Invesco Property Income Trust (IPI) is to wind up but its shareholders will not receive any proceeds on completion, and its shares have been suspended from trading. The highly indebted investment trust is going to accelerate its disposal programme and seek purchasers for its remaining assets to be able to repay some of its bank debt. But it does not expect to be able to repay this in full, and thinks it will not be able to pay back any of the loan it owes to its manager Invesco.
The trust does not have the assets to meet its repayment date of 28 September, and even though its bank lender, Royal Bank of Scotland, said it could have a three-month extension beyond 28 September 2014 it doesn't think it will be able to meet the full amount due.
Its bank has said provision can be made for Invesco Property Income to meet its liabilities to trade and other creditors, and any further liabilities and obligations incurred during the its disposal programme and winding up.
The trust took on debt and expanded into European property but suffered during the financial crisis when commercial property prices fell steeply. This led to declines in the value of its investments and a significant increase in its loan-to-value ratio in 2008 and 2009, so that it had breached its maximum covenant since the end of December 2008. Its share price fell also from around 127p at start of 2007 to 0.87p in 2009.
In 2011 it managed to restructure its loan with a new maturity date of 28 September 2014 that did not require it to repay debt or sell properties before that date, so that the trust's managers could pursue an orderly realisation of the portfolio. Invesco Property Income also changed its investment objective in 2011 "to repaying its bank borrowings and other liabilities on or before 28 September 2014, and having met those obligations, to provide a return for shareholders".
