9th Dec 2015 11:09
LONDON (Alliance News) - The investment adviser to Ground Rents Income Fund PLC on Wednesday said ground rents remain in demand, as investors look for "long-term, low-risk, inflation-linked income".
James Agar, investment director of Brooks Macdonald Funds, the investment adviser, said the demand has put pressure on valuation yields.
"Ground rents have enjoyed contractual rental increases, as is the nature of the underlying asset base, but most of the rise in underlying asset values is a result of the undersupply and strong demand which continues in this niche sector," Agar said in a statement.
Malcolm Naish, the chairman of the real estate investment trust, said pricing has moved up significantly, with retail price index reviewable rents in particular demand.
"The traditional 25 year reviews with rents doubling have also seen a significant yield shift from around 6.0% in March 2012 to around 4.0% today," the chairman said.
"We feel the prospects for GRIF are positive. The trend of increasing market values coupled with a growing income each year, it is hoped, will have the intended effect of a growing net asset value," Naish added.
The comments came as Ground Rents Income said its portfolio increased in value over the 12 months ended September 30, to GBP104.0 million from GBP67.0 million. Net assets rose to GBP106.2 million from GBP88.2 million over the same period.
Shares in the real estate investment trust were flat at 115.50 pence on Wednesday.
By Samuel Agini; [email protected]; @samuelagini
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