Invesco Property to sell assets, postpone share issue

Invesco Property Income Trust has revealed it is negotiating the sale of £100 mln (EUR 140 mln) of property assets and is putting a planned share issue on ice after a 'difficult' six months. The proceeds of the sale will be used to reduce the UK closed-end fund's debt of £293 mln.

During the presentation of its six-month figures to end-September, the company said it is undertaking a strategic review of its £464.5 mln property portfolio and its liabilities 'with the objective of protecting shareholder value'. The board, the fund said, is also taking steps to reduce the recurring level of fees and expenses.

Invesco Property Income Trust's property portfolio declined in value by 4.4% from April to September, while net asset value per share fell 12.8% from 130.7 pence to 114 pence. The company's shares were trading at 107.2p at the end of September, a 6% discount to the company's adjusted net asset value.

Invesco said the planned share issue to fund the expansion of its European portfolio could not proceed as investor demand had declined rapidly in the last few months. 'There is increasing evidence of a marked slow down in the performance of commercial property markets in the UK. This has been felt by the company as the first down valuation in the UK portfolio since the company's launch in 2004. In Europe, while transaction volumes are in a similar position, having not recovered from the summer break, investor sentiment is much more positive, and investor demand remains more robust,' said fund manager Rory Morrison.

'It is from the investor perspective that sentiment has swung against the sector, with the huge weight of investable capital that has been apparent in the sector over the last few years, falling away. This change in sentiment has brought to an end the extended period of falling investment yields, with yields in Europe remaining flat, while UK yields have been rising,' Morrison added. He said that with sentiment likely to continue to be the dominant factor in determining property returns in the near term, valuations, particularly in the UK, will continue to suffer from increased volatility, only settling down when rational markets return.

From April to September the company acquired seven properties in France, Spain, Belgium and Germany for a total of EUR 122 mln. Some 72% of Invesco Property Income Trust's assets are located in the UK and 28% are in Continental Europe.