16 Jul 2018 07:00
16 July 2018
RM Secured Direct Lending Plc
("RMDL" or the "Company")
Quarterly Update
RMDL, an investment trust specialising in secured debt investments, today announces an update for the quarter and a NAV of 97.85p for the month ended 30 June 2018 (31 May 2018: 99.14p). The Factsheet for the period is now available to be viewed on the Company website www.rmdl.co.uk/investor-centre/monthly-factsheets/.
Company update
The ZDP cash has been fully deployed along with 87% of the C share proceeds raised in early April. The capital invested has increased to £106.8m across 30 investments with the proportion of investments in Senior Secured increasing from 69% to 74%. Floating rate investments are up from 53% to 54% which is in line with the target of reducing fixed rate exposures where possible.
Over the period the Company had a NAV Total Return of 0.34% which takes the NAV Total Return to 2.95% over the half year. Given the pipeline transactions being processed the manager is confident at this point in time that the full year target dividend of 6.5p per Ordinary share is achievable.
Transaction highlights for the quarter are as follows:
· Healthcare: Elysium Healthcare announced during March the intention to refinance their term loan facility and this transaction closed during the current quarter. The Company invested £6m in the new debt facility which is Libor linked and secured over the assets and cash flows of the business.
· Property Bridging: the closing of a new facility to finance a bridge lender. The key attractions with this transaction are that the Investment Manager conducts its owns analysis and approvals on each potential investment funded by this facility. The individual loans are secured and have modest leverage. During the period there were two drawdowns totalling £1.5m for this facility. The Investment Manager continues to seek direct investment in the property bridging space.
· L'Oscar Hotel: the initial facility was fully funded and a second facility was documented to allow some additional funding now the hotel is fully operational. This additional facility was partially drawn down during the quarter.
· Forecourt operator: a €5m investment in a private syndicated transaction for a large independent forecourt operator with a diversified portfolio of premium branded sites. Funded in Euros and hedged back to GBP to give a yield in excess of 9%.
· Children's nursery: Senior Secured Loan to a growing business in the South East - the final drawdown of £1.3m took place during the quarter so the entire £5m investment is now fully funded. This transaction also has some additional upside as equity options have been negotiated which could be valuable should the business hit its growth targets and exit strategy.
C share update
On 22 June, the RM Capital Markets Limited (the "Investment Manager") notified the Board that 87% of the funds raised from the recent C Share issue had been invested with a Calculation Date set for 30 June. The Conversion Ratio will be announced on 16 July.
The Ordinary Shares NAV as at 30 June was 97.85 pence which is 0.34 points higher than the end of May (after the dividend payment made during the month is included) and is made up of interest income net of expenses of 0.55 pence and a decrease in portfolio valuations of 0.21 pence - the majority of this is market sentiment feeding into valuations which we expect to recover and the risk of credit impairments have not changed.
Market update
The global equity markets have been more challenging during the first half of the year, with credit market weakness accelerating during May and June, driven by US trade wars and the rise of populism within Europe hitting the headlines post the Italian elections. The quarter was also characterised by USD strength, consistent with the general weaker market sentiment. Credit markets spreads have widened back to the elevated levels last seen in 2016 post the Brexit vote.
The effect of this on the Company during Q2 has been weaker investor sentiment resulting in modest mark to market losses on the liquid proportion of the existing portfolio, despite there being no increase in the probability of default. The stronger USD has not had a material impact given the Company's currency exposures have been largely hedged.
The remaining six months of 2018 will likely see the continued negative effect on global growth from trade wars, coupled with the impact of ongoing Brexit discussions. Sovereign risk within the Eurozone is also likely to remain an ongoing factor.
However, further market weakness also provides opportunities as pricing is expected to become more favourable throughout the second half of the year, as the cost of funding across the market has increased and is likely to remain elevated.
Pipeline
The Investment Manager has identified an attractive pipeline of opportunities for investment. The next transaction is likely to be in the Health and Social Care Sector where a strategic investment has been undergoing due diligence over past two months with this transaction expected to close in late July or early August. In total, there is in excess of £30m of near term opportunities being reviewed including Health and Social Care, Asset Finance, Property and Hospitality. The intention is optimise the existing portfolio by bringing forward these higher yielding pipeline transactions over the summer and divesting circa 7% of the portfolio held in lower yielding more liquid investments. The net effect of this is that it is the Investment Manager's intention that the portfolio average yield will increase over the coming months.
END
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
PR Enquiries
Tulchan Group - Financial PR
James Macey White
Elizabeth Snow
Tel: 0207 353 4200
PraxisIFM Fund Services (UK) Limited - Administrator and Company Secretary
Anthony Lee
Ciara McKillop
Tel: 020 7653 9690
Nplus1 Singer Advisory LLP - Financial Adviser and Broker
James Maxwell
Lauren Kettle
Tel: 020 7496 3000
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/