UKML.L Regulatory News (UKML)

UK Mortgages Ltd - Second Keystone Warehouse and Progress Update

PR Newswire

London, April 6

Second Keystone Warehouse and Progress Update

THE INFORMATION IN THIS ANNOUNCEMENT IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION DIRECTLY OR INDIRECTLY IN OR INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, THE REPUBLIC OF IRELAND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

6th April 2021

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

LEI 549300388LT7VTHCIT59

Second Keystone Warehouse and Progress Update

The Board of UK Mortgages Limited (“UKML”, the “Company”) and TwentyFour Asset Management LLP (“TwentyFour”) are pleased to announce that the Company has completed the arrangement and signing of a new warehouse facility arranged by Santander Corporate and Investment Banking (“Santander”), called Cornhill Mortgages No.7 Limited. This will fund the forward flow purchases of newly originated Buy-to-Let mortgage loans from the Company’s ongoing arrangement with Keystone Property Finance (“Keystone”) following the highly successful securitisation of the first pool of Keystone loans into the Hops Hill No.1 securitisation in January of this year.

Santander, who were Joint Arranger and Joint Lead Manager on Hops Hill No.1 as well as Sole Arranger and Joint Lead Manager for the Company’s Oat Hill No.2 transaction in July 2020, will also be the swap provider for the facility. The transaction is intended to fund portfolio growth to a size suitable for a further public securitisation into what is then be expected to be the second Hops Hill transaction.

Performance of the original loan pool has been extremely strong with no loans currently in arrears, and just 29 Covid-19 payment holidays granted from over 1,900 loans originated, almost all of which have already begun repayments of their deferred amounts. The risk profile of the new portfolio is expected to remain broadly similar to the previous one.

Since Keystone commenced lending in partnership with UKML in late 2018 and have subsequently become further established as a standalone lender, their monthly origination levels have continued to grow, culminating in a record month in March 2021 with over £40m of origination. This means that the pre-funding phase of the Hops Hill No.1 transaction has been completed early (other than any loans which might be used to replace any prepayments that might occur between now and the first Interest Payment Date in May) thereby enhancing value for the Company, and once the final elements of capital remaining in the previous Cornhill No.4 facility have been utilised today, funding from the new facility is expected to commence from tomorrow, Wednesday 7th April. Furthermore, the early completion of the Hops Hill No.1 pre-funding means the additional origination, which already includes an extremely healthy pipeline of well over £100m, will go into the Cornhill No.7 vehicle sooner than expected, thereby initiating the growth of further returns for the Company earlier.

Overall, this means that in just 4 months since shareholders approved the revised fund mandate last December, all of the major objectives from that proposal have now essentially been accomplished:- the securitisation of the first Keystone portfolio, the agreed sale of the two lower-yielding Coventry portfolios; with one sale and the resultant first tender already completed and with the second sale and subsequent tender expected to take place in late May and early June respectively, and now the agreement for the second Keystone warehouse has been finalised and will begin funding almost immediately. Furthermore, all these objectives have been achieved on better terms than originally indicated and/or in an accelerated timeframe - thereby locking in and adding value for and to the Company.

As a result, the Company is now firmly positioned to deliver its primary objective of generating stable long-term income for investors, and with additional income growth now forthcoming from this new facility.

For further information:TwentyFour Asset Management LLPRob FordDouglas Charleston020 7015 8900

Numis 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.

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.