ICG-Longbow Senior Secured UK Property Debt Investments (LBOW) has reported a further decline in NAV for the year ended 31 January 2025, as progress toward the fund’s full realisation continues at a cautious pace. The trust’s NAV fell to 27.15p per share, down from 29.86p a year earlier, largely due to an additional £5.7m in expected credit loss (ECL) provisions, driven by updated property valuations and extended sale timelines.
The fund’s three remaining loans – Affinity, Southport, and RoyaleLife – had a combined gross value of £57.75m at year-end, but a carrying value of just £29.90m after impairments. All loans are, or have been, subject to formal enforcement processes, and the investment manager continues to manage these assets with a view to maximising value through asset sales.
Two loans, Affinity and Southport, are now under offer, with the Southport hotel asset reportedly close to a sale to an experienced local buyer. The RoyaleLife portfolio is seeing increased bungalow sales under new branding, with buyer interest improving, although a full portfolio exit remains dependent on favourable market timing. No value is ascribed to the ongoing legal claim against a former valuer, though the company has confirmed its participation.
LBOW posted a £3.3m loss for the year (2024: £24.9m loss), with no dividends declared. Cash reserves stood at £3.2m, and the company’s share price rose marginally to 22.4p, ending the period at a 17.5% discount to NAV.
The board halved the investment manager’s fee during the year and reduced its own size, with two directors stepping down in January. The company is expected to declare no further dividends, with capital returns dependent on the realisation of the remaining loans.
The outlook remains cautious. While credit conditions have eased and some interest in secondary real estate is returning, recent geopolitical developments – notably US-led trade disruption – have added fresh uncertainty. The board remains committed to avoiding distressed sales but acknowledges shareholder frustration with the protracted wind-down.
[QD comment MR: ICG-Longbow’s situation is a familiar one among legacy real estate credit funds – grappling with impaired loans, impaired confidence, and limited liquidity. While the company has shown discipline in avoiding fire sales, the long tail of this wind-down continues to test shareholder patience.
The good news is that two of the three remaining loans are under offer, with the Southport asset in particular showing tangible signs of progress. However, the RoyaleLife portfolio remains more complex, and while the manager reports improving interest, timing is still uncertain and dependent on market sentiment turning more constructive.
The recent NAV erosion appears to reflect prudent provisioning, but also underscores how protracted resolutions can be expensive – not just in terms of carrying costs, but opportunity cost. With the share price still trading well below NAV, the final stages of this wind-down will need to deliver meaningful capital returns to justify the wait.]
