Secured finance
Information as per 31 March 2023 annual report
| Investment | Investment type | Carrying value | Income return | Property type / underlying security |
|---|---|---|---|---|
| Secured senior finance | First charge secured loans | £38.8m* | 7.0%** | Diversified loan portfolio focussed on real estate investments and developments |
| Secured mezzanine finance | Second charge secured loans |
£16.6m* |
16.4%** |
Diversified loan portfolio focussed on real estate investments and developments |
* Including accrued interest/coupon at the balance sheet date
** The income returns for high return debt are the annualised actual finance income return over the period shown as a percentage of the average committed capital over the period
ART’s portfolio of secured senior and mezzanine loan investments have increased in scale and diversity over the past year. These loans are typically secured on real estate investment and development assets with attractive risk-adjusted income returns from either current or capitalised interest or coupons.
As at 31 March 2023, ART had invested a total amount of £55.4 million across nineteen loans. Over the past twelve months the loan portfolio has increased by 52.2%.
During the year, six loans totalling £10.7 million (including accrued interest and exit fees) were fully repaid and a further £5.2 million (including accrued interest) was received as part repayments. Post year end, no new loans were drawn but additional drawdowns of £3.3 million were made on existing loans, one loan was fully repaid for £1.5 million (including accrued interest and exit fees) and part payments for other loans were received amounting to £2.3 million (including accrued interest).
Each loan will typically have a term of up to two years (one loan has a term of four years), a maximum 75% loan to gross development value ratio and be targeted to generate attractive risk-adjusted income returns. As at 31 March 2023, the portfolio had an average LTV of 63.5% (with average approved LTV between 48.8% and 78.6% for mezzanine facilities while the highest approved LTV for senior loans is 72.9%).
Three loans in the portfolio, with a total balance at year end of £6.8 million, have entered receivership: ART is closely working with stakeholders to maximise capital recovery. The Company has considered the security on these loans (which are a combination of a first charge and a second charge over the respective assets and personal guarantees) and have calculated an Expected Credit Loss (‘ECL’) on these three loans of approximately £2.9 million; the Group has also provided for an ECL on the remainder of the loans’ portfolio for an additional £0.8 million: in total, the Group has provided for an ECL of £3.7 million in its consolidated accounts.
