Value of ground rent income portfolio slides on consolidation uncertainty

By Joe Hoppe

Ground Rents Income Fund PLC said on Wednesday that the value of its portfolio slipped in the first half due to material uncertainty surrounding responsibility for replacing hazardous coatings in its buildings.

The property investment trust said the UK government’s proposed amendments to the Building Safety Bill seek to assign clear responsibility for addressing fire safety issues in buildings over 11 metres, following investigations into the 2017 Grenfell Tower fire in London which killed 72 people. .

The trust said that while responsibility for remediation is assigned to the original developers, if the original developers are untraceable, insolvent, or no longer exist, the responsibility rests with the freeholders.

Ground Rents said it has applied to the government for the Building Safety Fund for all affected buildings over 18 metres, which should fully cover all material costs of the remediation. However, if the proposed changes are passed and developers of other buildings cannot be found, ground renters may be held responsible for the costs of rehabilitation.

Thus, the uncertainty led to a 7.9% drop in the valuation of the company’s portfolio to 110 million pounds ($143.0 million) as of March 31, whether Ground Rents was responsible or not.

Shares at 0741 GMT were down 1.5 pence, or 2.3%, at 62.5 pence.

Write to Joe Hoppe at [email protected]