Unaudited Portfolio Valuation as at 31 March 2026

Ground Rents Income Fund PLC

15 April 2026

 

15 April 2026

Ground Rents Income Fund plc

('GRIO' or the 'Company')

UNAUDITED PORTFOLIO VALUATION AS AT 31 MARCH 2026

Ground Rents Income Fund plc announces that Savills Advisory Services Limited ('Savills') has provided an unaudited independent valuation of the Company's portfolio as at 31 March 2026 of £29.5 million. This represents a like-for-like reduction over the six-month period (net of disposals) of £21.6 million or 42.3% (30 September 2025: £56.2 million or £51.1 million on a like-for-like basis). Savills, in discussion with peers and the RICS, continues to adopt a Material Valuation Uncertainty Clause ('MUC') that applies across the residential ground rent market due to uncertainty relating to leasehold reform and the resultant lack of transactional evidence.

Valuation metrics and rental growth

The valuation as at 31 March 2026 reflects a net initial yield of 15.8% and a Years Purchase ('YP') multiplier of 5.9, based on annual ground rent of £5.0 million.

Over the six-month period, contracted rent on a like-for-like-basis increased by 4.2%, compared with the latest available six-month change in Retail Price Index inflation of 0.1%. Based on an illustrative assumption of 3.5% per year inflation over the next five years, annual ground rent would increase to approximately £6.3 million, implying a net yield on the latest valuation of approximately 20.0%. The Company understands that Savills' valuation approach is broadly consistent with peers.

Leasehold reform

The reduction in valuation primarily reflects the Government's publication in January 2026 of the draft Commonhold and Leasehold Reform Bill (the 'Bill') which, through amendments to the Leasehold and Freehold Reform Act 2024, proposes capping ground rents on most long residential leases in England and Wales at £250 per year, reducing to a peppercorn (nil value) after 40 years, subject to the Bill becoming law and the relevant provisions coming into force (not expected before late 2028).

The Company believes the proposed provisions to be unlawful and has reiterated that any reform should be targeted and evidence-based, balancing the interests of responsible freeholders and leaseholders while avoiding unintended consequences such as heightened freeholder insolvency risk and disruption of building safety oversight (see the Company's January 2026 announcement: https://tinyurl.com/3utctx76).

Disposals and loan facility

Due to uncertainty relating to leasehold and building safety reform, the Company's strategy has focussed on improving portfolio liquidity and selling assets where possible. Over the past two financial years to-date, disposals have totalled £14.8 million, including £5.1 million since the beginning of this financial year, with a further £1.5 million exchanged.

As a result, the Company's loan with Santander UK plc has reduced from £19.5 million to £3.9 million and remains in compliance with all bank covenants. The Board is considering whether cash reserves (currently £5.6 million) could be utilised for further loan repayments following completion of the exchanged disposals, subject to working capital requirements of the Company.

Judicial Review of existing legislation

The Company is a party to a Judicial Review challenging the enfranchisement provisions within the Leasehold and Freehold Reform Act 2024. These provisions are intended to reduce the premium payable by a leaseholder when extending their lease or acquiring their freehold (see the Company's audited results for the year ended 30 September 2025: https://schro.link/grioar25).

The claim was dismissed by the High Court in October 2025. The Court of Appeal has since granted permission to all remaining claimants to appeal on all requested grounds, with the hearing date yet to be determined. The Company is considering next steps with other institutional claimants, including a review of advisers and associated costs.

The Bill, as proposed, is expected to further affect the economics of enfranchisement by capping the amount of ground rent that may be capitalised when calculating premiums payable to landlords.

Reporting timetable

Further detail relating to the independent portfolio valuation and the resultant impact on the Company's net asset value ('NAV') and strategy will be included in the unaudited half year results, expected to be published in June 2026.

This announcement contains inside information for the purposes of the UK version of the Market Abuse Regulation ('MAR') which forms part of UK law by virtue of the European Union (Withdrawal) Act 2018; as amended. Upon publication of this announcement, the inside information is now considered to be in the public domain for the purposes of MAR.

Enquiries:

Schroder Real Estate Investment Management Limited

Chris Leek

020 7658 6000

Singer Capital Markets (Financial Adviser & Broker)

James Maxwell / Sam Butcher (Investment Banking)

Sam Greatrex (Sales)

020 7496 3000

Appleby Securities (Channel Islands) Limited (Sponsor)

Andrew Weaver / Michael Davies

01534 888 777

FTI Consulting

Richard Gotla / Oliver Parsons

0203 727 1000

JTC (UK) Limited (Company Secretary)

Ruth Wright

[phone]

 

END