RBS, IRE to wind up £207m listed trust

Fund manager Invesco Real Estate and Royal Bank of Scotland have agreed to liquidate a debt-laden listed property company by 2014.

The Invesco Property Income Trust, with assets valued at £207 mln in the UK and Continental Europe, has currently £201 mln of debt provided by RBS, reflecting a gearing ratio of as much as 97%. The fund has struggled to remain afloat since the start of the credit crisis, when a decline in the value of its commercial real estate assets prompted a default on the company's 65% Loan-To-Value covenant.

Although the company has remained solvent, its board said that it does not expect the fund to be able to refinance the company's debt in September 2014, so assets would be sold to pay down the debt and the company will subsequently be wound up. 'It is possible that all, or substantially all, of the property investments will need to be sold to meet the company's obligations to its lending banks and other creditors,' it said in a statement.

As part of the agreement reached with its main creditors, the trust's debt has now been extended to 2014 to allow a sale of the cassets. The fund has also entered into a profit participation fee scheme with West Register, the property management company of RBS. Under the agreement West Register will receive a share of any profits if the sales price is higher than the level of the debt.

The debt restructuring proposal is to be put to a vote during an extraordinary general meeting on 12 September.

The trust has realised £24 mln of aggregate proceeds from three asset disposals since end-September 2010.