UKML.L Regulatory News (UKML)

UK Mortgages Ltd - New Warehouse Lending Facility for TML

PR Newswire

London, August 6

UK Mortgages Ltd: New Warehouse Lending Facility for The Mortgage Lender (“TML”)

THE INFORMATION IN THIS ANNOUNCEMENT IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION DIRECTLY OR INDIRECTLY IN OR INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, THE REPUBLIC OF IRELAND OR JAPAN.

6 August 2019

UK MORTGAGES LIMITED(a closed-ended investment company incorporated in Guernsey with registration number 60440)LEI 549300388LT7VTHCIT59 

New Warehouse Lending Facility Completed for The Mortgage Lender (“TML”)

The Board of UK Mortgages Limited (the “Company”) and TwentyFour Asset Management LLP are pleased to announce that the Company has completed the arrangement and signing of a new warehouse facility arranged by HSBC Bank plc, called Cornhill Mortgages No.5 Limited. This will fund the forward flow purchases of newly originated owner-occupied residential mortgage loans from the Company’s ongoing arrangement with TML following the completion of the pre-funding phase of the Barley Hill No.1 securitisation from earlier this year, which concludes in August. The transaction is intended to fund portfolio growth to a size suitable for a further public securitisation into what will then be expected to be the second Barley Hill transaction.

Unlike the previous forward flow warehouse for TML loans arranged in 2016 (which was fully capitalised from the outset as TML, whilst operated by a highly experienced lending and management team, was a new lender at that time, and furthermore UKML’s the Company’s capital position was then at a large surplus) this transaction employs a far more efficient incremental capitalisation structure, similar to that employed with last year’s Cornhill 4 transaction. This new structure will allow the Company to maximise the efficiency of capital deployment and therefore leverage, minimising the cost of undrawn commitment fees. Swaps hedging will also be with HSBC Bank plc, a Aa2(cr)/AA- rated (Moody’s/S&P) counterparty.

Performance of the original loan pool has been extremely strong with just 4 loans from over 1350 more than 3 months in arrears at the end of June 2019, and with a low weighted average Loan-to-Value ratio of 67.9%. Whilst lending criteria are likely to evolve on an ongoing basis in response to changing trends and needs in mortgage markets, the risk profile of the new portfolio is expected to remain broadly similar to the previous one. Furthermore, after slower than expected initial lending growth, primarily due to the effects of the post-Brexit-vote extraordinary monetary policy measures introduced just after TML began operating, TML have more recently been successfully growing their origination volumes, with July 2019 being a record month for both applications and completions.

Further information:

TwentyFour Asset Management LLPRob FordDouglas Charleston020 7015 8900Numis Securities Limited, Corporate BrokerNathan BrownHugh Jonathan020 7260 1000 

Important notice

This announcement has been prepared for information purposes only, it is not a prospectus.

The distribution of this announcement in certain jurisdictions may be restricted by law. Persons into whose possession this announcement comes are required by the UKML, TwentyFour and Numis to inform themselves about, and to observe, such restrictions.

Certain statements in this announcement are forward-looking statements which are based on UKML’s expectations, intentions and projections regarding its future performance, anticipated events or trends and other matters that are not historical facts. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. TwentyFour's estimate of the potential gross IRR for this investment is calculated based on certain scenarios and subject to certain assumptions. This and any other references herein to potential future returns or distributions are targets and not forecasts and there can be no guarantee or assurance that they will be achieved. Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date of such statements and, except as required by applicable law, UKML undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

The information contained in this announcement is subject to change without notice and neither the UKML, TwentyFour nor Numis assume any responsibility or obligation to update publicly or review any of the forward-looking statements contained herein.

Recipients of this announcement who are considering acquiring New Shares in UKML are reminded that any such acquisition must be made only on the basis of the information contained in the Prospectus and any supplementary prospectus(es) thereto which may be different from the information contained in this announcement. This announcement does not constitute or form part of and may not be construed as an offer to sell, or an invitation to purchase, investments of any description, nor as a recommendation regarding the possible offering or the provision of investment advice by any party. No information in this announcement should be construed as providing financial, investment or other professional advice and each prospective investor should consult its own legal, business, tax and other advisers in evaluating any investment opportunity. In particular, an investment in UKML involves a high degree of risk and prospective investors should read the section in the Prospectus entitled "Risk Factors" for further information.