7th Oct 2016 08:19
LONDON (Alliance News) - Ground Rents Income Fund PLC said Friday it is proposing to lift its restrictions on the use of leverage for investment and convening a general meeting to seek shareholder approval.
Ground Rents said its existing investment policy restricts the use of debt to only short-term purposes, to be repaid from proceeds of future fundraisings or asset sales.
However, the company said that as its equity is now fully invested, it believes borrowing over a longer term period will allow it to purchase good quality assets and determine how to finance those investments in the longer term. Ground Rents added that it believes it can now borrow at historically low interest rates.
Ground Rents said its investment adviser has conducted preliminary discussions with Santander PLC over a GBP26.0 million fixed-rate, interest only facility for a five-year term, which would include refinancing its existing GBP8.0 million short-term facility with Santander.
Ground Rents noted it does not intend to increase its current restriction of gearing at no more than 25% of gross assets, but only the ability to use debt over a longer-term and without the need to repay debt from future fundraisings.
Ground Rents will seek approval of shareholders for the change at a general meeting on October 26.
Shares in Ground Rents were up 2.4% at 129.75 pence Friday.
By Adam Clark; [email protected]
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