Low Carbon Accelerator sees property-linked investments hit trouble

Low Carbon Accelerator, an Aim-quoted investment fund specialising in low carbon products and services, has announced that Living Villages Holdings, a UK low-carbon housebuilder, is being put into administration.

LCA has invested a total of GBP1.15m into Living Villages which will be fully written down.

LCA has also announced it has made provision against Classical Renaissance, the developer of Spanish community-scale sustainable villages. To date, LCA has invested GBP2.5m into Classical Renaissance which will be written down to GBP0.75m.

Both companies had been making good progress against their respective business plans. However, with deteriorating market conditions, land-bank values have diminished and bank credits lines for property developments have been withdrawn.

It was decided by the investment manager that, in view of these changed economic circumstances, it could not recommend that further capital be invested in either of these companies.

Classical Renaissance has had its designs for a zero-net carbon reduction and 98 per cent water reduction development passed through two stages of the Spanish planning process. It has also received a re-financing proposal from an investor group if a restructuring of the business can be agreed. As this prospect remains, LCA is maintaining a small carrying value in Classical Renaissance.

Andrew Affleck, executive chairman of Low Carbon Investors, LCA's investment manager, says: "This is a decisive move on our part to limit exposure to the economic downturn. Both of these companies were extremely innovative and working to the highest environmental standards.

'However, we cannot ignore the fact that the building sector as a whole is suffering in the current financial climate. LCA will not support companies which are unlikely to produce a positive return for shareholders in the near to medium term. As we have stated before, we will continue to support and preserve capital for those companies within our portfolio that are performing well and which are poised to produce good results in spite of the global recession."