ING property fund investors back £22m restructuring

The ING UK Property Income Fund has completed a two-year restructuring by raising £22.4m of fresh equity at net asset value. Six of the limited partnership’s 13 investors took all the equity offered, which will be used to pay off debt with lender Nationwide.

The partnership was due to be wound up at the end of 2008 and fund manager Chris Nash said that although some investors wanted to come out, agreement was reached to extend its life for 25 years.

In return, ING has changed the fee basis from gross to net asset value and introduced six-monthly liquidity capped at 10% of NAV, as well as carrying out a plan to cut gearing. “With valuation falls at the end of 2008 and into 2009 we came close to breaching our 75% loan- to-value covenant,” Nash said.

Some property was sold, quarterly distributions were stopped and the LTV level was cut to 66% by late 2009. “At the end of 2009 we felt values could fall again so decided to de-risk the fund further, while keeping the benefit of some gearing in a rising market,” Nash said.

“We decided to try to raise £20m or so to cut the debt to 50%.” The fund’s gross asset value is now £133m. The fund, which Nash said buys “average assets in high- yielding sectors” for income and some capital growth, was one of the best performers last year, with a 6.9% total return.