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Project Finance has announced an increase of 25% to the Company’s stated annualised dividend target for its first financial period to 31 December 2016.
As set out in the prospectus published on 29 September 2015, the Company was targeting an annualised dividend yield of 4% (on the IPO issue price of 100p per share) in the financial period from IPO to 31 December 2016. The annualised dividend target for the Company’s first financial period has been restated upwards by the Board to 5%.
Further, the prospectus envisaged the Company paying its first dividend in August 2016. The Company will bring forward this payment to May 2016.
The increase to the initial dividend target and acceleration to its payment has resulted from the Investment Manager having deployed the majority of the net proceeds of IPO expeditiously and at attractive rates. As at the date of this announcement c.75% of the net proceeds of IPO have been committed for investment.
The dividend target in respect of the financial year ended 31 December 2017 is 6%, with a target IRR of between 7% and 8% (on the IPO issue price) over the long term.
Project Finance has also made a loan, of up to £10m, to finance social housing units in the UK through a loan note with an average life of 20 years.
The loan note will be issued in tranches, with an initial amount of £4.2m subscribed for immediately and the remainder expected to be issued over the coming two to three months. The loan is subject to upward-only principal indexation in line with various inflation measures and secured against both the social housing units and the leases thereon. The leases are with housing associations in England regulated by the Homes and Communities Agency and are fully repairing and insuring with terms of no less than 20 years.
The acquisition of the Loan Note has been financed fully from the proceeds of the Company’s IPO. Following this investment the Company has committed c.75% of the net proceeds of the IPO.
PROJ : Project Finance ups dividend target