16 Oct 2020 07:00
RM Secured Direct Lending Plc and RM ZDP PLC | |||||||||||||||||||||||||
("RMDL" or the "Company") | |||||||||||||||||||||||||
LEI: 213800RBRIYICC2QC958 | |||||||||||||||||||||||||
Net Asset Value | |||||||||||||||||||||||||
RMDL announces that its unaudited net asset value per ordinary share as at 30 September 2020, on a cum income basis, was 91.58 pence (31 August 2020: 91.97 pence). | |||||||||||||||||||||||||
RM ZDP PLC announces that the unaudited accrued capital entitlement per ZDP share as at 30 September 2020 was 108.92 pence (31 August 2020: 108.62 pence).
NAV The Company's NAV % Total Return for the month was +1.35%, which brings the NAV % Total Return for the quarter to 2.25%, year to date ("YTD") to -1.09% and for the last 12 months to 0.37%. The Ordinary Share NAV as at 30th September 2020 was 91.58 pence per share, which is 0.39p lower than at 31st August 2020. This monthly return of -0.39 pence per share arose primarily from the ex-dividend effect of the 1.625 pence per share total ordinary dividend for the period Q2 2020, declared in July and paid in September 2020. Otherwise, there was positive net interest income net of expenses of 0.53 pence per share and an increase in portfolio valuations and currency hedging costs of 0.71 pence per share. Fund performance
Portfolio Update During the quarter the Company continued to purchase shares in the market. Overall, 1,524,000 shares were purchased during the quarter, bringing the total number held in treasury to 2,489,000. The share price discount to NAV has narrowed from 16% at the end of Q2 to 12% at the end of Q3. Both the Board and the Investment Manager remain focused on reducing the discount and therefore continue to closely monitor secondary market levels. The portfolio size reduced slightly over the quarter from £131m to £126m as loans to Motor Fuel Group and part of the Busy Bees holding were divested over the period to repay the partially drawn RCF and provide capital for pipeline CBILS transactions. The average portfolio yield increased slightly to 8.89% from 8.62% in the previous quarter. Using the mid-market share price against the stated dividend target gives an implied yield for investors of 8.125% which is down from 8.44% at the end of Q2 and reflects the slight improvement in the share price over the period from 77.00 pence per share to 81.00 pence at a mid-price. The principal focus over the quarter was the management and monitoring of the existing portfolio of investments. Below is a summary of some key investments and activities for the period: New Investments Energy Efficiency Loan. Coronavirus Business Interruption Lending "CBILS" eligible: The first CBILS loan for £500,000 was granted to a business operating in the energy efficiency sector. This three-year investment has a low Loan to Value ("LTV") ratio of c. 26%, generates a net return of 8% to RMDL and has an 80% Government-backed partial guarantee should the borrower default. The first year's interest is paid by HM Government. The investment also aligns with the UN Sustainable Development Goals. This investment provided a high impact catalyst to the business, helping the UK's transition to Zero Net Carbon by 2050. This transaction is expected to be the first in a new series of energy efficiency lending by RMDL. Existing Investments Hotels (Operational) - (£34.4m): The hotel sector is the portfolio's largest industry exposure, accounting for 27% of Gross Assets split across 7 loans. Despite the temporary closure of the hotels, they have continued to perform though the Covid pandemic with the continued servicing of cash interest payments. Hotel (Development Glasgow) - (£5.1m): The quarter saw continued progress with a new Hotel Management Agreement ("HMA") signed during August. It is the lending group's intention to fund the final construction element with a view to complete the hotel in H1 2021. An updated valuation was undertaken with the new HMA counterparty in-situ, and, on an "as is" basis, the LTV is 71.5% and the Gross Development Value "GDV" once stabilised, is expected to be 65%. Student Accommodation (Three loans) - (£16.6m): Together these loans represent 13% of Gross Assets. The investment team focused on this social infrastructure subset during Q3 given it is a key trading period for the sector as students return to university. Two of the three Loans have had issues which RM Funds is seeking to resolve during Q4 and all of these Loans have been marked lower (Loan 1 at 93% of face value, Loan 2 at 97.50% of face value and Loan 3 at 96% of face value) in order to reflect the specific loans risks and the increased risk within the sector with regards to occupancy; as it is uncertain as to what the outlook is in the near term. Loan 1 (£6.1m nominal): This loan is senior secured on a new, purpose-built student accommodation ("PBSA") in Coventry in a prime-location: the asset has 80 bedrooms and the loan equates to £76k per bed. The loan was due to be repaid at the end of the quarter but due to the pandemic this refinancing has been postponed and the Investment Manager is working with the borrower to resolve this situation. Loan 2 (£6.06m nominal): A mezzanine loan secured over five PBSA assets spread across four prime regional cities. Average occupancy is c68%. The borrower is paying cash for Q3's interest payments and in addition, the Q2 interest which had previously been PIK, will be now be paid in cash, thus reducing the PIK balance. The lender currently holds one quarter cash interest in reserve and this reserve is due to increase to cover 4 quarters loan interest which would be a material enhancement. Loan 3 (£4.4m nominal): A senior secured loan to a PBSA asset with 77 bedrooms. This loan equates to £78k per bed. The borrower has had ongoing issues with the operator which are still being resolved. Occupancy has been reported at 77% which is very positive however, to be conservative, any income accrued over the period has been written down as the timing of the income receipt is uncertain and RM is in the process of seeking to recover these amounts from the operator. Over Q4 RM is seeking to ensure all operator issues are resolved so interest service resumes as expected.
Income & Dividend During the quarter a 1.625 pence per share dividend was announced and paid which is line with the target dividend for the full year. The year-to-date dividend has an income cover of 1.1 times. Outlook In the near to medium term the Investment Manager is progressing a number of CBILS eligible transactions which will enhance the credit profile of the portfolio, whilst not reducing any income returns. As at month end, the Company held cash or near cash from trades being settled of £6m and has capacity to draw an additional £10m under its revolving credit facility with OakNorth bank. In addition, due to positive screening by RM Funds of CBILS eligible transactions, there has been an increased allocation of capital to companies which the Investment Manager believes will aid the delivery of UN Sustainable Development Goals, in line with its objectives as a member of PRI. These transactions are within the existing investment scope and deliver a triple bottom line of economic, social and environmental benefits. The Investment Manager has been conducting meetings with existing and potential shareholders over the past few weeks. If you would like to meet with the Investment Manager then please either contact Investment Manager directly or the Company's brokers N+1 Singer and Peel Hunt.
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The Company also announces that the Monthly Report for the period to 30 September 2020 is now available to be viewed on the Company website: | |||||||||||||||||||||||||
https://rmdl.co.uk/investor-centre/monthly-factsheets/ | |||||||||||||||||||||||||
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For further information, please contact: | |||||||||||||||||||||||||
RM Capital Markets Limited - Investment Manager | |||||||||||||||||||||||||
James Robson | |||||||||||||||||||||||||
Pietro Nicholls | |||||||||||||||||||||||||
Tel: 0131 603 7060 | |||||||||||||||||||||||||
International Fund Management - AIFM | |||||||||||||||||||||||||
Chris Hickling | |||||||||||||||||||||||||
Shaun Robert | |||||||||||||||||||||||||
Tel: 01481 737600 | |||||||||||||||||||||||||
Tulchan Group - Financial PR | |||||||||||||||||||||||||
James Macey White | |||||||||||||||||||||||||
Elizabeth Snow | |||||||||||||||||||||||||
Tel: 0207 353 4200 | |||||||||||||||||||||||||
PraxisIFM Fund Services (UK) Limited - Administrator and Company Secretary | |||||||||||||||||||||||||
Brian Smith | |||||||||||||||||||||||||
Ciara McKillop | |||||||||||||||||||||||||
Tel: 020 4513 9260 | |||||||||||||||||||||||||
Nplus1 Singer Advisory LLP - Financial Adviser and Broker | |||||||||||||||||||||||||
James Maxwell | |||||||||||||||||||||||||
Lauren Kettle
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Peel Hunt LLP - Financial Adviser and Broker |
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Luke Simpson |
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Liz Yong |
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Tel: 020 7496 3000
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About RM Secured Direct Lending | |||||||||||||||||||||||||
RM Secured Direct Lending Plc ("RMDL" or the "Company") is a closed-ended investment trust established to invest in a portfolio of secured debt instruments. | |||||||||||||||||||||||||
The Company aims to generate attractive and regular dividends through loans sourced or originated by the Investment Manager with a degree of inflation protection through index-linked returns where appropriate. Loans in which the Company invests are predominantly secured against assets such as real estate or plant and machinery and/or income streams such as account receivables. | |||||||||||||||||||||||||
For more information, please see | |||||||||||||||||||||||||
https://rmdl.co.uk/investor-centre/monthly-factsheets/ | |||||||||||||||||||||||||