Secured finance
Information as per 30 September 2023 half year report
Investment | Investment type | Carrying value | Income return | Property type / underlying security |
---|---|---|---|---|
Secured senior finance | First charge secured loans | £39.7m * | 9.8%** | Diversified loan portfolio focussed on real estate investments and developments |
Secured mezzanine finance | Second charge secured loans |
£18.2m* |
18.6%** |
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
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 2023, ART had invested a total amount of £57.9 million across eighteen loans. Over the past twelve months the loan portfolio has increased by 20.4%.
During the six months to 30 September 2023, one new loan was drawn for £0.8 million and additional drawdowns of £8.9 million were made on existing loans; two loans for £2.1 million (including accrued interest and exit fees) were fully repaid and a further £7.3 million (including accrued interest) was received as part repayments.
Post period end, £1.5 million of drawdowns were made on existing loans, one loan was fully repaid for £1.5 million (including accrued interest and applicable fees) and part payments were received amounting to £4.5 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 2023, the senior portfolio has an average LTV of 59.5% based on loan commitments (with mezzanine loans having an LTV range of between 49.5% and 68.0% whilst the highest approved senior loan LTV is 65.6%).
Four 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 four loans of approximately £3.7 million; the Group have also provided for an ECL on the remainder of the loans’ portfolio for an additional £1.4 million: in total, the Group have provided for an ECL of £5.1 million in its consolidated accounts.