Gcp Asset Backed Income Share Discussion Threads

[speedsgh] 15/9/2021 17:03

GCP Asset Backed Income hurt by Co-living loan writedown -

... GABI was a small player in a syndicate of lenders to Co-living, leading Liberum analyst Conor Finn to say it illustrated ‘some of the risks in minority lending investments, particularly the lack of control in distressed situations.’

‘The scale of the writedown is significant given the LTV [loan to value] of the position was less than 65% at March 2021,’ Finn said, meaning there was a healthy cushion of equity to protect the lender.

Stifel analyst Iain Scouller cut his ‘positive’ rating to ‘neutral’ saying there was a risk the shares could drop to a discount to NAV.

‘We are disappointed to see this writedown especially given what had been the improving backdrop and comments from the company regarding its high-risk loans. While no portfolio is immune to problems, the size of the writedown – around 54% as the loan was 6.8% of the portfolio 30 June – is significant and means that something has clearly changed quite materially in the third quarter,’ Scouller said.

Shares in GABI have dropped from 104.5p to 101p since the announcement on Monday, but remain on a small premium to the reduced NAV following Conlon’s insistence that no ‘read-across should be made as a result of the writedown in the value of the Co-living Group loan to the rest of the company’s portfolio which continues to perform as expected.’

Speaking at an Association of Investment Companies event yesterday, Gravis associate director Joanne Fisk, who works with Conlon on GAVI, said the fund remained committed to funding sustainable borrowers.

‘Core to the sustainable theme is looking for assets that meet a structural demand in society or serve a purpose as we think that underpins the value of the investment we are making,’ she said.

While the Co-living loan has been painful, GABI remains keen on housing, lending £5m earlier this year to Apex Airspace, whose modular pods on top of flat-roof buildings are designed to solving the property shortage.

Fisk said Apex had ‘a borrower track record’ and is working on an affordable homes project with the Greater London Authority and local councils.

‘It is improving and building on existing housing stock providing affordable homes in London,’ she said.

Within social infrastructure, GABI is also a lender to four care homes. Fisk hoped to add to the exposure in ‘areas of undersupply when there is a need for elderly and vulnerable care’.

‘These assets have seen really strong growth in valuations,’ she said.

Fisk said the managers of the four homes ‘impressed through Covid-19 by taking steps early on, maintaining occupation, and gaining new contracts’, despite the sector being hit hard by the pandemic.

‘This is an area we are interested in. We are looking at other projects and are hoping to close soon.’

[panshanger1] 13/9/2021 08:33

Co op Living group loan being written down and reduction in NAV

[speedsgh] 20/8/2021 07:19

Extension to term of Revolving Credit Facility -

On 10 July 2020, GCP Asset Backed, which invests in asset backed loans, announced that it had exercised a 12-month extension option in respect of its £50 million Revolving Credit Facility ("RCF") with Royal Bank of Scotland International Limited (the "lender"), maturing in August 2021.

The Company is pleased to announce that the RCF has been extended by 24-months on the same terms as the previous facility. An additional 12-month extension option has also been included to be approved at the lender's discretion upon expiration in August 2023.

The Company's Investment Manager, Gravis Capital Management Limited, considers having continued access to the revolving credit facility an essential tool to allow the Company to access attractive investment opportunities. As at the date of this announcement, the facility is drawn by £20.2 million.

[jonathan49] 13/8/2021 12:32

Thanks appollocreed1 - I am a long term holder of the credit ITs for reasons of diversification and total return (not driven by need for income) As it happens I also held SQN and GCP infra. I sold out of GCP infra because the dependence on power prices was much too great for my liking. There is a tight linkage and my view is that power prices need to fall in the long term because much more electricity will need to be used and it will need to be affordable. Plus since the assets are "wasting" (being amortised away to nothing) there is a big question about whether they are reinvesting enough and have good enough opportunities in the long term to maintain the NAV. The power price aspect is evidenced that some of the GCP infra loans are already valued below cost due to the power price having fallen. I also sold out of TRIG at a nice profit for the same reason. Gore Street may be different because it is not power price dependant as I understand it. I got SQN C shares on at about 80p and have held on - now hopeful that I will get most of my money back as it winds up. SQN management was a learning experience to be very careful that any Boutique manager really has the market network, contacts and access to source good deals with responsible sponsors who have meaningful equity in the deal deep pockets. None of these existed with SQN, they were just lending to anyone who came along and wanted money. Gravis does look better than that but they are still a boutique manager and I wonder about their market access compared to the big boys. My preferred ITs for credit are now CCPG/NCHY/RECI/MGCI/TFIF/NBMI/BIPS/HDIV. I have equal weight of all those plus GABI.

[apollocreed1] 13/8/2021 02:37

@jonathan49 - I sold out of this at 105.5 because I didn't think it was worth holding at a premium when they have a list of loans that are being watched for potential default. You can buy something like Gore Street Energy Fund or GCP Infrastructure that yield about 6% just like GABI, but without the loan risk. I also came around to the idea recently that loan trusts can often be much riskier than other high yielding trusts like the infrastucture ones, because I was a holder of SQN (KKVL) Asset Finance and Hadrians Wall that are also loan funds and they lost over 50% of their NAVs.

[jonathan49] 12/8/2021 22:15

Did anyone else listen to this presentation?
There is one large mezzanine loan to a Co living project which appears to be taking a substantial loss. The loan has been marked down to £32.8M from £36.4M. The project is evidently still perfectly viable and rents are being received OK but a covenant had been broken for the senior loan. The senior lender instructed a sale process. Current project value means that senior loan can be repaid in full be the Mez loan will take a £4M loss even though the income is still there to pay all interest payments and the project value will likely recover in due course. It was a very unclear explanation but left me with the impression that Gravis had not done a good job in structuring the terms of the GABI mez loan in that they had no say in the sale or refinancing. I am now wondering whether Gravis has enough expertise in order to get appropriate terms for the types of loans being made by GABI. Any comments or insights would be appreciated.

[playful] 15/7/2021 07:08

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 [e-mail] .

[panshanger1] 18/6/2021 10:04

New 52 week high @105

[badtime] 17/6/2021 13:16

Nice move up this month

[jong] 13/5/2021 10:02

XD today (1.575p) payable on 14 June

[frazboy] 27/4/2021 13:53

Divi announcement due - hopefully this week unless anyone has a definite date?

[panshanger1] 24/4/2021 07:50

Yes new 52 week high @103I held on too last year 112 next stop GLA

[playful] 23/4/2021 22:18

I am very comfy sitting on their register for the long term.

[panshanger1] 23/4/2021 14:21

Ticking along nicely

[speedsgh] 21/4/2021 10:58

Net Asset Value and Investment Update -

GCP Asset Backed, which invests in asset backed loans, announces that, as at 31 March 2021, the unaudited net asset value ("NAV") per ordinary share of the Company (including current period revenue) is 102.49 pence.

NAV

The NAV performance for the 3 month period is a positive movement of 0.31 pence per share after the payment of dividends, a rise of 0.30 per cent.

The Company's investments continued to perform in the period to 31 March 2021, with all principal and interest payments received as expected1. 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. However, during the period a number of the discount rate adjustments have been unwound or scaled back as a result of the continued strong performance of the underlying borrower.

1 As previously reported by the Company the CHP and ROC loan referred to below remains in default and no payments are expected on this loan until the anticipated sale completes...

OUTLOOK

The Investment Manager remains encouraged by the financial position of our borrowers and hopeful that with the lifting of COVID restrictions across the UK, our loans will continue to perform. We continue to see refinancing of loans in the portfolio coming through and have access to a pipeline of opportunities in excess of our available capital.

[panshanger1] 14/4/2021 12:38

Creeping closer to NAV now

[chucko1] 14/4/2021 07:41

For now, so make the most of it. At 95.5p, I would argue it’s still cheap, but not the free lunch it has been the past year.

[badtime] 13/4/2021 23:47

Spreads better these days

[panshanger1] 24/3/2021 08:36

Nothing to scare the horses there.7% yield and still offering value imoJust need to navigate the bid offer spread as has been highlighted GLA

[rambutan2] 23/3/2021 21:02

No sweat:

HIGHLIGHTS FOR THE YEAR

- Dividends of 6.475(1) pence per share in respect of the year, including a special dividend of 0.25 pence. Achieving the Company's stated aim to grow the dividend year-on-year, for the fifth consecutive year.

- Total shareholder return(2) of -9.8%, total NAV return(2) of 6.5% (31 December 2019: 10.2% and 7.2%) and an annualised total shareholder return(2) since IPO of 3.8%.

- Profit for the year of GBP27.4 million (31 December 2019: GBP28.0 million), with total income of GBP33.9 million generated from the investment portfolio (31 December 2019: GBP34.0 million).

- NAV per ordinary share of 102.18 pence at 31 December 2020, a marginal decrease from 102.33 pence in the prior year, reflecting adjustments to discount rates on some of the loans. See below for further detail. Excluding these adjustments the NAV would have increased in the year by 1%.

- Exposure to a diversified, partially inflation and/or interest rate-protected portfolio of 50 asset backed loans with a third party valuation of GBP444.2 million at 31 December 2020.

- Loans of GBP126.8 million advanced by the Group, secured against 28 projects with a further GBP14.5 million secured against five projects, advanced post year end.

- Loans of GBP131.0 million repaid in the year generating repayment fees of GBP1.8 million, with a further GBP1.0 million of repayments received post year end.

[playful] 09/3/2021 17:34

Keep looking and scratching my head at these but keep buying as I think they are way too low, but what do I know!

[chucko1] 15/2/2021 13:51

Even crazier is the current bid-offer spread. Not always easy to trade it - in fact, rarely, recently.

[panshanger1] 15/2/2021 12:46

As you said a little crazy but generally moving in the right direction Still offering value IMO but I have plenty !!GLA