- What GRIO reports drop in NAV in H1
- Why Challenging conditions in ground rents sector
- What next Working with Gov on a solution
Ground Rents Income Fund, a REIT focused on investing in UK ground rents, which is now managed by Schroders, has reported a 2.9% reduction in its net asset value to £109.9m in its half year results.
In its H1 results to March 2019, the fund made a loss of £1.4m on £2.7m of revenue including a £2.6m revaluation loss. The residential ground rent sector continues to be a challenging market due to ongoing leasehold reform and low transaction volumes.
Schroder Real Estate Investment Management replaced Brooks Macdonald Funds as the alternative investment fund manager in May.
GRIO is engaging with the government and other stakeholders in the leaseholder reform process, most recently evidenced by it signing the government-backed Public Pledge for Leaseholders.
Malcolm Naish, chairman of the Board, said: “The Investment Manager and broader industry are continuing to engage constructively with the government to address concerns regarding leasehold practices. While the final outcome of leasehold reform remains uncertain, we remain confident that institutional management of ground rent assets on fair terms offers the best long-term outcome for consumers and other stakeholders.”
James Agar, head of residential, Schroders, Investment Manager to GRIO, added: “The valuation reflects weaker market sentiment which can be attributed to lower transactional volumes, the government’s recent response to its own consultations and the subsequent review of residential leasehold law by the Law Commission.
“The current government proposals under consultation are not retrospective, but there is a stated desire from policymakers to make leasehold enfranchisement and extensions simpler, fairer and cheaper.”