Secured finance
Information as per 30 September 2022 half year report
| Investment | Investment type | Carrying value | Income return | Property type / underlying security |
|---|---|---|---|---|
| Secured senior finance | First charge secured loans | £33.1m * | 5.8%** | Diversified loan portfolio focussed on real estate investments and developments |
| Secured mezzanine finance | Second charge secured loans |
£15.0m * |
15.7%** |
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 30 September 2022, ART had invested a total amount of £48.1 million across nineteen loans. Over the past twelve months the loan portfolio has increased by 37.0%.
During the six months to 30 September 2022, four loans for £9.0 million (including accrued interest and exit fees) were fully repaid and a further £2.4 million (including accrued interest) was received as part repayments. Post period end, one loan of £1.1 million was drawn, additional drawdowns of £1.9 million were made on existing loans and part loan repayments were received amounting to £0.67 million (including accrued interest).
Each loan will typically have a term of up to two years, a maximum 75% loan to gross development value ratio and be targeted to generate attractive risk-adjusted income returns. As at 30 September 2022, the senior portfolio has an average LTV of 64.4% based on loan commitments (with mezzanine loans having an LTV range of between 48.8% and 78.6% whilst the highest approved senior loan LTV is 72.9%).
Two loans in the portfolio 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 ECL on these two loans of approximately £2.3 million; the Group have also provided for an ECL on the remainder of the loans’ portfolio for an additional £0.9 million: in total, the Group have provided for an ECL of £3.2 million in its consolidated accounts.
