15 Jan 2021 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 31 December 2020, on a cum income basis, was 93.88 pence (30 November 2020: 93.66 pence). | ||||||||||
RM ZDP PLC announces that the unaudited accrued capital entitlement per ZDP share as at 31 December 2020 was 109.87 pence (30 November 2020: 109.55 pence).
NAV The Company's NAV % Total Return for the month was +1.97%, which brings the NAV % Total Return for the quarter to 4.29% and for the full year 2020 to 3.15%. The Ordinary Share NAV as at 31st December 2020 was 93.88 pence per share, which is 0.22p greater than at 30th November 2020. This monthly return of 0.22 pence per share arose primarily from the ex-dividend effect of the 1.625 pence per share total ordinary dividend for the period Q3 2020, declared in October and paid in December 2020. Otherwise, there was positive net interest income net of expenses of 1.06 pence per share and an increase in portfolio valuations and currency hedging costs of 0.79 pence per share.
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Company Activity During the quarter, the Company continued to purchase shares in the market with an additional 1,371,299 shares acquired, bringing the total number held in treasury to 3,860,299. The share price discount to NAV has narrowed over the last three quarters from -16% at the end of Q2, then -12% at the end of Q3, to -7.3% at year end. Both the Board and the Investment Manager remain focused on reducing the discount to -6% or lower which is the targeted maximum discount level noted within the Company prospectus. The portfolio size increased over the quarter by £5m as new CBILS transactions were closed. Cash management has been a key focus over this period and the Investment Manager has successfully rotated out of the majority of the syndicated loan investments with below target yields into higher yielding bilateral loans originated by RM Funds. The has led to a material increase in the average portfolio yield from 8.89% to 9.37% during the period. Using the mid-market current share price against the stated dividend target gives an implied income yield for investors of 7.55% down from 8.125% at the end of Q3, as the share price has appreciated over the period. Portfolio Update It has been a strong quarter for the portfolio both in terms of performance and activities within the portfolio. Key highlights include: · £15m of HM Government guaranteed CBILS business written, representing c11% of NAV. · £1.8m partial repayment of 2 hotel loans and an increase in the lender reserve attached to this facility of £1m. · Resolution of Covid-related work-out assets contributing to additional NAV gains during the month. CBILS Loans RM Funds was initially granted £15m of HM Government Guarantee capacity, with the potential to upsize this by a further £10m. The Investment Manager is currently seeking approval for the additional capacity. All CBILS loans benefit from a UK Government Guarantee, protecting 80% of the principle and 100% of the first year's interest.
New Investments Social Infrastructure > Aged Care Sector: Two tranche Senior Secured Loan (£5m CBILS, £2.8m Non-CBILS). The loan will be utilised to support the development of a high quality 72 bed purpose-built care home. The borrower has an extensive track record in developing and operating quality care homes in the UK. Hospitality & Leisure > Senior Secured Loan (c.£4.5m CBILS). The loan will be utilised to support the development of hospitality and leisure assets. The loan benefits from an all-asset debenture and guarantee over key development assets. Existing Investments Social Infrastructure > Student Accommodation (£6.1m nominal; Loan ref 68). RM Funds executed a work-out strategy as the developer failed to action their Covid recovery plan. This loan is senior secured on a new, purpose-built student accommodation ("PBSA") in a prime location in Coventry city centre. The asset has 80 bedrooms and the loan equates to c.£76k/bed. The Investment Manager appointed FRP Advisory LLP "FRP" as part of the work-out process, which will involve the marketing, operational management and a variation of planning permissions to maximise the utility of the asset in the near to medium-term. The loan has been marked down to 81.86% of par valuing the loan at just over £5m. This values the asset at c.£62.8k per bed which is conservative versus some of the listed peer group and other private comparables. Hospitality & Leisure > Hotel (Development) (£3.35m, Loan ref 58): This loan was partially refinanced by £2m during December 2020 generating a gain of approximately £700,000 as the loan was previously marked at 64.58% of face value. The remaining loan balance also saw a valuation increase to 73% of par value as the hotel development scheme was fully funded during the period by the senior and junior Lenders, in addition to further equity cash injection. The additional capital funded by RMDL was via the CBILS scheme. This loan trajectory is back to 100% of par value as the scheme is finalised over this coming year. Finally, the existing loan coupon was increased from 12% to 15% as part of the refinancing to reflect the general increase in debt costs since the Covid period started - this interest will roll up as is typical of a construction financing. In summary the property has a signed Hotel Management Agreement ("HMA") with a 5* counterparty and a fully funded scheme. 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%. Social Infrastructure > Student Accommodation (£4.4m nominal; Loan ref 12): A senior secured loan to a PBSA asset with 77 bedrooms. This loan equates to c.£78k/bed. The borrower has had ongoing issues with the operator which have been resolved. RMDL had previously noted overdue interest for this asset in the July Interim accounts, RM Funds are pleased to report that £500k was received in December 2020 and is key contributor to the excess income over the month. Hospitality & Leisure > Hotels (Operational) Despite the temporary closure of the hotels, our counterparties have continued to perform through the Covid pandemic via cash interest payments. December saw significant progress with the reduction of risk within this portfolio exposure as our largest borrower completed a ground rent transaction on an asset held within the two loan portfolios (ref 66&67). This ultimately reduced the loan balance by c.£1.8m, lowered the LTV back to 80% and has enabled the borrower to deposit c.£1m in a RMDL lender control account.
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The Company also announces that the Monthly Report for the period to 31 December 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 | ||||||||||
Thomas Le Grix De La Salle | ||||||||||
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 | ||||||||||
Carlo Spingardi | ||||||||||
Tel: 020 7496 3000 | ||||||||||
Peel Hunt LLP - Financial Adviser and Broker | ||||||||||
Luke Simpson | ||||||||||
Liz Yong | ||||||||||
Tel: 020 7418 8900 | ||||||||||
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/ | ||||||||||