but in face of headwinds Leasehold The new Government has emphasised a more measured approach to leasehold reform but is committed to go reform and further, with market wide Material Uncertainty* continuing to be adopted.
Slide 4: Results to 30 September 2024
Results to 30 September 2024 Key metrics 30 September 2023 30 September 2024 Year ended Comment (audited) (audited) Ground rent income £5,161,073 £5,323,810 Upwards only rent reviews. Ancillary income £563,014 £784,370 More active apartment transaction market. Net revaluation loss on investment prop
Slide 5: Leasehold Reform and Building Safety
LEASEHOLD REFORM AND BUILDING SAFETY
Slide 6: Residential leasehold reform
Residential leasehold reform Advocate for reform that fairly balances the interests of responsible landlords and leaseholders Legislative change Activity – The Government’s leasehold reform agenda started in 2017 aimed – Our efforts, along with broader industry actions and change of to limit new gro
Slide 7: Building safety reform
Building safety reform Complex and changing legislative landscape Complex legislation – The Building Safety Act 2022 (‘BSA’)1 is the most significant regulatory reform to the UK’s built environment in almost 40 years, aiming to increase accountability and improve building standards – The Grenfell To
Slide 8: Building safety reform: mitigating risks across the portfolio
Building safety reform Mitigating risks across the portfolio % of Portfolio Value Remediation, as of Number of Assets (30 Sept 24) 30 Sept 24 MEST / NMEST / Total Over the year the number of assets impacted by building safety MEST / NMEST / Total remediation requirements reduced from 24 to 23, and t
Slide 9: Strategy
STRATEGY
Slide 10: Asset sales
Asset sales Optimise value, repay debt and improve portfolio liquidity Recent sales Future sales – In the year (Feb 2024), the Company sold two – Further disposals are in assets in Bristol and Exeter for a total of £3.45m progress, with significant work – Post year-end (Nov 2024), the Company sold i
Slide 11: Portfolio valuation as at 30 September 2024
Portfolio valuation as at 30 September 2024 Optimise value, repay debt and improve portfolio liquidity 30-Sept- 30-Sept- 31-Mar- 30-Sept- 22 23 241 24 Ground rent roll (£m) 5.1 5.2 5.2 5.3 Savills, in discussion with peers and the RICS, continues to adopt a Material Valuation Uncertainty Clause ('MU
Slide 12: Financing
Financing Maintain a robust balance sheet whilst minimising expenses to maximise free cash Post Latest year- Pre refinance, refinance and end, In Mar 2024, the Company refinanced its Santander loan facility, 30-Sep-23 Feb-24 sales, 30-Sep-24 31-Mar-24 including extending the facility to July 2026, s
Slide 13: Recap of strategy
Recap of strategy Recap of strategic priorities set out when the Investment Policy was approved New strategy Objectives Risks – Strong support for change to the 1. Sell assets where possible to optimise net – The Act is of concern, but critical detail Continuation Vote in April 2023, together realis
Slide 14: Ongoing execution of new Investment Policy
Ongoing execution of new Investment Policy Focus on reducing legislative risk, improving portfolio liquidity and disposals Summary – £11.59m of completed sales at or above the prevailing valuation, with current loan outstanding reduced to £12.0m – Further disposals are in progress – Refinance of loa
Slide 15: Possible offer for the Company
Possible offer for the Company The Company is in an offer period as a result of the announcement on 8 January 2025 Summary of 8 January 2025 announcement – On 8 January 2025, the Company published a response announcement (the 'Response Announcement') to the announcement released earlier on the same
Slide 16: Summary
SUMMARY
Slide 17: Implementing the strategy but in face of headwinds
Implementing the strategy but in face of headwinds Objectives The Company continues to satisfactorily manage the challenges 1. Sell assets where possible to optimise the presented by leasehold reform and building safety net realisation value of the Company's investments, whilst repaying debt and imp
Slide 18: Appendices
APPENDICES
Slide 19: Portfolio summary
Portfolio summary Overview of the portfolio as at 30 September 2024 – Portfolio to capture rising and above Detailed review type Ground rent roll % of ground Portfolio valuation Portfolio valuation target inflation (see fan chart) with (£000) rent total (£m) (%) 74% of ground rent income reviews Ind
Slide 20: Portfolio summary
Portfolio summary Overview of the portfolio as at 30 September 2024 – 396 years Weighted Average Years to next review Ground rent Asset location Portfolio ground Portfolio valuation Unexpired Lease Term, with shortest income (%) rent roll (%) (%) term remaining of 80 years 0–5 51.0 North East 30.9 2
Slide 21: NAV movement for the year ended September 2024
NAV movement for the year ended 30 September 2024 NAV decrease of 34.5% and a NAV total return of -34.5% – NAV of £56.5 million or 59.0 pps as at 30 September 2024, which compares with £86.2 million or 90.1 pps as at 30 September 2023 – NAV decline of 31.1 pps or -34.5% with a NAV total return of -3
Slide 22: Balance sheet (1/2)
Balance sheet (1/2) Portfolio valuation negatively impacted by headwinds and sector wide MUC 30 Sept 2024 31 Mar 2024 30 Sept 2023 As at £m £m £m Investment properties 71.5 81.5 106.1 Cash 5.5 6.4 1.6 Net payables -1.0 -0.5 -0.5 Debt -19.5 -21 -21 Net Asset Value 56.5 66.4 86.2 NAV (pps) 59.0p 69.4p
Slide 23: Balance sheet (2/2)
Balance sheet (2/2) The Company remains fully compliant with loan covenants – In Mar 2024, the Company refinanced its Santander loan facility, with the key terms as follows: • Initial facility of £19.5m with a term extension from Jan 2025 to Jul 2026 • Margin of 2.75% per annum, an increase of 90 ba
Slide 24: Statement of Comprehensive Income
Statement of Comprehensive Income 30-Sep-24 30-Sep-23 Year ended £m £m Ground Rental income 5.2 5.3 Insurance commission 0.2 0.3 Consent fees 0.4 0.3 Other income 0.2 - Gain on the disposal of investment property - 0.1 Operating Income 6.1 5.8 Legal and other professional fees (1.7) (1.6) Director c
Slide 25: Discrete yearly performance (1/2)
Discrete yearly performance (1/2) Ground Rents Income Fund Plc Discrete Yearly Performance (%) Q3 2023–Q3 2024 Q3 2022–Q3 2023 Q3 2021–Q3 2022 Q3 2020–Q3 2021 Q3 2019-Q3 2020 Share price1 -32.6 -25.7 -32.3 -9.0 -7.7 Shareholder Total Return2 -32.6 -23.7 -29.0 -3.8 -3.3 NAV Total Return3 -23.2 -1.3 -
Slide 26: Discrete yearly performance (2/2)
Discrete yearly performance (2/2) Ground Rents Income Fund Plc Risk Considerations (continued): • Concentration risk: The Company may be concentrated in a limited number of geographical regions, industry sectors, markets and/or individual positions. This may result in large changes in the value of t
Slide 27: Enfranchisement reform
Enfranchisement reform Assessing the potential impact on GRIO’s portfolio Portfolio (as at 30 September 2024) Ground rent (%) Valuation (%) This analysis, supported by Rightmove data, is specifically in relation to the Act provision to cap the treatment of residential Unlikely to be fully in scope o
Slide 28: Building Safety Reform and impact on the Company
Building Safety Reform and impact on the Company Overview of provisions set out in the Building Safety Act 2022 (‘BSA’) Developer no longer in existence Type of building in portfolio* Pledged Developer Developer and other ‘Polluters’ still in existence (‘orphaned property’) Not relevant building 1.
Slide 29: Ground Rents Income Fund Plc
Ground Rents Income Fund Plc Inflation-linked income Illustrative ground rent revenue – inflation sensitivity Listed in August 2012 and Schroders appointed as Investment Background Manager in May 2019 to support the GRIO Board with the complex challenges relating to building safety and leaseholder r
Slide 30: Ground Rents Income Fund Plc team
Ground Rents Income Fund Plc team GRIO team supported by Schroders Group and non-executive Board Non-executive Board Schroders Group Schroder Real Estate Direct Investment Committee Chaired by Nick Montgomery Barry Gilbertson Bill Holland Katherine Innes Ker UK Direct Investment Team Chairman Non-Ex
Slide 31: Important Information
Important Information Marketing Material This information is a marketing communication. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. We recommend you seek financial advice from an Independent Adviser before
Slide 32: Thank you
THANK YOU Schroder Real Estate Investment Management Limited 1 London Wall Place London EC2Y 5AU schroders.com
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