Ground Rents Income Fund plc announced the refinancing of its existing £25 million loan facility with Santander UK plc ('Santander'), which was due to expire in January 2025. The loan was put in place in 2019, comprising a £12.5 million term loan and a £12.5 million revolving credit facility, with an aggregate £21 million currently drawn. The new loan terms include: A new £19.5 million facility with an extension in the loan term from January 2025 to 10 July 2026.

The new loan has a margin of 2.75% per annum, an increase of 90 basis points compared to the previous margin of 1.85% per annum. Existing hedging will remain in place until expiry in January 2025, consisting of an interest rate swap on £12.5 million at 0.83% per annum and an interest rate cap on £5.5 million at 1.00% per annum. This results in a total current interest rate of 4.0% per annum.

Based on the previous total loan drawn of £21.0 million and existing hedging, the effective total current interest rate was 3.5% per annum (inclusive of a non-utilisation fee). Five assets added to the security pool for a combined value of £9.5 million, increasing total charged assets to £53.6 million, resulting in a loan to value ('LTV') ratio of 36.4% compared to a covenant of 50%. Refinancing consistent with the strategic objective to realise assets in a controlled, orderly, and timely manner, by providing more time to effect disposals.

Santander's agreement to accept new assets also provides more headroom against loan covenants. As part of the refinancing, the Company has used £1.5 million of recent disposal proceeds to reduce the new loan facility to a total of £19.5 million. Santander can require all future proceeds from charged asset disposals to be used to repay the loan facility.

The new loan facility also requires amortisation of £62,500 per quarter from January 2025, with future disposal proceeds net against the aggregate remaining amortisation amounts. There are no commitment or early repayment fees. The Board and Manager will review hedging options in advance of the existing hedging expiring in January 2025, having regard to the outlook for interest rates and further progress with disposals.

Including the addition of five new assets, Santander's independent external valuation of the security pool is £53.6 million, reflecting a LTV ratio of 36.4%. This compares to a LTV covenant of 50%. At completion the interest cover ratio ('ICR') is 301%, which compares to a current ICR covenant ratio of 200%, with the covenant level reducing to 160% in January 2025.

Santander's independent external valuation includes the industry wide Material Valuation Uncertainty Clause because of uncertainty relating to both leasehold and building safety reform. Based on the Company's latest unaudited, published, independent portfolio valuation as at 31 March 2023, following the refinancing the group LTV, net of cash, is 13.8%. The Company's remaining assets are uncharged and comprise property assets valued at £55.2 million (as at 31 March 2023) and cash of £4.6 million.