Proposed Convertible Preference Share Issue

03 April 2013

Ground Rents Income Fund plc

Proposed Convertible Preference Share Issue

Trading Update

Ground Rents Income Fund plc ("GRIF" or "the Company"), a listed real estate investment trust (REIT) investing in UK ground rents, today announces a trading update covering the period ending 31 March 2013 and that the Directors have resolved to raise further capital of up to £50m, which would increase GRIF's total assets to approximately £100m.

Highlights:

·; Up to £50m to be raised through a placing of convertible preference shares

·; Total invested assets since IPO now at £34m

·; Additional transactions agreed and in legal due diligence of approximately £10m, to reach a fully invested position ahead of schedule

·; Strong pipeline of future investment opportunities

Capital Raise

As previously stated, the Board has been anticipating a further capital raise in 2013, aimed at taking the Company's total assets to £100 million. It is proposed that the capital raise will be conducted through a placing of convertible preference shares. These shares are designed to minimise cash drag on the REIT's performance and protect income returns for investors from GRIF's IPO. It has always been the Board's and investors' desire to see GRIF increase substantially in size from the date of IPO. The Company has chosen a convertible preference share issue so that current shareholders are not unfairly diluted by a straight capital raise. The convertible preference shares will carry a 2% coupon which will be payable quarterly in line with the current dividend payment timetable (from September 2013). The placing is expected to close before the end of April 2013 and will be subject to shareholder approval at a general meeting of the Company expected to be held in May 2013.

Investments

The Gateway, purchased for £2.4m in January, is a major mixed-use development located in Leeds city centre. The development, situated at the end of The Calls, comprises 552 residential apartments, the Etap hotel and retail units.

The Company has also purchased a further portfolio of ground rents consisting of 541 units throughout the North West and Midlands at a cost of £2.4m from Morris Homes Limited, generating income annually of approximately £130,000. This entire portfolio is directly linked to RPI, providing investors with index-linked income.

James Agar, Investment Director of Braemar Estates, Investment Adviser to the Company commented:

"Progress since the IPO has been ahead of our expectations and we reached the 50% invested milestone in December 2012. We have made a number of significant additions to the portfolio and maintain our focus on delivering investment in a timely manner. The acquisitions that we have completed have secured a greater than anticipated weighting to RPI-linked income.

We have some excellent visibility for the next £50m worth of investment and anticipate further large scale portfolio assets being added to the portfolio in due course."

Malcolm Naish, Chairman of GRIF, added:

"GRIF has performed ahead of expectation in difficult market conditions. The second dividend payment, paid on 20 March 2013, was 0.6 pence per share, equating to a total dividend yield since IPO in August of just under 1%. The investment which has taken place in the last three months will put the Company in a good position to achieve its target year-one dividend yield.

We are pleased to be looking to raise further funds on the back of investor demand and our anticipation that GRIF will outperform its 12 month investment timescale. This will create a larger vehicle with greater liquidity and a diversity of assets."

Contacts:

Website: www.groundrentsincomefund.com