Ground Rents Income (GRIO ) has received a £32.5m bid from Victoria Property for its heavily discounted portfolio, offering shareholders a quick exit from the closing trust.

Victoria Property, which is part of the larger Martin Property Group focused on both commercial and residential property, confirmed that it had made three offers for the Schroders-run trust across November and December, all of which were rejected.

It has now made a ‘possible cash offer’ for the entire portfolio at 34p per share, the final price it offered in December, which values the trust at £32.5m.

The offer is a 48.5% premium to yesterday’s closing price of 22.9p, which gave the trust a market cap of just £22m. However, the price would still represent a potential bargain for Victoria given the net asset value (NAV) of the fund is currently £66m, a gap which had seen the shares trade at a painful 66% discount.

GRIO’s shares jumped massively in response today, trading 38% higher at 31.5p by 2pm.

Victoria Property also noted that the price offered is ‘in excess of the company’s highest closing share price at any time over the last 12 months’.

The offer could provide a swift way out for shareholders who voted to wind down the fund in April 2023 but have seen little progress given the wave of reform, on both leasehold contracts and building safety, that the trust has faced.

Almost the entire portfolio is subject to a ‘material valuation uncertainty clause’ due to the political will from both the previous Conservative government and the current Labour government to overhaul leasehold rules.

In July, Labour set out a draft Leasehold and Commonhold Reform Bill that will make it easier for leaseholders to oust management groups, better regulate existing ground rents, and even ban the sale of new leasehold flats.

In a stock market announcement, Victoria Property said the current strategy is ‘expected to entail a prolonged exit period of many years with elevated operating costs’, including ongoing fund management fees.

It added that the current investment policy ‘carries risk, and we believe does not provide a certain exit of the entire portfolio for GRIO shareholders’, pointing to the fact that just three assets have been sold at a total price of £11m since April 2023.

‘We believe there is a scenario where the company continues to sell its better-quality assets, where there is market demand, but is left with a portfolio of less desirable assets that will be difficult to exit,’ said the property group.

‘Given the significant uncertainty that exists, it is perhaps unsurprising that the board has been reluctant to engage,’ said Numis analyst Andrew Rees. ‘However, if a firm cash offer was forthcoming it would provide shareholders with a swift exit from a highly uncertain situation, which is likely to appeal to some, in our view.’