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- ICG-Longbow Senior Secured UK Property Debt benefits from improving market for sales and refinancings
ICG-Longbow Senior Secured UK Property Debt (LBOW) has announced its annual results for the year ended 31 January 2022. LBOPW’s chairman, Jack Perry, says that at a domestic level, the UK property market has largely shaken off the effects of the Covid-19 pandemic with occupational, investment and finance market transactions returning to something like normal levels. Although the trends seen pre-Covid-19 which had especially impacted some sub-sectors of retail property have continued. Against this backdrop, several of the LBOW’s borrowers have been able to secure successful sales and refinancing of their property holdings and repay the LBOW’s loans in full. This, in turn, has allowed LBOW to commence its programme of returning capital to shareholders. As at 31 January 2022, LBOW had made capital distributions of 26p per share, while a further 6p per share was approved by the board on 18 May 2022.
The chairman says that, as the number of remaining investments reduces, LBOW’s investment manager has been focused on working closely with borrowers to establish likely exit timetables for the remaining loans, with a particular focus on the likelihood of any further early repayments. He says that, as the critical mass of the portfolio reduces, LBOW’s board and investment manager may explore the potential for negotiated early exits or other solutions which allow for an acceleration of capital return while preserving shareholder value.
Despite the reduction in the size of its investment portfolio, LBOW has been able to maintain a robust level of quarterly dividends, with the total dividend declared of 5.6 pence per share in respect of the financial year to 31 January 2022. The dividend was fully covered and LBOW says that its earnings have been bolstered by the significant prepayment protection originally negotiated by the manager on the underlying loans, which has served to generate additional income for LBOW following some of the recent early repayments.
As at 31 January 2022, LBOW’s portfolio comprised six loans with a total principal balance outstanding of £80.5 million. LBOW received three full repayments during the year and, in July 2021, the remaining £5.7m balance of its Halcyon loan was repaid, following a refinancing of the underlying security portfolio. In October 2021 its £7.8m Knowsley loan was repaid, following a sale of the underlying property. The £16.3m remaining balance of the GMG loan was repaid in full in December 2021, again following a sale of the underlying property. The latter came with interest, exit and prepayment fees of £0.8 million, which was modestly accretive to LBOW’s overall NAV.
During the period, LBOW received a partial repayment of its Southport loan, representing the pay down of previously capitalised loan interest, and a series of partial repayments of the Quattro loan (which repaid in full after period end). Also, during the year LBOW’s manager negotiated a number of amendments to the RoyaleLife loan, with the associated amendment to fees being both accretive to NAV and improving the prepayment protection provisions.
LBOW has provided the following key highlights from its financial performance:
LBOW has provided the following key highlights on its dividend and capital distributions:
LBOW has provided the following key highlights on its investment portfolio:
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