REG - GCP Asset Backed Inc - Quarterly Update

GCP Asset Backed Income FundAnnouncement

26/07/2024 07:00

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RNS Number : 8461X  GCP Asset Backed Income Fund Ltd  26 July 2024

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FOR IMMEDIATE RELEASE

26 July 2024

GCP Asset Backed Income Fund Limited

("GABI" or the "Company")

LEI: 213800FBBZCQMP73A815

Quarterly Update

GCP Asset Backed, which invested in asset backed loans, announces that, at 30
June 2024, the unaudited net asset value ("NAV") per ordinary share of the
Company (including current period revenue) is 90.92 pence per share.

NAV

The NAV represents a quarterly decrease of 0.33 pence per ordinary share
(0.36%) from 31 March 2024. This decrease primarily reflects asset-specific
revaluations, including loan-specific impairments and discount rate movements.
The weighted average discount rate of the portfolio at 30 June 2024 was
10.37%, a decrease of 0.32 percentage points over the quarter (largely
resulting from the evolution of the underlying portfolio as a result of the
repayments received) and an increase of 1.07 percentage points since 30 June
2023.

Capital allocation

During the quarter ending 30 June 2024, the Company did not make any
investments. As of 30 June 2024, the revolving credit facility ("RCF")
commitments were reduced to £1 million to lower ongoing financing costs,
primarily commitment fees, ahead of the RCF's maturity in August 2024. The
reduced facility has been retained for use in relation to the Company's FX
hedging contracts. Cash on hand as of 30 June 2024 was £5.6 million.

The initial capital distribution, as declared on 3 June 2024 was made on 24
June 2024. On a pro rata basis, 159,609,669 ordinary shares, representing
approximately 37.5% of the Company's issued shares, were compulsorily redeemed
at 89.66875 pence per share as of 10 June 2024. Following this redemption, the
Company has 266,016,390 ordinary shares in issue.

No new investment activity is planned for the current quarter. The focus
remains on the orderly realisation of the portfolio and the active management
of the portfolio by the Investment Manager, aiming to accelerate redemptions
or disposals where possible, in line with the Investment Manager's published
realisation plan (the "Realisation Plan").

Portfolio update

In determining the 30 June 2024 valuations, Mazars, the Company's independent
valuation agent, has applied certain asset-specific discount rate adjustments
or impairments to reflect updates to loan and/or borrower performance during
the period. During the period, £87.7 million in repayments were received,
reducing the number of total loans outstanding from 39 to 31. As announced by
the Company on the 8 July 2024, an additional repayment of £10.1m was
received after the 30 June 2024, reducing total outstanding facilities to
£244.4 million. Additionally, £7.8 million of interest was realised over the
period.

Two assets were removed from the Watchlist or Problem Loans list during the
quarter, with six loans classified as either Problem or Watchlist loans as of
quarter-end. The Company and Investment Manager continue to work to resolve
the remaining Problem and Watchlist loans. More details on the status of these
loans is provided below:

Watchlist and Problem Loans (representing 11.6% of the 30 June 2024 NAV):

·      Co-living group (0.0% NAV): This asset has been written down to
nil (0.32% of the NAV at 31 March 2024) due to increased uncertainty on
eventual recovery. Though recovery is still possible, the Investment Manager
and Mazars believe the degree of uncertainty and limited control over the
recovery process warrant a full impairment of the remaining facility.  This
is also in line with the recovery estimates set out in the Realisation Plan.

·      Social housing (4.3% NAV): Classified as a Problem Loan due to
persistent covenant breaches and failure to meet repayment obligations related
to wider financial and regulatory challenges at one of the registered
providers. The Investment Manager is progressing the early realisation of this
investment in accordance with the Realisation Plan.

·      Multi-use community facilities (0.3% NAV): The Investment Manager
is in discussions to exit the position and is actively exploring a number of
options.

·      Student accommodation (0.5% NAV): The borrower has requested an
extension to facilitate the refinancing or sale of the asset to repay the
loan. Following the end of the reporting period, a positive planning decision
was received regarding the property, which is expected to significantly
increase the collateral value. This position will be reassessed in the second
half of the year. The Investment Manager continues to work with the borrower
to achieve an exit through sale, refinance, or redemption.

·      Multi-use community facilities (0.9% NAV): Continued performance
improvements have been seen, and the asset continues to make payments linked
to turnover, in line with contractual requirements. The borrower has provided
an updated long-term budget for the project during the period resulting in a
further impairment of the facility. The position will continue to be monitored
and the loan remains on the Watchlist until further improvement is
established.

·      Co-living (5.6% NAV): As previously communicated in the Company's
2023 annual report and accounts, this facility has been classified as a
Watchlist loan due to the receipt by the Investment Manager of an updated
valuation showing a breach of the facility's LTV covenant, and the borrower's
failure to meet cash interest payments after the facility fell outside its
contractual interest capitalisation period. The Investment Manager continues
to engage with the borrower, who has made significant progress in stabilising
the asset, noting consistently high occupancy levels and a key commercial
tenant expected to take residence. This is expected to positively affect
valuation and improve the LTV position. Discussions on a redemption of the
facility are ongoing.

Further details will be provided in the Company's forthcoming interim
accounts.

Dividends

On 25 April 2024, the Directors declared a quarterly dividend for the period
from 1 January 2024 to 31 March 2024 of 1.58125p per share, which was paid on
4 June 2024. Aggregate dividend payments over the last 12 months represent a
8.3% yield on the Company's closing share price at 18 July 2024.

For further information:

 GCP Asset Backed Income Fund Limited                                      +44 (0)15 3482 2251

 Alex Ohlsson, Chairman
 Gravis Capital Management Limited - Investment Manager                    +44 (0)20 3405 8500

 Philip Kent

 Anthony Curl

 Cameron Gardner

 Barclays Bank PLC, acting through its Investment Bank - Corporate Broker  +44 (0) 20 7623 2323

 Dion Di Miceli                                                            BarclaysInvestmentCompanies@barclays.com

 Stuart Muress

 James Atkinson

 Buchanan/Quill - Media Enquiries                                          +44 (0)20 7466 5000

 Helen Tarbet

 Henry Wilson

 George Beale

Notes to the Editor

About GABI

GCP Asset Backed Income Fund Limited is a closed ended investment company. Its
shares are traded on the Premium Segment of the Main Market of the London
Stock Exchange. Its investment objective is to undertake a managed wind-down
of the Company and realise all existing assets in the Company's portfolio in
an orderly manner.

The Company's portfolio comprises a diversified portfolio of predominantly UK
based asset backed loans which are secured against contracted, predictable
medium to long term cash flows and/or physical assets.

 

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