22nd Nov 2006 07:00
Grainger Trust PLC22 November 2006 22 November 2006 Grainger Trust plc ("Grainger") Grainger launches £210 million market rented residential fund Grainger Trust plc, the UK's largest quoted residential property owner,announces today the successful first closing of G:res1 Limited ("the Fund" or "G:res1"), a market rented residential fund comprising circa 1,400 units locatedthroughout the UK. G:res1 is an independent private Jersey exempt company that invests throughsubsidiaries in the Grainger Residential Property Unit Trust ("GRUT"). Graingerpreviously held 100% of the share capital of G:res1 and has sold shares in G:res1 to new investors. GRUT owns all the property assets of the Fund, which wereindependently valued at 30 September 2006 at £210 million. The new investors comprise four 'blue chip' Continental European financialinstitutions: Swiss Re, Storebrand Eiendom, Achmea Vastgoed and Norsk HydrosPensjonskasse who have committed to date £56 million of equity in aggregate.60% of the equity will be drawn at first closing and 40% will remain committedto the Fund for future acquisitions. In addition, the Fund has raised £125million of non-recourse debt from Barclays Capital. The amount returned toGrainger at first closing is £156.6 million (being £123 million of debt, net ofcosts, plus £33.6 million of draw off equity). A second closing of the Fund is expected to take place in the first quarter of2007 utilising the balance of the committed equity raised at first closing aswell as equity from new incoming investors. Grainger is currently in discussionswith other leading institutions who are currently conducting due diligence witha view to investing in the Fund at the second closing. In the long-term,Grainger intends to retain a 20% stake in G:res1. The 80% portion of the gross assets expected to be sold was shown as assets heldfor sale in the half year accounts and the same treatment and disclosure will beadopted at the full year. The total net assets of the fund currently stand at£88.9 million of which £33.6 million has been sold at first closing. The resultsfor this group of assets for the ten months to 30 September 2006 will be shownin the notes to the full year accounts as profits on a disposal group. The fullyear impact on gross rents to Grainger will be a reduction of £10.5m, with anassociated impact on property expenses and revaluation gains on investmentproperties. Going forward Grainger's retained interest in the fund will betreated as an investment in an associate and its share of profits recognisedaccordingly. Grainger will be entitled to both property management and asset advisory fees ona recurring basis and a promoted interest performance payment at year seven orupon early wind-up of the Fund. Commenting on the Fund launch, Rupert Dickinson, Chief Executive of Grainger,said: "The positive response from leading European institutional investors is a strongendorsement of Grainger and the UK residential sector. The successful launch ofG:res1 reflects Grainger's reputation for creating value in the residentialsector but also its ability to structure such independent vehicles. This is asignificant step towards achieving our co-investment and fund managementaspirations and we see great potential for this business model to be applied toother areas of our business, most obviously our European portfolio." Commenting on G:res1, Quinton Hill-Lines, Grainger's Director of CorporateDevelopment, said: "The fund has a focussed, value-added strategy which will allow investors tobenefit from Grainger's nationwide property management and asset advisoryexpertise together with its ability to efficiently capitalise vehicles such asG:res1. The intention of the fund is to grow through well selected acquisitions,generating value for both the fund investors and our shareholders through ourretained stake and performance incentive." -ENDS- Enquiries: Grainger Trust:Andrew Cunningham / Quinton Hill-Lines Tel: +44 (0) 20 7795 4700 Financial Dynamics:Stephanie Highett / Dido Laurimore Tel: +44 (0) 20 7831 3113 Notes to editors: Macquarie Capital Partners Limited acted and continues to act as adviser toGrainger with respect to the structuring and placement of the Fund. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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