27th Sep 2019 11:45
(Alliance News) - ICG-Longbow Senior Secured UK Property Debt Investments Ltd on Friday reported a slight decline in net assets in the first half but is confident in the growth of its portfolio following post-period events.
ICG-Longbow invests in UK real estate debt, in particular loans secured by fixed charges against commercial property investments.
At July 31, the investment company's NAV per share stood at 98.41 pence, 0.8% lower than the 99.16p recorded at the end of January.
Over the six month period, ICG-Longbow's net assets slipped 0.7% to GBP119.4 million from GBP120.3 million.
"The reduction was caused by the board's decision to utilise capital to support the quarterly dividend. Based on the current portfolio, this position will reverse and the Board anticipates consistent, modest growth in the NAV per share henceforth," said Chair Jack Perry.
ICG-Longbow declared two 1.5p interim dividends in the period, unchanged from the year before.
At the end of the half, ICG-Longbow's investment portfolio comprised eight loans with an aggregate principal balance of GBP92.3 million, equal to 77% of shareholder equity, down from GBP107.2 million at the end of January.
The closed-ended investment company's total income in the first half from its real estate debt portfolio decreased to GBP3.4 million from GBP3.6 million the year before.
ICG-Longbow said its portfolio continues to perform in line with expectations. The investment firm said its loan portfolio saw a "fair degree" of activity during the half.
"In addition to the new GBP15.0 million Southport loan, a GBP500,000 increase was committed to the borrower of the Affinity loan in support of its ongoing business plan. The Affinity loan is now fully drawn at GBP16.7 million following the completion of renovation works at the underlying security property," ICG-Longbow explained.
The company also noted its GBP22.4 million Commercial Regional Space loan and its GBP8.0 million Ramada Gateshead loan were repaid in the period.
The portfolio weighted average loan-to-value was 59.4% in the period, down from 62.2% the previous half. The decline stemmed from the company's Meadows loan seeing its LTV dropping sharply to 45.9% from 70.3% following the London Mayor's decision to grant planning permission for a major residential development on the site.
The weighted average interest coverage coupon on the portfolio increased to 6.91% from 6.23% at the end of January.
After the period-end, however, ICG-Longbow said it saw a "more meaningful" level of change in its portfolio. The company refinanced its "strongly-performing" Northlands loan, providing a new GBP12.5 million commitment. The company also extended its Meadows loan.
As of Thursday, the company's investment portfolio had increased to ten loan with a principal balance of GBP117.9 million with a total committed capital of GBP129.3 million.
Perry said: "I am pleased to report that the encouraging momentum generated by the recent new transactions."
"The investment adviser is seeing continuing demand from prospective borrowers for capital at terms that are attractive to the company. This lays the foundations now for progressive, consistent growth in the company. The board and the investment adviser are keen to progress this growth over the coming twelve months, based on the positive feedback received in recent months from a wide range of current and prospective shareholders," Perry added.
Shares in ICG-Longbow were 0.2% lower in London on Friday at 97.58 pence each.
By Paul McGowan; [email protected]
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