UK Mortgages sells two portfolios – UK Mortgages Limited says that, on Friday 5th February 2021, UK Mortgages Corporate Funding Designated Activity Company signed agreements under which, Godiva Mortgages Limited, a subsidiary of Coventry Building Society has made a commitment to purchase two buy-to-let mortgage portfolios originated by Godiva and currently financed within the Cornhill No.6 and Malt Hill No.2 vehicles.
Subject to successful completion, the timing of these sales is expected to be around February and May 2021 respectively. They say that strong market conditions have enabled these portfolios to be disposed of at economics that improve on those indicated to investors in late 2020 and also ahead of anticipated timing for the Cornhill No.6 portfolio.
On the 4th December 2020, shareholders voted overwhelmingly in favour of an updated strategy for UKML. The first objective was achieved on the 15th January 2021 through the successful securitisation of existing Keystone buy-to-let loans in the inaugural Hops Hill No.1 transaction. As the first European residential mortgage backed security (RMBS) transaction of 2021, this transaction locked in better funding levels when compared to those achievable in the fourth quarter of 2020, improving income materially.
The second phase of the strategy aimed to free up capital, initially through the sale of the two Coventry portfolios, to enable capital to be returned to shareholders by way of a tender and to fund the second Keystone investment. The combination is expected to increase capital efficiency and to continue the growth trajectory of income.
Hop Hill 2 on the way
The manager, TwentyFour, has mandated a warehouse provider for the planned second Keystone investment. This warehouse provider will assemble a portfolio of mortgages which will then be wrapped into a new securitised vehicle. Documentation work has started with an expectation of this completing during March. they say that material improvements in overall funding conditions will benefit this new investment over its life.
Two tender offers
The sale of the two Coventry portfolios is expected to release capital enabling two tenders to be carried out, returning an aggregate at the higher end of the previously communicated £35m-40m range. These tenders are expected to take place following the payment dates expected to be in February and May respectively. The board’s expectation is that the tenders will take place at 75p per share.
UKML : UK Mortgages sells two portfolios