27th Apr 2016 10:09
LONDON (Alliance News) - ICG-Longbow Senior Secured UK Property Debt Investments Ltd Wednesday said the United Kingdom's June 23 referendum on whether to remain in the European Union or leave will probably "temper" the country's "stable" economic environment that would otherwise bode well for its investments.
"The UK economic environment remains stable with steady, if unspectacular, levels of growth coupled with increasing employment. Low levels of new property development have begun to lead to rental growth in most sectors and have driven property values up over the financial year," Chairman Jack Perry said in a statement.
ICG-Longbow Senior Secured UK Property Debt Investments has seen the benefit of those drivers, Perry said, citing the most recent property valuations and a consequent fall in weighted average loan-to-value ratios.
"These conditions bode well for the investment portfolio as a whole in terms of the ability of borrowers to refinance their loans on maturity but we anticipate that uncertainty surrounding the outcome of the UK's EU membership referendum will temper these conditions in the short term," Perry said.
He said a vote to leave the EU would "undoubtedly" lead to extended uncertainty, which could indirectly affect the company's loan investments and underlying property values, depending on whether inward investment and property transaction volumes fall.
The underlying property portfolios are "generally well diversified" and "not materially exposed" to international businesses or trade at the tenant level, Perry said. "As such the loans are well covered in terms of valuations. Consequently, based on our initial analysis, we would not expect the company to be materially adversely affected by such a vote in terms of revenue generation or capital risk."
The chairman said current market conditions don't support the re-investment of loan proceeds at "similar risk and return dynamics" to the company's existing investments, prompting a review of its long-term strategy.
The review is being carried out with investment manager Intermediate Capital Group PLC and corporate broker Cenkos.
"This review will seek to identify changes to the investment objective (whether in terms of risk or return) that would be required in order to allow the anticipated future loan proceeds to be reinvested as the portfolio is realised. Recognition of shareholder views on the trade-off between yield and risk will of course be taken into account," Perry said.
The chairman's comments came as the company said retained profits in the year ended January 31 boosted its net asset value per share to 100.18 pence from 99.99p.
"During a period of considerable market volatility, the company's shares have continued to trade in a relatively narrow range of 101 to 106.5 pence per share, consistently trading at a premium to NAV, reflecting the secure and predictable nature of the income generated by the underlying loan portfolio," Perry said.
Shares in ICG-Longbow Senior Secured UK Property Debt Investments were down 1.2% at 102.76p Wednesday morning.
By Samuel Agini; [email protected]; @samuelagini
Copyright 2016 Alliance News Limited. All Rights Reserved.
Related Shares:
Icg-longbowICP.L