Morgan Sindall Investments (MSI) is paying Ashley House plc £2m to take over its 50% share in the venture.
Ashley House will use the money to help its off-site construction business, F1 Modular.
Ashley House said that delays to Morgan Ashley schemes reaching financial close had had ‘a significant impact’ on the cash requirements of the JV, even though each partner had banked £310,000 profit from it in the year to 30th April 2018.
The terms of the transaction restrict Ashley House from working in the elderly care housing sector for three years, but the board is looking to move into affordable housing and healthcare projects that are not restricted by the sale agreement.
It was only in December 2017 that Ashley House and Morgan Sindall announced the formation of Morgan Ashely to develop extra care and supported living housing.
Ashley House chief executive Antony Walters said: "The board has reviewed funding and strategic opportunities available for the company and has concluded that the Transaction and a re-focus on its key strengths in health development and modular construction are the most suitable options. We look forward to being able to exploit opportunities in these sectors and further developing the company's strategic reach."