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Co-living loan dents otherwise reasonable year for GCP Asset Backed

GCP Asset Backed Income has announced results for 2021. Highlights are:

  • Dividends of 6.30p declared, including a dividend of 1.575p for the quarter to 31 December 2021, which was paid post year end.
  • Total shareholder return of 13.2%, total NAV return of 3.4% and an annualised total shareholder return since IPO of 5.3%.
  • Profit for the year of £15.0m, hit by the impact of the decrease in fair value of the group’s Coliving loan.
  • Renewal of existing £50m revolving credit arrangements with RBSI to extend maturity from August 2021 to August 2023.
  • NAV of 99.29p at 31 December 2021, a decrease from 102.18p in the prior year, predominantly due to a 4.5p per share write-down of the Coliving loan, partially offset by valuation gains elsewhere in the portfolio and excess income.
  • Diversified, partially inflation and/or interest rate-protected portfolio of 60 asset backed loans with a third party valuation of £443.64m at 31 December 2021.
  • Loans of £135.5m (new and followon) advanced during the year, secured against 35 projects with a further £16.6m secured against five projects, advanced post year end.
  • Repayments of £118.1m during the year generating repayment fees of £2.5m, with a further £31.7m of repayments received post year end.

The chairman said “Throughout the year, Government-issued Covid-19 restrictions have continued to impact the normal flow of business, particularly impacting retail and hospitality businesses. However, despite the restrictions, the significant majority of the portfolio has continued to perform well.”

Co-living loan update

The Co-living loan is described in the statement as a significant disappointment, with the loan defaulting due to breaching a liquidity covenant. The loan is a syndicated loan and GABI is part of a consortium of lenders.

Since the loan defaulted in May 2021, the consortium of lenders have been looking to sell the assets of the Co-living group to recover as much value as possible. Significant progress has been made in this regard, with a number of assets sold in the period and exclusivity agreements in place to sell a number of others.

In terms of the remaining assets, the following current positions are in place at the time of writing:

  • US assets – exclusivity in place and working towards sales in the coming weeks;
  • UK HMO assets – sale process started and more than 50 parties have expressed an interest and are reviewing the sales information; and
  • UK large assets – an exclusivity was entered into with a proposed REIT (GCP Co-Living REIT); however, due to the situation in Ukraine, the IPO of the REIT has been paused. The operating assets have both been stabilised and are operating above 95% occupancy. If the REIT does not IPO, a sales process will be launched for the assets in the coming months. GCP Asset Backed Income expects strong competition for these assets and remains confident that they offer a defensive and stable cashflow that will prove highly attractive to investors.

GABI : Co-living loan dents otherwise reasonable year for GCP Asset Backed

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