Uk Mortgages Share Discussion Threads

[future financier] 09/7/2021 10:15

sounds like we have some people on this board who genuinely know what they are talking about! How rare!

[yieldsearch] 09/7/2021 09:40

FF and Stun12: yes UKML is the retention piece of rmbs securitisation/ junior piece, and also pre securitisation, the warehouse line. it is a very leverage position: getting this yield from portfolio of resi mortgage can only obtained by leverage (just look at the cost of your mortage and calculate how much leverage you need to get to this..) You need a number of residential mortgage loans to default and make a loss to start impact this. Historically default are linked to divorce rate and employment. My belief (i may be wrong) is that the UK government will do "whatever it takes" to maintain and prop up UK resi prices (stamp duty holiday, help to buy, cheap funding for banks through TLTRO, low capital adequacy, may be Miras eventually..) so really you are exposed to a macro risk. Reci is comprising leverage position on mainly commercial properties. commercial properties are riskier than resi (just look at shopping centre and retail). so you are more exposed to single risk (one tenant not paying) or event risk ( a property development going bust) greater risk RECI vs UKML, but there is a dvd premium I hold both.

[stun12] 09/7/2021 09:14

I would agree with all that, FF. I work on the 'edges' of securitisation.

[future financier] 08/7/2021 14:22

I've got RECI as well - but not as many. Two companies are similar in some respects but whereas RECI is taking large slabs of debt on large individual projects (where a problem on one site might have a material impact on RECI), UKML is taking in substantially all of the debt on thousands of mortgages and then improving its return by securitising away the least risky part of the debt. So the risk here is of a generalised downturn in the market causing a significant number of re-possessions across the whole portfolio. At least that is my take on the situation!

[boystown] 08/7/2021 11:45

Many thanks FF. I will get a few. Is this similat to RECI? Any views on that one? I'm out of my comfort zone when it comes to analysing these things. Stun12, I already hold MNG at a good profit. Just wish I'd bought more

[stun12] 08/7/2021 11:10

Indeed it does. Our company bank account pays - wait for it - 0.01%, so our retained earnings go into these and a bit of MNG.

[future financier] 08/7/2021 11:07

Boystown Current yield is 6.2% - 4 quarterly divis of 1.125p = 4.5p on current price of 72.5p. I believe the divi to be sustainable - they appear to have sorted out the issues that they had previously with some large portfolios of loans tying up a load of capital and not yielding a lot. They have slightly increased their risk profile through the changes they made last Autumn but I still consider this to be an element of the "Low Risk" segment of my portfolio.

[future financier] 08/7/2021 10:28

The divi yield at 6% is always useful to have in any portfolio - particularly when I believe that the risks to capital are quite modest. So not a lot to talk about at present! stun - interesting - I have a slab personally and another (larger) slab of these in my company - beats getting 0.4% from a bank!

[boystown] 08/7/2021 10:28

Curses - wish I'd come across this sooner! How sustainable is the 8.25% (?) yield, according to you experts, who, having read the thread, are clearly better informed than I am? I suppose the obvious danger is the inflation-related threat of an interest rate rise?

[stun12] 07/7/2021 17:40

Fair enough. We have some in our company investment account too, but for technical reasons can't really take part in the tenders with them.

[stemis] 07/7/2021 16:27

No, just sitting here collecting the dividends at the moment...

[stun12] 07/7/2021 16:21

Works OK this tender thing. Sell into the tender, buy back ~3p cheaper. Made nearly 3 dividends at once and didn't miss out on any of them. It's the end of that game now though, so now we need to see how they will do what is now required of them versus the discount to NAV. PS Am I now talking to myself? Recent BTL rmbs deals have been going well and pricing keenly. A non-conforming one has just been announced so we will be able to see how the forward flow warehouse to weaker borrowers fares.

[stun12] 06/4/2021 12:54

Thanks scburbs and FF. Makes sense.

[future financier] 06/4/2021 11:30

Sounds like a good explanation - wish I had known that in advance - there was a nice arbitrage opportunity at one point which only worked if you had a healthy level of acceptance. Worth bearing in mind for the next tender though.

[scburbs] 06/4/2021 11:02

Hi Stun12, I similarly had a tender fully accepted that I was expecting to be scaled back (as well as one that was partially scaled back). I think the answer is in 3.1/3.3 of the circular which implies your platform registered shareholder is the shareholder for the tender test rather than you. If they have multiple shareholders who don't tender then the total tender by the platform registered holder may have been equal to or less than 11.5% and, therefore, the platform tender (and your tender) gets filled in full.

[stun12] 01/4/2021 11:32

Quick question for you please. I hold UKML across several accounts (SIPP, wife's SIPP, ISA) but decided to just tender from the account which holds the most as 11.5% of the smaller holdings wasn't really worthwhile. So I had 40,000 in one account and tendered 10,000. These were 'locked' in the account and have now duly disappeared and the cash balance is £7.5k higher. However, 11.5% of 40,000 would have been substantially fewer shares and the tender was oversubscribed, which should mean I would be scaled back to the 'basic entitlement'. Any ideas? Do they send back the excess and then debit the account? TIA.

[stemis] 26/3/2021 11:54

Tender was massively oversubscribed which does rather suggest that any price rise is going to be restrained by selling from those who have been scaled back.

[rambutan2] 01/3/2021 20:45

Latest factsheet: httPs://mma.prnewswire.com/media/1443999/UKML___Factsheet___Jan_2021.pdf

[future financier] 09/2/2021 16:15

I am sure there will be some of those who were in favour of M&G who will be happy to exit - and the increase from 70p to 75p is broadly in line FTSE over the period. Added to which as a UKML shareholder they received a special dividend of 1.5p in October. So nothing too exciting but they are still ahead of the game with this outcome. I guess that if the tender fails then they will have to pay a special dividend to get rid of the surplus capital.

[stun12] 09/2/2021 14:36

UKML is warehousing loans from The Mortgage Lender in a different warehouse, Cornhill No.5. These were securitised in Barley Hill in Apr-19, but the balance is building again with £235m of completed originations paying an average 3.88% as at the Dec-20 fund update. The tender for UKML shares is interesting, not least because of SteMiS's observation above that it would improve NAV due to purchasing at a discount. I don't know about anybody else, but I'm not really inclined to tender shares with such a small difference between the current price and 75p (and bear in mind that the final M&G offer of 70p represented a much higher premium in difficult times) when UKML's future direction requires the discount to NAV to be eliminated altogether over time. I wonder what happens if insufficient shares are tendered?

[future financier] 09/2/2021 10:41

Looking at their presentation from last week they will soon be almost totally reliant upon the newcomer, Keystone, to generate the assets that they manage. Wonder what thy plan to do with them - sounds like they are quality mortgages and steadily increasing the volumes and margin. Plans to get closer still?

[stemis] 09/2/2021 00:11

Interesting. £40m at 75p a share would add a couple of pence to NAV/share.

[rambutan2] 08/2/2021 21:52

More welcome news: Agreement to Dispose of Two Portfolios Under Revised Strategy The Board of UK Mortgages Limited ("UKML", or the "Company") and TwentyFour Asset Management LLP ("TwentyFour") are pleased to announce that on Friday 5th February 2021, UK Mortgages Corporate Funding Designated Activity Company ("UK DAC") signed agreements under which, Godiva Mortgages Limited ("Godiva"), a subsidiary of Coventry Building Society ("Coventry") has made a commitment to purchase two buy-to-let mortgage portfolios originated by Godiva and currently financed within the Cornhill No.6 and Malt Hill No.2 vehicles. Subject to successful completion, the timing of these sales is expected to coincide with the payment dates in February and May 2021 respectively. Strong market conditions have enabled these portfolios to be disposed of at economics that improve on those indicated to investors in late 2020 and also ahead of anticipated timing for the Cornhill No.6 portfolio... https://uk.advfn.com/stock-market/london/uk-mortgages-UKML/share-news/UK-Mortgages-Ltd-Portfolio-Disposal-Announcement/84270549

[scburbs] 05/2/2021 12:49

Thanks Rambutan2. Must have missed it when I looked there before. Not a fan of this new(ish) website redesign.

[stun12] 05/2/2021 09:50

No trades at all so far today, after a couple of 1m+ days. I guess people are happy to hold. I know I am. Divi arrived this morning too.