TIDMGABI TIDMGABC
RNS Number : 2868F
GCP Asset Backed Income Fund Ltd
15 July 2021
15 July 2021
GCP Asset Backed Income Fund Limited
(the "Company" or "GCP Asset Backed")
LEI: 213800FBBZCQMP73A815
Net Asset Value and Investment Update
GCP Asset Backed, which invests in asset backed loans, announces
that, as at 30 June 2021, the unaudited net asset value ("NAV") per
ordinary share of the Company (including current period revenue) is
102.71 pence.
NAV
The NAV performance for the 3 month period is a positive
movement of 0.22 pence per share after the payment of dividends, a
rise of 0.21 per cent.
The Company's investments continued to perform in the period to
30 June 2021, with all principal and interest payments received as
expected(1) . The performance in this period means that all
expected interest and principal payments have been received in
their entirety since the onset of the COVID-19 pandemic in early
2020.
The Board, after due consideration to advice from the
independent Valuation Agent and recommendations from the Investment
Manager, has determined to continue with its prudent approach to
discount rate movements to reflect continued uncertainties related
to the COVID-19 pandemic on several loans. During the period a
number of discount rate adjustments have been made, which are
detailed below.
(1) As previously reported by the Company the CHP and ROC loan
referred to below remains in default and no interest payments are
expected on this loan.
Portfolio Update
We continue to allocate our loans into three categories on a
high-level basis. In line with previous updates, the portfolio as a
whole continues to move towards a lower risk rating, with discount
rates being adjusted to reflect this risk reduction.
Impact Commentary % of Portfolio % of Portfolio Movement (as
June 21 March 21 % of portfolio)
-------------------------- --------------- --------------- -----------------
No major impact
to the way the business
operates, with revenue
and costs remaining
in line with previous
quarters.
No expected long
term impact as a
result of change
Low in the medium term. 55.4% 56.5% (1.1)%
-------------------------- --------------- --------------- -----------------
Some impact on how
the business operates,
some increased costs
or reduction in
revenues.
Limited expected
disruption to markets
Medium in the medium term. 36.5% 34.7% 1.8%
-------------------------- --------------- --------------- -----------------
Significant impact
on how the business
operates, increases
in costs or reductions
in revenues.
Expected disruption
to the business
model in the medium
High term. 8.1% 8.8% (0.7%)
-------------------------- --------------- --------------- -----------------
The Investment Manager will be holding a webinar on 27 July 2021
at 10am to provide more detail on the portfolio. For any investor
interested in joining, please e-mail zoe.french@graviscapital.com
.
Sector update
Co-living - Discount Rate increased from 31 March 2020 by
250bps
The borrower, which provides a mixture of long stay and short
stay accommodation, has a facility in place with a security package
comprising 10 operational assets, 5 assets in construction and 12
sites in pre-development.
GABI is a minority lender as part of a syndicate of lenders to
the borrower. The borrower undertook a strategic review of its
funding position and determined that the long-term viability of the
borrower group would be better met via a sale. A sales process was
kicked off in the period and several bids were received for the
borrower group, with bidders now at the second round stage.
The discount rate on the loan has been increased to reflect the
offers received for the group and the expected buyout price on the
debt.
Community Facility - Discount Rate unchanged from 31 March
2020
The Group has provided loans to two community facilities. These
facilities house a variety of small businesses including bars, food
outlets, co-working and studio space.
Despite both facilities now being open, they continue to be
impacted by the UK Government's restrictions on dining and
drinking. These restrictions continue to limit capacity at both
venues, as only table service is allowed in groups of up to six.
Serving customers in this way increases overheads as additional
serving, front of house and cleaning staff are all required.
Despite these restrictions, both facilities have operated well in
the period, taking advantage of the UEFA European 2020 Championship
to significantly increase both footfall and income.
One site made interest payments as planned, whilst the newer
site continued to capitalise interest. Both sites are experiencing
strong interest in their remaining units, including a significant
events operator who is interested in leasing the event space at the
new site for a period of 10 years.
We remain hopeful that the easing of restrictions will allow
these businesses to thrive. Continuing the prudent approach to
adjustments, we have held the current provisions until we see the
impact of the movement out of lockdown.
CHP and ROC Engines - Discount Rate unchanged from 30 June
2020
This loan defaulted in March 2019, since which time we have been
working to achieve a sale of the asset. We are pleased to report
that the asset was sold to an investment bank in the period. This
resulted in an immediate repayment of GBP1.08m, with a further
GBP1.1m held in escrow subject to any potential warranty claims.
The first GBP1m is expected to be released in December 2021 and the
final GBP0.1m in March 2023. We remain confident that there are
unlikely to be any claims against these warranties, as the SPV has
sat dormant and within our control since it defaulted.
There is one ROC engine which sat outside the sale. This is in a
separate SPV, over which we have full security. The developers were
awarded a Renewable Heat Incentive tariff in the period and are now
looking to build out the facility, targeting financial close
towards the beginning of quarter four. We have not ascribed any
value to this engine in the current NAV and will update this in
September, depending on whether financial close is likely to be
achieved or whether we will need to sell the engine.
The valuation of the asset was slightly increased in the period
in line with the current expected recovery of the warranty amounts.
This asset has been moved from high to medium risk in the
period.
Nurseries - Discount Rate unchanged from 31 March 2021
The Group has lent to 11 nurseries, all of which are now
operational. The group lent against one additional nursery in the
period.
The borrower group continues to perform and occupancy remains
high. We remain excited about the borrower who is fast building a
reputation as one of the premium nursery brands in London.
Bridging/Development and Buy to Let Loans - Discount Rate
reduced by average of 2bps
The Group has lent to several parties which provide specialist
property loans secured against residential property. The loans are
at a low loan-to-value ratio (less than 65 per cent) and typically
have secondary protection in place, including personal guarantees.
This book of loans has continued to perform strongly throughout the
period, though an average 15bps discount rate adjustment remains
across the loans. This is to provide some caution against
fluctuations in property prices as a result of the ending of the
stamp duty holiday and furlough schemes provided by the UK
Government.
The Group has also provided a warehousing line for a buy-to-let
mortgage portfolio, which was refinanced in the period through a
securitisation of the book. This is the third time our warehousing
line has been securitised and on each occasion the spreads achieved
have tightened. The funds returned are moved into bridging loans as
the warehousing line builds back up, ensuring there is no cash drag
on behalf of the Fund. As a result of the continued high
performance, the 15bps discount rate adjustment on the buy to let
portfolio has been removed.
Student accommodation - Various rates
The Group has four remaining loans secured against student
accommodation projects.
In the period we increased the discount rate against our
Australian student accommodation loan by 100bps. This rate was
increased due to the continued lockdown of the country and
therefore the difficulty in attracting foreign students. The three
main buildings we have funded have all completed construction,
though they are all currently mothballed. The equity holders remain
highly supportive and have injected additional equity to cover the
running of the assets through to 2022. We are also in discussions
with the equity holders regarding a small prepayment on the
loan.
We have decreased the provision on our Dublin loan by 100bps as
a result of the strong advanced bookings that are being seen for
September.
Overall we remain highly supportive of our student accommodation
loans and we are seeing significant interest from large
institutions in the high quality and well located assets we have
funded.
General
The portfolio continues to rotate well with GBP35.7m repaid and
GBP54m deployed against five new loans in the period. We continue
to see strong performance in existing loans with notable increases
in the occupancy of our care homes and the continued strong
performance of property loans being a highlight in the period.
During the period, shareholders voted to allow the Company to
increase its overseas exposure from 20% to 30%, at the period end
the total overseas exposure was 20%.
Dividends
On 29 April 2021, the Company declared a quarterly dividend in
respect of the period from 1 January 2021 to 31 March 2021 of
1.575p per share, which was paid on 14 June 2021.
Outlook
We continue to remain encouraged by the overall performance and
strong cash generation of the portfolio. As the country looks to
lift remaining coronavirus restrictions, we remain hopeful that the
high risk loans we have highlighted will be able to recover.
For further information, please contact:
Gravis Capital Management Ltd +44 (0)20 3405 8500
David Conlon
Joanne Fisk
Investec Bank plc +44 (0)20 7597 4000
Helen Goldsmith
Denis Flanagan
Neil Brierley
Buchanan/Quill +44 (0)20 7466 5000
Helen Tarbet
Sarah Gibbons-Cook
Henry Wilson
Notes to Editors
GCP Asset Backed is a closed ended investment company traded on
the Main Market of the London Stock Exchange. Its investment
objective is to generate attractive risk-adjusted returns primarily
through regular, growing distributions and modest capital
appreciation over the long term.
The Group seeks to meet its investment objective by making
investments in a diversified portfolio of predominantly UK based
asset back loans which have contracted, predictable medium to long
term cash flows and/or physical assets.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
NAVFZGMNLDLGMZM
(END) Dow Jones Newswires
July 15, 2021 02:00 ET (06:00 GMT)
Gcp Asset Backed Income (LSE:GABI)
Historical Stock Chart
From Mar 2024 to Apr 2024
Gcp Asset Backed Income (LSE:GABI)
Historical Stock Chart
From Apr 2023 to Apr 2024
