Invista sells residential portfolio

4th Feb 2011 16:46

AIM-quoted Invista Real Estate Investment Management has sold its interest in the Castle residential property portfolio to residential property specialist Grainger for a gross sale price of £97.1m. Invista is selling its subsidiary HI Tricomm, which owns 317 freehold houses in south west England. The houses are part of developments providing homes for Ministry of Defence personnel. Grainger is paying £18.5m in cash and taking on debt of £69.1m. The buyer will also take the out of the money interest rate swap of £9.5m which is associated with the debt. Grainger says that the net rental income is £7.8m a year and the net property yield is 8.4%. Invista has used the cash to pay back a loan of £13.6m. Prior to the sale, cash was transferred from HI Tricomm to Invista. The overall net cash proceeds are £7.7m, of which £3.5m will be in escrow for 18 months. Invista will make an estimated book loss of £26m on the sale. Management had warned that disposals would be at a discount to book value. Invista plans to sell all of its assets and wind itself up. The remaining cash will be distributed to shareholders. Invista is in exclusive negotiations for the sale of part of its asset management business with a consortium of Invista's management, including chief executive Duncan Owen, Invista Foundation Property Trust (IFPT) and Invista European Real Estate Trust (IERET).The commercial terms of the transaction have been agreed in principle but no agreement has been signed and regulatory approval will be required.Invista had to reassess its future after Lloyds and Northern Trust terminated their contracts with the company.