ICG Longbow has announced results for the six-month period ending 31 July 2016. The NAV increased to GBP111.1 million whilst the NAV per share has increased by 2.48 pence per share to 102.66 pence per share. The shares traded in a range of 99 pence per share to 104 pence per share finishing at a small premium to NAV. They paid a first interim dividend of 1.50 pence per share in respect of the quarter ended 30 April 2016 on 22 July 2016, and on 14 September 2016 declared a second interim dividend in respect of the quarter ended 31 July 2016 of 1.50 pence per share. This brings the dividends paid and payable for the six months to 31 July 2016 to 3.00 pence per share.
The investment portfolio saw some changes during the reporting period, as the March 2016 repayment of the Mansion loan facility (with associated exit and prepayment fees) allowed for redeployment of capital into a new GBP22.40 million loan secured by two industrial parks in Northern England.
During the period, the borrower of the First Light Portfolio repaid its loan of GBP1.75 million, together with interest and prepayment fees of GBP0.16 million. Following the above transactions, the portfolio now comprises 10 loans with a weighted average portfolio LTV ratio of 57.31% (31 January 2016: 52.65%) and the ICR has increased from 161% (31 January 2016) to 181%.
The Sponsor of the RAEES International loan has advised of its intention to repay its facility (with associated exit and prepayment fees) and should this proceed, there should be an opportunity for profitable reinvestment, in line with the approach taken with the Mansion proceeds. Revenue for the six month period was GBP6.82 million (31 July 2015: GBP4.18 million), an increase on last year due to the exit and prepayment fees received for the Mansion and First Light redemptions.
Outside of the Mansion and First Light repayments and the replacement loan, activity across the portfolio during the year has centred on monitoring all the loans for their performance against agreed business plans and with regard to previous quarters. All of the investments are performing broadly in line with the underwritten business plans. As at the 31 July 2016, the 10 loans in the portfolio had a weighted coupon of 6.83%, down from 7.40% as a result of replacing the Mansion loan (7% coupon) with the Commercial Regional Space Limited loan (4.41%). However the projected portfolio IRR has marginally increased to 8.72% owing to the reinvestment of the capital and exit fees from the Mansion repayment.
The Board has continued to work with the Investment Manager and brokers Cenkos on a review of the Group’s strategy taking into account the current interest rate environment and market conditions. The objective of this review is to consider the investment policy and objective ahead of the proposed continuation vote in 2017, to facilitate the re-investment of proceeds from maturing loans, while also forming a platform for the future growth of the Group.
The outcome of this review, is likely to contain a proposal to invest in a wider range of UK real estate debt opportunities including whole loans (higher LTV loans secured by a first mortgage) and smaller loan opportunities generated by the Investment Manager, as well as investments in loans as joint-lender with other funds managed by ICG-Longbow and/or investments in such funds. Any such proposal is expected to be communicated to shareholders later this year. Their intention is to convene a General Meeting early in 2017 at which shareholders will be asked to approve a proposed change in the investment policy and objectives and also the continuation of the Company for a further five years. Further details will be announced in due course. Any change in investment objective and policy will be subject to shareholder and regulatory approval.
LBOW : ICG Longbow strategy review progressing