Invista Real Estate Investment Management could extend its winding-down process, owing to a lack of acceptable offers for its remaining assets.
In the company’s interim results, executive chairman Douglas Ferrans said that the company continues to have discussions about the “realisation of value from specific assets” following its announcement in October last year after Lloyds took two HBOS mandates in-house.
But because the market environment could lead to sales at a discount to net asset value, “it recognises that this is not the best outcome for shareholders”.
Ferrans said: “In that event, recognising further that shareholders will not wish the company to sell assets at any price, a realistic possibility will be to execute the strategy over a longer time frame and for the time being to continue to own the remaining balance sheet assets and potentially the associated fund management capability.
“However, given the reducing scale of operations of the company going forward, the board is to consider cancelling its AIM admission at an appropriate time and expects to put forward proposals to shareholders in this regard in due course.”
During the period, Invista has been investigating the potential sale of its 50% interest in the £50m Invista Real Estate International Fund and a 45% interest in the £56m Invista Real Estate Opportunity Fund to third parties. But Ferrans said that “to date, no definitive agreements have been entered into”.
In the half-year to the end of June, assets under management have decreased by 52% to £2.5bn, from £5.2bn, comprising net fund outflows of £2.8bn and positive valuation movements of £68m.
The termination of £2.4bn of HBOS contracts was agreed in March this year and resulted in a £2.6m termination payment during the first half of the year, with £500,000 still outstanding pending the satisfaction of certain closing requirements.
As at 30 June, Invista managed separate account mandates amounting to a total value of £1.1bn, representing 43% of AUM. But this drops to £284m following the transfer of £797m of St James’s Place funds to Orchard Street after the period end in September.
The entire £284m relates to assets managed on behalf of The Equitable Life Assurance Society.
At the end of the period, collective investor funds totalled £1.4bn, representing 57% of AUM.
This comprises the £478m Invista European Real Estate Trust, which is being taken over by Internos Real Investor, and the £376m Invista Foundation Property Trust, which is set to be taken over by Schroders pending the outcome of a potential takeover by rival listed trust Picton.
It also includes UK residential assets under management of £283m which have served termination notice and £273m of opportunistic and other funds including IREOF and IREIF.
During the period it sold the assets and business of residential division Invista Castle, resulting in a reduction in assets under management of £92m.
In the half-year the firm returned £48m – or 18p per share – to shareholders, leaving it with a cash balance of £35.5m excluding amounts held in escrow of £3.5m.
It recorded an overall profit before tax of £1.7m, compared with £5.3m a year earlier.
bridget.oconnell@estatesgazette.com
