LONDON (Alliance News) - TOC Property Backed Lending Trust PLC on Friday reported a decrease in net asset value per share in 2018 due to ongoing challenges with borrowers.
At November 30, the trust's NAV per share stood at 94.39 pence compared to 98.11p the year before, a decrease of 3.8%. TOC Property's net assets increased by 14%, however, to GBP25.4 million from GBP22.3 million in the twelve months to the end of November.
TOC Property said the decrease in NAV per share reflects unrealised losses of GBP546,000 provided against the loans for its West Auckland and Gatsby projects.
The trust said: "The board has acted prudently in making such provisions on two projects where execution by the developers has not been in line with the board's expectations. The investment adviser has taken steps to change the management of these projects. The ultimate outcome is necessarily uncertain, but we believe that the provisions are prudent and sufficient."
TOC Property's investment adviser, Tier One Capital, added: "We continue to be mindful of the ongoing challenges our borrowers are facing in a climate of rising interest rates, a weakening housing market and the ever-present shadow of Brexit. Where necessary, we intend to increase our monitoring presence of those projects we feel may be most exposed to a slowdown of property prices, and in particular, a slowdown is the time taken to sell a new residential home."
TOC Property also booked a GBP200,000 impairment made against a GBP1.7 million loan for the Pendower Hall project. The trust said it is "working hard to ensure an early exit from this project at full value".
The trust paid a four quarterly interim dividends of 1.75p in 2018 but has decided to lower that to 1.50p going forward due to a reduction in property transaction volumes.
Chair Stephen Coe announced he will be stepping down from his role at the company's upcoming annual general meeting and will be replaced by John Newlands. As a result, TOC Property will begin searching for a new independent non-executive director.
The company agreed four new facilities in financial 2018.
As of Friday, the trust's portfolio is valued at GBP24.7 million from 14 projects.
Coe added: "The company seeks to provide a regular and significant income stream to investors within a reasonable capital risk framework. As the portfolio matures some losses are inevitable, but hopefully profits will come through. In the meantime active management and staying close to developers is key to a successful outcome."
Shares in TOC Property Backed Lending Trust were untraded Friday, last closing at 100.00p each.