Icg-longbow Senior Secur... Share Discussion Threads

[jonwig] 11/1/2017 09:50

Thanks scburbs.

My instinct is getting me more and more risk averse, I think you've allayed that a bit here - and anyway, it looks as though the policy will phase in as existing loans mature and the new capital is deployed.

Para 2, 3: I would have drawn the line at anything below whole secured.

Para 4: but they'be stuck with non-performing assets or a capital loss, maybe a dividend reduction.

So maybe I can park this one again for the time being!

[scburbs] 11/1/2017 09:26

Hi Jonwig,

Yes, definitely an increase in risk which was always going to be necessary to retain 6% yield so not really a surprise.

On the plus side they are focussing on whole secured loans, i.e. at the top end of their risk profile they should have a loan of 0-85% LTV rather than any mezzanine loans in the 75-85% tranche only. This means the 80-85% portion of the whole loan should be less than 1% (being 20% * 5%) of GAV.

They clearly state that they will not invest in subordinated loans, mezzanine loans, leveraged loan portfolios etc. which provides greater transparency of overall risks.

Therefore, if there is a fall in values they should be in control and first in the queue rather than mezzanine lenders who risk being wiped out as senior lender in control generally only focusses on recovering their own loan as soon as a sufficient offer is available after any default.

It would be interesting to know what gross yield they were expecting the new policy to provide and what their assumptions on bad debts were in concluding the portfolio would provide 6% yield plus some capital growth.

[jonwig] 11/1/2017 07:38

A revised investment policy proposed. On the existing policy, future loans can't be made which enable a 6p dividend.

From what I can see, the main change is that the current senior with 65% LTV is relaxed to "first ranking loans ... with an aggregate LTV of no more than 75%" and, further, "have an LTV no higher than 85% at the time of origination or acquisition provided however that the aggregate value of the loans with an LTV of greater than 80% shall be no greater than 20% of the Company's gross asset value".

Actually, I find 80, 85% a bit scary as property values can be ill-determined in the event of a financial crisis - the market dries up. (75% over the whole portfolio isn't much reassurance.)

[skyship] 22/12/2016 08:31

XD 1.5p today. PD = 13/01/17

[skyship] 14/12/2016 16:53

Ah-ha....spoke to John Christie at Heritage.

Problem is that the RNS gave the old website!

The new website address, where the factsheet appears, is:



NAV up to 104.02p

[skyship] 14/12/2016 16:40

jonwig....!?@#~.....its still not there! That link is to the Q2 factsheet to end July. We are waiting for Q3 to end October...

[jonwig] 14/12/2016 15:26

It's there now:



Blush ... should I have cleared my cache earlier?

[skyship] 14/12/2016 11:57

& I phoned them...ansaphone...no answer yet!

[jonwig] 14/12/2016 10:44

I coudn't find it - e-mailed them yesterday, no reply yet.

[scburbs] 14/12/2016 09:40

Latest factsheet is well hidden if it has been uploaded to the website. Anyone seen it and can post a link?

[skyship] 06/12/2016 08:50

Long time since I've been in these; but as I'm excessively long cash I decided the very recent minor fall provides an opportunity.

Bought a few @ 103.5p and pondering whether to add. Anyone any views as to why these have fallen back....looks perhaps just to be one holder selling down his holding rather than anything that might startle the horses...

[davebowler] 28/10/2016 15:40

27 October 2016

ICG-Longbow Senior Secured UK Property Debt Investments Limited (the Company)

Portfolio Update

The borrower under the Group's(1) RAEES International loan has completed a refinancing of the properties which provided security for the Group's loan. As a result, the GBP13.25 million loan has been repaid in full, together with interest, exit and prepayment fees of approximately GBP1.8m in aggregate. The proceeds of this repayment will be received by the Company shortly.

The Investment Manager has an encouraging pipeline of potential transactions in which the Group could reinvest these proceeds, and will seek to do so in the manner most accretive to shareholders.

[davebowler] 14/10/2016 09:15

Liberum;
ICG-Longbow Senior Secured UK Property Debt Investments
Strong interims but returns likely to decrease over medium term

Event
NAV per share at 31 July 2016 was 102.7p per share which equates to a NAV total return of 5.5% for the six-month period. Returns have been ahead of of expectations because of prepayment fees relating to the Mansion and First Light loan repayments.

The portfolio comprises 10 loans with a weighted average LTV of 57.3% and expected gross IRR of 8.7%. The weighted average residual term was 2.3 years of which an average 1.2 years remains income protected.

There is potential for further loan repayments in the loan portfolio over the next year as the income protection period reduces. The manager has indicated that the redeployment of capital over the medium term will struggle to meet the existing return targets as interest rates on senior loans are significantly lower than at the time of the IPO. The manager expects to bring forward proposals to update the company's investment policy to allow the company to reinvest repayment proceeds having regard to current market conditions.

Liberum view
Interim results for the period to July 2016 were strong with the company's income protection providing a boost to returns from early repayments. The medium-term outlook for the company is uncertain as investors face the prospect of moving up the risk curve to maintain the level of returns or accepting a lower return for deployment in loans with similar risk characteristics to the existing portfolio. The company trades on a 0.3% premium to NAV (5.8% dividend yield).

[davebowler] 22/9/2016 09:30

Distribution period: 1 May 2016 - 31 July
2016
Distribution amount 1.5 pence
per share:
Ex-dividend date: 22 September 2016
Dividend record 23 September 2016
date:
Payment date: 14 October 2016

[davebowler] 20/9/2016 10:49

LBOW mentioned as cheap here -

[jonwig] 05/9/2016 10:04

It's hard to fathom: comparison with SWEF is interesting, as it stands at a premium of about 5% to NAV and pays 6.5p. Its loans are also mostly subordinated, I think.

I seem to remember that HSLE (similar to LBOW but not property lending) had a fairly low payout and consistently traded at a few percent discount to its NAV. People will chase high yield even at risk to capital these days.

[scburbs] 05/9/2016 09:34

Surely its the reverse, i.e. they have a portfolio of loans at above current market rate so the shares should be trading at a premium.

Logically if in the future they push out loans at the current market rate they should trade at par (in respect of the new loans). Unless you take the view that the management fees are too high etc.

If the new strategy is unlikely to result in the shares trading at par (plus providing a reasonable yield) then the correct answer on the continuation vote become very easy!

[jonwig] 05/9/2016 07:29

That's a reasonable conclusion. The management fee is 1% and these things can be re-negotiated, after all they only have 11 loand.

[orinocor] 05/9/2016 06:44

ok but I suppose if they go for the lower dividend yield option the shares will trade at a NAV discount maybe 10% which would give a share price of around the 90p mark?

[jonwig] 05/9/2016 05:43

The current objective is to make senior secured property loans which will enable them to pay a 6p dividend. As loans mature and new ones made, the interest rate looks likely to be too low given continued yield compression.

The basic choice, then, is between targeting a lower dividend yield and going up the risk scale with unsecured and mezzanine loans. Of course, the continuation vote may not be passed, in which case the company will, presumably return cash and go into run-off.

Personally I wouldn't be keen on the riskier loans path, as SWEF is already there, and I have a holding in that.

[orinocor] 04/9/2016 15:36

I took the paragraph below from the last results.

What are the implications going forward? I'm tempted to buy but have no idea what LBOW culd potentially morph into. Any comments?


"As referred to above, given the shortening residual maturity of the loan portfolio and recognising that current market conditions would not support the re-investment of loan proceeds at similar risk and return dynamics as the existing portfolio, the Board together with the Investment Manager and now Cenkos is reviewing the Company's longer term strategy. This review will seek to identify changes to the investment objective (whether in terms of risk or return) that would be required in order to allow the anticipated future loan proceeds to be reinvested as the portfolio is realised. Recognition of shareholder views on the trade-off between yield and risk will of course be taken into account. The results of that review will be communicated to shareholders in due course and indeed well in advance of the continuation vote in 2017."

[jonwig] 17/8/2016 06:16

Brewin Dolphin have been buying - for discretionary clients with a cautious-leaning portfolio, I guess.

From below 5% to 5,478,965 shares, 5.0628% of company.

[wirralowl] 07/7/2016 11:22

Investment Manager comments following Brexit and confirmation of NAV increase to 102.45p:

4th July 2016

ICG-Longbow Senior Secured UK Property Debt Investments Limited (the Company)


"Following the "Leave" outcome of the UK Referendum on EU membership, we are now entering a period of volatility, uncertainty and adjustment in the UK which will affect the property investment and property finance markets. The Investment Manager has considered the impact of this outcome and remains confident in the underlying quality and resilience of the Group's security portfolio from both a capital and income perspective, given the senior secured risk positioning, diversification at portfolio level by sector and region and at loan level through exposure to predominantly multi-property or multi-tenanted security.

In particular, the Group's 11 loans are underpinned by a security portfolio comprising 74 properties and 275 tenants (plus 325 hotel rooms) which benefit from the conservative risk metrics of 57.1% loan to value ratio and 174% interest coverage ratio, whilst each loan also benefits from strong financial covenants. The loan portfolio has no exposure to the Central London office or residential markets, which the Investment Manager believes may be disproportionately affected by the outcome of the vote, nor any imminent loan maturities. As a consequence, the Investment Manager believes the Group's loan portfolio to be well positioned to withstand any short term volatility and downside risk, whilst supporting the maintenance of the quarterly dividend payment."

The Factsheet also confirms that the Company has declared a dividend of 1.5 pence per share in respect of the quarter ending 30 April 2016 and that the Company's NAV has increased to 102.45 pence per share following the repayment of the Mansion loan, together with associated exit and repayment fees.

[jonwig] 13/4/2016 14:41

Latest stated was 102.1p (Oct 2015) plus 2.5p referred to in post #55 ... should be about 104.6p now. Loans are all secured.

[kev0856153] 13/4/2016 14:19

This is no longer priced at a premium to NAV so decided to buy today at 102.5p for that almost 6% yield.