Icg-longbow Senior Secur... Share Discussion Threads

[hpcg] 13/1/2022 17:34

Ex rights to the latest capital return! RNS was on Tuesday.

[dlp6666] 13/1/2022 17:25

Any idea what triggered today's sudden 16% drop?

[smidge21] 19/10/2021 09:02

Thx,
I take comfort from ICG having more to lose from a messy/expensive wind-down than I have!

[hpcg] 10/10/2021 13:46

My consistent experience with winding up of trusts is that the cost of doing so is slightly over provisioned and there is a small bonus sum that arrives after the "final distribution", sometimes a couple of years later. This is probably one of the simpler ones to wind up as it has no assets that might come with calendared indemnities nor anything much to be sold, certainly in comparison with the loan book.

[loglorry1] 10/10/2021 11:47

@smidge should not be more than £1m.

[smidge21] 09/10/2021 19:44

Hi, has anyone seen any guesstimates of the legal costs etc of dissolving LBOW?
Many thx

[hugepants] 05/8/2021 12:55

A disposal and some cash to be returned soon

[hugepants] 01/6/2021 19:37

Still holding and expecting a decent return as this is wound up. First distribution expected in Q2 or early Q3.

[davebowler] 12/11/2020 10:25

Liberum-
ICG Longbow Senior Secured UK Property Debt Investments has received 87% of interest payments due for quarter to 31 October 2020 (82% in quarter to 31 July). The company has agreed to capitalise a further quarter's interest relating to the £15m Southport hotel loan to provide working capital during the latest lockdown. The manager reports positive trading for the hotel during Q3 and the LTV ratio on the loan is 67%.

Interest receipts have increased quarter-on-quarter as a result of full interest payment on the Quattro loan (£8.8m outstanding) together with a small amount of arrears.

The company expects full principal and interest payments on all of its loan positions.

Liberum view

The shares have re-rated strongly following the recent announcement of an intention to switch to an orderly realisation strategy and return capital to shareholders. The weighted average term on the loan portfolio is 2 years, although we note the likelihood of loan extensions for borrowers that may need to refinance or sell assets in order to repay their loans. The payment of part of the arrears on the Quattro loan is encouraging. The loan is secured on three assets in Kingston. A payment plan had been agreed with the borrower to rectify the situation over the next two quarters. The LTV on the loan is currently 85.8%. Contracts have been exchanged for the sale of one of the assets which would materially reduce LBOW's exposure.

[stemis] 12/11/2020 08:15

Decent update. All interest being received apart from on the Southport loan. In the prior quarter the Quattro loan was non performing but that has been brought up to date. I'm slightly confused about the Royal Life loan as, in the half year report, it was stated that interest was being deferred, but that doesn't seem to be the case.

[tiltonboy] 03/11/2020 13:14

I don't know why ICG just doesn't integrate the LBOW portfolio into it's own, and make an offer at close to NAV to keep it nice and clean!

[davebowler] 03/11/2020 09:29

Liberum-
Event

The board of ICG-Longbow Senior Secured UK Property Debt Investments will recommend to shareholders that the investment policy is amended so that the company can pursue an orderly realisation strategy and return of capital. If approved, the new strategy will be implemented to maximise value to shareholders and the manager will not be required to dispose of assets within a defined time frame. The listing will be maintained throughout the orderly realisation process and the board intends to maintain the current dividend target (6p annualised).

In reaching this decision, the board has referenced the current economic backdrop and rating of the sector. Factors influencing the decision include the current discount to NAV and the fund's size and liquidity, feedback from shareholders and the maturity profile of the portfolio.

LBOW portfolio breakdown

Loan

Region

Sector

Remaining term

Balance

LTV

Halcyon

National

Industrial

0.4

5.7

65%

BMO

National

Mixed use

0.0

11.4

49%

Quattro

South East

Mixed use

0.5

8.8

81%

Affinity

South West

Office

1.8

16.7

66%

Southport

North West

Hotel

2.7

15.2

65%

Northlands

London

Mixed use

2.2

9.2

57%

RoyaleLife

National

Residential

3.2

24.9

83%

LBS

London

Office

2.2

6.0

74%

Knowsley

North West

Industrial

2.7

5.7

71%

Carrara

Yorks/Humb

Office

1.6

4.3

73%

GMG

London

Office

2.2

12.8

70%

Total / average



2.0

120.7

69%



Source: Liberum, Company data

Liberum view

In some respects, the proposals come as a surprise given the recent improvement in performance and the manager's outlook in the July interim report. The fund is, however, sub-scale and has struggled to attract new capital despite a change in investment policy and attempts to raise equity. The proposals are in line with the recommendation of the investment manager, ICG Real Estate. The listed fund is only a very small part of the manager's AUM. ICG had €4.9bn of AUM within its real assets division at 31 March 2020. The manager has had considerably more success raising money for private funds as evidenced by the €1.7bn raised for ICG-Longbow Fund V.

The maturity profile of the portfolio offers the potential for a relatively swift return of capital, although we note the likelihood of loan extensions for borrowers that may need to refinance or sell assets in order to repay their loans. At the current 22% discount, the shares present an attractive risk/reward offering, given the downside protection from collateral backing (69% LTV)

[hugepants] 03/11/2020 08:58

That's unexpected. Orderly realisation and return of capital.

[hugepants] 12/10/2020 19:58

Director buys 50K

[hugepants] 28/9/2020 11:49

Interims:

"...Despite the overall resilience of the loan portfolio, the Company's share price has fallen to a material discount to NAV as a result of the wider market re-rating following the onset of Covid-19. The Board believes the current share price discount is unwarranted given the security offered by the Company's loan portfolio, with exclusively first mortgage investments at an average LTV below 70%. With shorter-dated gilts providing a negative yield currently, the attraction of a fully covered 6.0 pence per share annual dividend, offering a yield of approximately 7.8% on the current share price, is in the Board's view a compelling investment. As a measure of their confidence in the Company and its prospects, the Directors collectively acquired 182,500 shares in the Company during the period..."

[davebowler] 09/9/2020 09:36

Liberum;
Dividend target to be maintained

LBOW: Mkt Cap £92m | Prem/(disc) -22.7% | Div yield 7.9%

Event

ICG-Longbow's NAV per share at 31 July was 98.3p, reflecting a 1.4% return in the quarter and 6.1% over 12 months.

The portfolio comprised 11 investments at 31 July with a total balance of £121m. A new £16.9m commitment to a loan secured on an office property in St James's, London competed in the quarter. Following completion of the new loans, the weighted average coupon on the portfolio is 7.3%. The average portfolio LTV is 69.3% (April 2020: 68.2%). The weighted average remaining term on the loan portfolio is 2.0 years.

The manager previously reported it had received 82% of interest payments due for quarter to 31 July 2020. The company agreed to capitalise a further quarter's interest relating to the Southport hotel loan (13% of NAV). The hotel has now re-opened and interest is now expected to be covered from operating cash flows.

The largest loan, RoyaleLife (21% of NAV), is secured on a portfolio of bungalows home sites on the South Coast. Interest is serviced from new home sales. Interest has been substantially paid for Q2, with the balance due in September and the deferred interest expected to be caught up over the coming quarters. The properties have been revalued upwards by 15% since the loan was agreed, reflecting continued investment in the sites and new planning permissions.

The Quattro loan (8% of NAV) is secured on three assets in Kingston. The loan has fallen into arrears with interest only partially covered by rental income. A payment plan has been agreed with the borrower to rectify the situation over the next two quarters. The LTV on the loan is currently 85.8%. Contracts have been exchanged for one of the assets and the borrower also intends to add eight new apartments above one of the properties.

Liberum view

The portfolio update is broadly positive with the manager reiterating its view that it does not expect any impairments. The dividend target is also expected to remain unchanged at 6p. The dividend has been fully covered for the last three quarters, following a 2.5 year period in which dividends had been partly funded from capital. The main concern at this stage is the Quattro loan. The borrower had fallen behind on interest payments in 2019 due to working capital issues following a capex programme. We note however the sale of one of the portfolio assets should reduce LBOW's exposure.

[davebowler] 21/8/2020 09:29

Stifel;

ICG Longbow – Manager on track to be fastest in de-risking legacy portfolio

VPC Specialty Lending – New loans extend international reach

Blackstone GSO – Webinar highlights

Key Points
ICG Longbow – Manager on track to be fastest in de-risking legacy portfolio

Since the Covid lockdown, all of the property debt funds (ICG Longbow, Real Estate Credit and Starwood European Real Estate) have been trading at double digit discounts. In this new environment, it is clear that all three managers will become more discerning in their underwriting standards and loan selection given the wide-ranging impact of the virus on businesses. We view new loans that have been committed post-February as potentially being more robust than the pre-Covid portfolio, as these new standards are incorporated into the investment process. ICG Longbow as the smallest and most concentrated of the three funds (typically this would be viewed as a negative) has committed just under 20% of the portfolio post-February which is materially higher than its larger diversified peers. This is a significant positive in our view, and at least on a fundamental basis should mean ICG Longbow trades closer to NAV than its peer, whereas currently it has the widest discount of -24% and a historic dividend yield of 8%.


With regards to new loans, the manager states that declining LIBOR has relatively little impact on their potential return profile as they are guided by underlying project returns and an equitable split between debt and equity. While return potential has certainly gone up following lockdown, the manager will continue to target between 8-10%, but will also look to reduce risk (i.e. upgrade quality of portfolio). We think both points are valid and sensible. We reiterate our Positive recommendation. (Analyst: Sachin Saggar).


VPC Specialty Lending – New loans extend International reach

This week VPC released the Q2 letter. We were looking for two key elements. The first was the extent of de-leveraging that has taken place. While there is no clear metric disclosed we note the gross portfolio has fallen from c.£430m at 31/03/20 to c.£380m at 30/06/20, largely through the fund repaying company level debt. The second element was new investments and whether capital has been deployed into securities versus private loans (previously flagged). We have mixed feelings on the announcement of one new UK loan, one Asian and a potential third in Australia. While we can understand the desire to expand outside of the US, the fund’s track record abroad has been mixed with a UK loan to Borro encountering difficulties and the recent announcement of the UK subsidiary of Elevate being placed into administration (although no NAV impact is expected). The expansion into Asia and potentially Australia is another matter, as culture, time differences and logistics are clearly more complex. In our experience, rapid expansions outside your home market are fraught with issues and many funds have tended to stumble. (Analyst: Sachin Saggar).

[yieldsearch] 10/8/2020 11:40

yes indeed positive

[hugepants] 10/8/2020 11:27

Update this morning


They claim 82% collection (or expected to be collected) for this quarter and expect the hotel to restart payments now that is has reopened. So that should take collection up to over 95%

[hugepants] 05/8/2020 16:04

20 JUL 2019. The brand new Bliss Hotel in Southport unveiled its new look last night as guests enjoyed their first taste of the venue’s £15million transformation....

[hugepants] 27/7/2020 15:48

The Southport hotel is quite high end and is well located close to the beach, pier, theme park etc. So the fact the adjacent conference centre is closed may not be too detrimental.

[yieldsearch] 23/7/2020 13:52

New factsheet
hxxps://www.lbow.co.uk/~/media/Files/I/ICG-Longbow/documents/factsheet/fact-sheet-quarter-to-30-april-2020-2.pdf

New loan:
Knowsley. Current balance of 3.5m and LTV of 60.30%, implying a valuation of £5.8m. However £4.25 is balance undrawn so that loan could be for a total balance of £7.75m (i am assuming that additional properties will be securing this as £5.8m of valuation is lower than total loan balance...) Industrial in North West, not clear if it has a diversified tenant base. would have been good to know. Lets hope so. Drawn in feb 20 so likely not priced to post Covid markets.

Existing loans:
Halcyon, Carrara are now showing an unexpired team of 0.6yrs so likely extended.

BMO still there with no unexpired term, but not a concern as the LTV is low at 51.50%. Could be a new loan with better interest rate?

Quattro: 0.71 year left to the term, company stated in the past that they are monitoring carefully. High LTV at 80.60%, not clear to me if it can be refinanced/ will rely on the planned sale of an asset. One to watch.

Affinity loan: LTV has reduced from 70.8% (Factsheet 31.01.2020 ) to 66%, while the loan outstanding has not changed. Not clear what happened here (New valuation going up during covid?? additional properties securing the loan??). If confirmed, positive for shareholder as this loan is one of the largest (15.8%)

Southport:
LTV increase to 70% as the loan amount increased (draw on the undrawn commitment). Balance undrawn of 0.31m suggesting that the works are nearly completed. Secured on hotel (see links below) so v likely got full impact of Covid. The theatre and convention centre next door is in liquidation (was owned by a company related to the hotel). Highlighted by the asset manager as adversely impacted. Not clear how the loan interest is capitalised as it doesn’t add up to the ltv calculation.

Clearly one loan to watch for potential losses.
Probably needs the theatre /convention centre to reopen to have sustainable level of occupancy and room revenues. It is 14% of the asset base so not a small exposure.

hxxps://www.placenorthwest.co.uk/news/icg-deal-puts-bliss-on-course-in-southport/
hxxps://www.liverpoolecho.co.uk/whats-on/arts-culture-news/southport-theatre-goes-bust-bosses-18260895


RoyaleLife
Secured on high end bungalows, from Royale Life (apparently largest provider in UK). Was part of a larger loan , syndicated to other ICG funds. Covid impacted sales but would expect this to restart. Largest loan (22.5%) and high ltv (80.8%) in a specialised sector.
hxxps://www.recapitalnews.com/icg-longbow-backs-uk-retirement-housing-200m-loan/


Overall,
the weighted average loan to value increased to 68.20% (from 66.40%), with the weighted coupon softening to 7.48% (from 7.51%).

70% of the loans have unexpired term >2 years so limited risk there as long as valuation have not reduced significantly (Southport hotel?) and loan interest covered.

Short term concern seems to be the quattro loan close to expiry/refinance, and Halcyon/carrara/BMO loans already extended but those have lower LTV.
Southport doesnt look great. would be helpful to get more disclosed in the factsheet.

[hugepants] 23/7/2020 10:24

A new investment.

[hugepants] 23/6/2020 09:39

A non-exec purchased 100K at 75.7p yesterday

[hugepants] 05/6/2020 15:57

Thanks. I think there was an error in that fact-sheet. There is a new one on the website. Portfolio breakdown is;

Mixed-use 28%
Offices 21%
Residential 20%
Hotel 12%
Cash 11%
Industrial 8%