30th Mar 2005 07:00
Grainger Trust PLC30 March 2005 FOR IMMEDIATE RELEASE30th March 2005 GRAINGER TRUST plc: MAJOR OPPORTUNITY TO EXPAND HOME REVERSION PORTFOLIO THROUGH NORWICH UNION AGREEMENT Grainger Trust plc ("Grainger"), the UK's largest quoted residential propertyinvestor, today announces a major opportunity to expand its home reversionportfolio via an agreement that enables it to acquire newly originated homereversion assets through Norwich Union. It is anticipated that by the end ofDecember 2006 Grainger's home reversion portfolio could grow by £180m or morethrough this source alone. Norwich Union Equity Release Limited ("NUER") is the market-leading provider ofequity release products. This agreement allows NUER to enhance its equityrelease offer by providing a home reversion product for the first time. NUERwill use its nationwide direct and IFA sales and distribution network to sellits home reversion product, and will be responsible for sales processing andcustomer administration. Grainger will set the pricing, acquire and manage each underlying propertyduring its occupation, and ultimately dispose of the asset on vacancy and retainany profit on sale. These acquisitions will be financed from existing resourcestogether with additional debt funding if required. The agreement will run until 31st December 2006 and, thereafter, is extendableon a rolling six monthly basis. Rupert Dickinson, Grainger's Chief Executive, said: "This is a major stepforward in developing our home reversion portfolio, a key platform in our growthstrategy. We believe that, in partnership with Norwich Union and through ourexisting Bridgewater business, we now have huge potential to capitalise on thisfast expanding market." Peter Couch, Grainger's group director of equity release, added: "We haveessentially created a joint venture with Norwich Union, a very major force inour market, which is unprecedented. It combines Norwich Union's national salesand distribution network with Grainger's proven property management expertiseand appetite for these assets. This initiative will sit very well alongside ourBridgewater brand which will continue to operate independently. We believe thisjoint venture will quickly become established as the UK's leading home reversionprovider." Mark Kelly, director of Norwich Union Personal Finance, said: "We believe theequity release market will be worth in the region of £1.5bn this year and homereversion plans will become increasingly important in the market. Mortgageregulation requires financial advisers to consider both home reversion andlifetime mortgage when recommending equity release products. With Norwich Unionnow offering a Home Reversion Plan, the choice for advisers and their clientshas increased." Grainger has been advised by ABN AMRO Corporate Finance Limited. Ends. Contact: Rupert Dickinson, Chief Executive, Grainger. Tel: 020 7795 4700Andrew Cunningham,Deputy Chief Executive and Finance Director, Grainger. Tel: 0191 261 1819Peter Couch, Director of Grainger Equity Release Tel: 0191 261 1819Baron Phillips, Baron Phillips Associates. Tel: 020 7920 3161 Notes to Editors: 1. Grainger is capitalised at £482m and is the UK's largest quoted residential investment group; 2. Grainger owns and manages a portfolio of over 12,000 residential units across the UK with a market value of approximately £1.5bn; 3. Grainger currently provides a home reversion product through Bridgewater Equity Release Ltd, a wholly owned subsidiary which is fully recognised in the IFA/IMA market. Bridgewater, a SHIP member, will continue to trade independently of the NUER agreement; 4. Home Reversion Plans - The homeowner sells all or part of the home in return for a lump sum payment and the right to live in the house rent free until they die or move home. The amount received is dependant on several factors, the key ones being: value of the property being sold; customer life expectancy/ morbidity assumptions; interest rates; house price inflation; the set up and ongoing administration costs. A Home Reversion Plan can offer a higher initial lump sum or guarantee a defined proportion of the property to be left on death to the occupier's estate; 5. Special Features of the Norwich Union Home Reversion Plan include: Inheritance Protection Guarantee - Guarantees a minimum payment in case of death or long term care in the early years; and House Price Inflation Guarantee - Guarantees a share in exceptional house price growth; 6. Lifetime Mortgages - Under this type of scheme (historically also known as Roll-up Mortgages) interest is rolled up and added to the outstanding value of the loan until the property is eventually sold (homeowners have a right to occupy the property until death). These are offered on fixed or variable interest rates (usually with an associated cap). The lump sum provided is calculated on a sliding scale (increasing with age), offering a loan to value based on the homeowner's age. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Grainger plc