UK Mortgages has published its first set of accounts, covering the period from 10 June 2015 to 30 June 2016. At the end of the period, the NAV was 94.95p, the share price 96.75p and they had declared dividends totalling 3p for the period.
They say that the pace of investment has been slower than they might have hoped for at the time of the IPO. Their first deal, in November 2015, was the purchase of a GBP310m pool of high quality Buy-to-Let mortgages from the Coventry Building Society. The pool comprised 1,722 non-member mortgages with an average balance of GBP178,822, with the Coventry Building Society remaining in place as the Servicer of the
mortgages. In June 2016 they securitised this portfolio. Malt Hill No.1 Plc, was completed in June 2016, locking in a lower long term funding cost of 3 month LIBOR +1.35% with an expected maturity of 3 years. This provides leverage of 6.8 times on the allocated GBP51m of capital, with an estimated IRR of 8.27% * under the portfolio manager’s base scenarios.
After the year end, they announced the completion of their second transaction. They made an arrangement with The Mortgage Lender (“TML”) to purchase up to GBP250m of newly-originated mortgages over an expected 12 to 14-month period.
They think that it will take around a year for the TML portfolio to become fully invested and we therefore need to complete at least one more transaction to fully invest the capital raised. As such the Board anticipates that the 6 pence dividend that they are due to pay in their first full calendar year of operation is unlikely to be fully covered.
UKML : UK Mortgages will pay 6p dividend but this may not be covered by earnings