GRIO : Ground Rents Income has a plan to get fully invested
Ground Rents Income Fund has announced results for the year ended 30 September 2014. Its net asset value rose from 97.2p to 104.3p over the period, in response to demand for the underlying assets driving up their values. They say “the ground rents market continues to be very competitive amongst the large scale investors, with a number of high net worthy individuals and family offices entering the sector.”
The effect of the rising prices has made it harder for the fund to deploy its cash at prices they are happy with. They were not fully invested when their preference shares converted into ordinary shares in May 2014 and, at the end of the year were sitting on a cash pile of £20.3m. The high cash balances have dragged on returns. The dividend was increased from 2.8p to 3.8p.
They have entered into some transactions where they have paid a 10% deposit on buildings under construction. they say this helps them negotiate better terms for these ground rents, including inflation protection. About £2.3m was outstanding under these arrangements at the year end. Since their year end they have found a further £22m worth of potential deals and say they are exploring options to finance this, including short-term debt.