Ground Rents Regulatory News (GRIO)

19 December 2013

Ground Rents Income Fund plc

("GRIF" or the "Company")

Acquisition of three landmark developments

Ground Rents Income Fund plc, a listed real estate investment trust (REIT) investing in UK ground rents, has transacted on three prominent and high-profile developments.

GRIF has acquired the freeholds of Bézier, a pair of curved 14-storey apartment towers at London's Old Street roundabout, and Gateway Plaza, a regeneration project in Barnsley, and exchanged contracts to acquire the private apartments at St Mark's Square, a £90 million mixed-use scheme that will transform the southern end of Bromley town centre.

These three freeholds will be acquired for a total consideration of £2.98 million and were financed from the proceeds of the Convertible Preference Share issue in May 2013.

Bézier, developed by Tudorvale, comprises 150 luxury apartments and is located at what is often referred to as 'Silicon roundabout', reflecting the large number of technology firms in the area. The freehold was purchased for £1.45 million, reflecting an initial yield of 4.90%.

Gateway Plaza is Barnsley's pioneering regeneration scheme. The mixed-use development comprises 96,000 sq ft of office accommodation, 188 one, two and three-bedroom apartments, a 110-bed Premier Inn hotel, 21,000 sq ft of retail and leisure space and a 548-space car park, all built around a large, modern central plaza. Gatehouse Court, which was bought in conjunction with Gateway Plaza, is a smaller scheme of apartments on the edge of Barnsley. The two assets were purchased for £700,000, reflecting an initial yield of 4.37%. The ground rent will increase in line with the Retail Prices Index (RPI) every 25 years.

St Mark's Square, which is being developed by Cathedral Group in partnership with the London Borough of Bromley, is a new residential and leisure quarter, where construction began in April 2013.

The wider scheme will comprise a landscaped public square, surrounded by a nine-screen Vue cinema, 25,000 sq ft of cafés and restaurants and a 130-bedroom Premier Inn hotel. The development also includes 200 private and affordable apartments. GRIF has exchanged contracts to acquire the private apartments for £830,000, reflecting an initial yield of 4.76%. GRIF will take ownership of this asset once construction has reached practical completion. The ground rent income will increase in line with RPI every 5 years.

James Agar, Investment Director of Brooks Macdonald Funds, Investment Adviser to GRIF, commented: "These deals provide investors with further stable, secure income, as GRIF aims to invest the remaining cash raised from the Convertible Preference Share issue in May.

"Bromley is the second transaction that GRIF has completed with Cathedral Group and underlines our strong working relationship from both a management and investment perspective. As Investment Adviser we were able to maximise returns and add value for both parties in the transaction by amending the lease terms on the underlying units in the development, bringing the review cycle down from 20 years, as with the Clapham One scheme we bought in 2012, to five-year cycles.

"Committing to this purchase allows GRIF to secure a high-quality asset with a trusted development partner, allowing visibility and certainty of investment of the preference share funds and, importantly, giving the vehicle's income profile a closer correlation to RPI with the five-yearly reviews.

"GRIF continues to have excellent visibility and deal flow on the deployment of the remaining funds raised from the Convertible Preference Share issue, which GRIF expects to be invested within the 12-month timescale set at the time of the issue."

Contacts:

Website: www.groundrentsincomefund.com