Ground rent investor spends £4.1m on Leeds and Manchester deals

A LISTED business that invests in ground rents for buildings has spend £4.1m on two deals in Leeds and Manchester.

Ground Rents Income Fund (GRIF), a London-based listed real estate investment trust (REIT), has acquire the ground rents for City Island in Leeds and Ladywell Point in Salford, Greater Manchester.

The company bought the ground rents for £1.4m at City Island, where there are 404 one and two-bedroom apartments, duplexes and penthouses in three-blocks of between 15 and 20 storeys beside the Leeds Liverpool Canal and the River Aire behind the former Yorkshire Post headquarters on Wellington Street in Leeds.

GRIF paid £2.7m for the ground rents at Ladywell Point in Salford which includes three blocks of modern residential apartments, totalling 262 units.

GRIF floated on the stock market in August 2012 and has completed £7.5m of deals for more than 1,000 apartments this year.

James Agar, investment director of Brooks Macdonald Funds, investment adviser to the company commented:

“The company has completed a number of sizeable deals over the last few months, including City Island, Leeds, and Ladywell Point, Salford, adding more than 9,000 units to GRIF’s portfolio.

“When GRIF was designed, we were very clear that we did not want it to be a residential-only ground rents vehicle, like the others which existed in the market.

There are significant opportunities to deliver enhanced yields outside the traditional residential market, whilst continuing to provide predictable returns with assets linked to inflation that also have ‘gilt-like’ security characteristics.

This opportunity for increased yield has been evidenced by the recent completion of a number of deals in both the hotel and student accommodation sectors. These assets have been added to the portfolio to drive gross dividend yield, whilst continuing to maintain our core investment characteristics.

The recent ‘Forward Guidance’ provided by the Bank of England’s new governor, Mark Carney, has indicated that interest rates are likely to remain low for some time to come, whilst sustained inflation is likely to erode cash holdings further, underlining the attractiveness of GRIF within the wider investment market.
We continue to have excellent visibility and deal flow on the deployment of the remaining funds raised from the Convertible Preference Share issue, which we would anticipate being invested within the 12 month timescale set at issue.”

Malcolm Naish, chairman of GRIF, added: “The Company is shortly to pay its final first year dividend, which is in excess of the target return outlined at the time of the IPO and, therefore, positive news for shareholders.
 
“The increased size of the vehicle has given a greater diversity of risk and greater liquidity through an increased market capitalisation, as we look to add further to the underlying portfolio with attractive income generating assets.”

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