We are writing to update you on the sale of properties owned by the London and Regional Capitals funds.

We will be providing you with ongoing updates on this process every six months until all properties have been sold and net proceeds returned to investors.

As of 09/09/21, we have sold seven properties for a total sales value of c. £1m. There are an additional 40 properties on the market, 25 of which are currently under offer with a combined sales value of c. £3.95m.

The initial proceeds of these sales will be used to pay down the outstanding liabilities on the fund including bank debt and the fire safety remediation work that is required for a portion of the fund’s properties.

Our lender, Barclays, has agreed to waive the historic debt covenant breach that occurred due to sky-rocketing insurance premiums and fire safety costs in affected buildings. We have agreed terms to remedy this issue on an ongoing basis, which includes repaying a portion of the debt using cash from asset sales. We are currently working with lawyers to amend the original loan agreement.

Remediation work has begun or is due to start shortly in several affected buildings, including the one with the most significant liability. While work has already been completed on a small number of units, it’s important to note that remediation work will take approximately 18 months to complete in some cases and we expect the wind down process to last into 2023. We do not know whether there will be interim payments to shareholders before this.

In the wider market, the Government announced that flats in buildings under 18 metres will no longer require EWS1 forms. We are currently reviewing the impact of this news, and although we expect that it will not be significant overall, certain properties will be easier to market as a result.

Elsewhere, calls for further support for leaseholders continue to grow, with the FT Editorial Board recently writing that the cladding crisis is a “market failure that requires greater government intervention”. Financial Times subscribers can read the full coverage here.

As of 09/09/21, we have sold one property for £520k. The remaining eight properties in the fund are on the market, with three currently under offer with a combined sales value of c. £1.35m.

We are doing everything we can to deliver the best outcome for shareholders, balancing the objective of maximising sales values while being mindful of the need to return net proceeds as efficiently as possible. We expect the wind down of the London fund to be completed in the first half of 2022, but this will depend on the speed of sales of the remaining properties.

We will keep you updated on the process over the coming months.

If you have not received your dividend yet, please email our support team so you can update your bank account details. You can find information about how to update your bank account details here.