Ground Rents Income Fund PLC · LSE:GRIO
Ground Rents Income Fund — Corporate Update (January 2023)
27 slides from Ground Rents Income Fund's corporate update, January 2023
Slide 1: Ground Rents Income Fund PLC ('GRIO')
January 2023 GROUND RENTS INCOME FUND PLC (‘GRIO’) Unaudited portfolio valuation, regulatory reform update and shareholder consultation Marketing material for professional clients only.
Slide 2: Contents
01 02 Overview Building Safety Reform CONTENTS 03 04 Shareholder Consultation Summary 2
Slide 3: Overview
OVERVIEW
Slide 4: Overview
Overview Unaudited portfolio valuation, regulatory reform update, and shareholder consultation Key points for shareholders to note are: The unaudited independent valuation of the portfolio as at 30 September 2022 was £109.0 million, reflecting a decline of 0.9% over the six month period from 31 Marc
Slide 5: Strategy timeline
Strategy timeline Significant activity since Schroders appointment in mid-2019, and subsequent Board appointments GAV - left axis NAV - left axis Gross Rental Yield - right axis CMA announces further Undertakings and Govt. amends Building investigation now in ‘final Govt. publishes Safety Bill, maki
Slide 6: Unaudited Portfolio Valuation as at 30 September 2022
Unaudited Portfolio Valuation as at 30 September 2022 Savills Portfolio Valuation Adjustments 30-Sep-22 31-Mar-22* 30-Sep-21 – Unaudited, independent valuation of £109.0 (unaudited) (unaudited) (audited) million as at 30 September 2022. Portfolio Valuation: – Reflects a valuation decline of -0.9% vs
Slide 7: Unaudited NAV movement for the year ended September 2022
Unaudited NAV movement for the year ended 30 September 2022 NAV decrease of 11.2% and a NAV total return of -7.4% – Unaudited NAV of £88.5 million or 92.5 pps as at 30 September 2022, which compares with audited NAV of £99.7 million or 103.1 pps as at 30 September 2021 – Unaudited NAV decline of 10.
Slide 8: Building Safety Reform
BUILDING SAFETY REFORM
Slide 9: Building Safety Reform and impact on the Company
Building Safety Reform and impact on the Company Material Valuation Uncertainty and potential for audit report modification – Consistent with the approach taken for the unaudited interim results for the six month period ending 31 March 2022, Savills, in conjunction with industry peers and the Royal
Slide 10: 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’) Type of building in portfolio* Pledged Developer Developer and other “Polluters” Developer no longer in existence still in existence (‘orphaned property’) Not relevant building (un
Slide 11: Building Safety Reform and impact on the Company
Building Safety Reform and impact on the Company BSA increased complexity of challenges facing the Company but progress being made – Robust processes in place to manage building safety issues, including regular and transparent communication with leaseholders who are understandably frustrated by issu
Slide 12: Building Safety Reform and impact on the Company
Building Safety Reform and impact on the Company BSA increased complexity of challenges facing the Company but progress being made – New fire alarm systems installed at 10 properties, removing the requirement for expensive ‘waking watches’ whilst additional building safety works are addressed. In mo
Slide 13: Building Safety Reform and impact on the Company
Building Safety Reform and impact on the Company Progress being made dealing with legacy issues as well as managing leasehold reform risk – Having resolved the highly complex legacy litigation at Beetham Tower in Manchester in August 2021, the Board and Manager are to deal with legacy issues relatin
Slide 14: Building Safety Reform and impact on the Company
Building Safety Reform and impact on the Company Key risk non-recoverable costs and impact on cashflow % of Portfolio Value Clarifications Remediation, as of Number of Assets (30-Sept-22) – Managed Estate (MEST) - properties where GRIO is responsible for 30-Sept-22 MEST / NMEST / Total MEST / NMEST
Slide 15: Building Safety Reform and impact on the Company
Building Safety Reform and impact on the Company Mitigating the potential for audit report modification Next steps – More accurately verify the valuation adjustments used in the forthcoming audited year end accounts. Strategy includes: i. Obtaining building safety assessments (FRAEW, PAS9980) ii. Ve
Slide 16: Shareholder Consultation
SHAREHOLDER CONSULTATION
Slide 17: Continuation Vote
Continuation Vote Summary and consequences – The Company’s Articles of Association (the ‘Articles’) contain provisions that provide shareholders with a vote on the future of the Company, commonly known as a ‘Continuation Vote’. Such votes are relatively common in investment trusts as a means of enab
Slide 18: Continuation Vote
Continuation Vote Shareholder consultation, alternative proposals to the Wind-up Resolution – The Company faces continuing headwinds relating to building safety and leasehold reform that are largely outside of our control, which have led to falling capital values and weak sentiment in the ground ren
Slide 19: Continuation Vote
Continuation Vote Shareholder consultation, consideration of alternative proposals to the Wind-up Resolution Option 1 Option 2 – The principle of one shareholder being able to trigger a – Removing the need for the vote on the Wind-up Resolution liquidation remains; in its entirety and providing the
Slide 20: Continuation Vote
Continuation Vote Shareholder consultation, additional considerations Current debt and potential refinancing – The Company’s external loan with Santander matures in January 2025. Alongside the measures described, we will consult on proposals to extend this facility for a short period of time. Board
Slide 21: Santander debt facility
Santander debt facility Summary of terms and next steps Summary – The Company has a £25 million facility with Santander UK Plc which matures in January 2025, comprising a £12.5 million term loan and a £12.5 million revolving credit facility (RCF) – The interest payable on the term facility is fixed
Slide 22: Summary
SUMMARY
Slide 23: Summary
Summary Key points, next steps and timeline – GRIO continues to operate in an increasingly challenging regulatory environment, and we Continued headwinds are working hard to protect both our shareholders’ investments and our leaseholders’ interests impacting performance and liquidity – Since Schrode
Slide 24: Slide 24
Slide 25: Important Information
Important Information Marketing material for professional investors or advisers only. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invest
Slide 26: Important Information
Important Information Ground Rents Income Fund Plc – Risk Factors: The Company borrows for investment purposes. This will magnify any gains or losses made by the Company. The Company has no maturity date. The Company may only be terminated by a continuation vote, a shareholders’ voluntary liquidatio
Slide 27: Building Change - Schroders Capital
BUILDING CHANGE Schroders capital
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