Invesco Property Income Trust has appointed a corporate advisory firm to help it address its bank covenant problems.
The listed trust said in its half-year results that Intelli Corporate Finance was carrying out a full review of options to reduce the loan-to-value ratio on its portfolio to below 70% by the end of this year.
A decline of 10.3% in the value of the trust’s portfolio in the six months to 30 September, of which 6.9% came in the second quarter, sent its loan-to-value ratio up to 74.9%. It also caused a 42% plunge in the trust’s net asset value from 74.6p to 43.5p a share.
The trust scrapped its dividend for the third quarter and warned that, once dividend payments are resumed, they would be below the level historically maintained of 6.75p a year. The trust’s shares were this week trading at around 7p.
The trust said that Intelli’s review was expected to be completed shortly. Its lender, the Royal Bank of Scotland, ‘has been kept informed at all stages and continues to be supportive,’ it added.
It said that in the likelihood that the loan-to-value covenant would be breached after the year-end valuation, if no action was taken, it and RBS were discussing ‘a long-term solution to the LTV covenant issue’.