LONDON-Terrace Hill Group has agreed to pay approximately $8 million (£5.3M) to acquire all the remaining residential assets of Terrace Hill Residential PLC, its residential investment joint venture in which it owns a 49% interest.

The balance of the interest in THR is beneficially owned by the Chairman of the Group.  The purchase was funded by a bank loan of $6.9 million (£4.6M) and cash from the Group's own resources.

The portfolio consists of 47 units in Scotland, Manchester, Bristol and Minehead and currently generate an annual income of approximately $451,000 (£0.3M). The group intends to dispose of these units on a piecemeal basis to owner occupiers, continuing the process adopted by THR prior to the Group's purchase.  The purchase price represents the current open market value of the assets as determined by independent third party assessors. Following this transaction, the group's net gearing (including on a look through basis) is expected to be approximately 35%.

“Following the sale of the majority of our residential assets to Places for People in February 2013 we are very pleased to have purchased the remaining assets of THR which facilitates a favourable negotiated settlement with the lender to THR on the guarantee,” said Philip Leech, chief executive at Terrace Hill. “The remaining properties are continuing to be sold on a piecemeal basis to owner occupiers which we expect to complete within 15 months.”

The group agreed to acquire these assets in order that it could reach a negotiated settlement with the lender to THR as regards its guarantee exposure to that lender. As of 30 September 2012, the Group had provided $9 million (£6M) in respect of its guarantee exposure and as a consequence of the terms agreed with the lender to THR, this guarantee exposure is now fixed at the reduced amount of $6.3 million (£4.2M) leading to a release of $2.7 million (£1.8M) in the group's accounts.  The liability payment in respect of the guarantee has been funded by way of a 13-month term bank loan.