REG - RM Infrastructure RM SecDirect - RMDC - Net Asset Value(s)

RM Infrastructure IncomeAnnouncement

16/01/2024 07:00

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RNS Number : 7643Z  RM Infrastructure Income PLC  16 January 2024

 RM Infrastructure Income Plc

 ("RMII" or the "Company")

 LEI: 213800RBRIYICC2QC958

 Net Asset Value

On 20 December 2023, at General Meeting shareholders approved the
 implementation of the Managed Wind-down of the Company as further described in
 the Circular published on 30 November 2023.  Accordingly, at that time the
 Company's investment objective was restated as follows: "The Company aims to
 conduct an orderly realisation of the assets of the Company, to be effected in
 a manner that seeks to achieve a balance between returning cash to
 Shareholders promptly and maximising value."

NAV & Share Price Performance

The Company's NAV % Total Return for the month of December was 1.80%, which
 brings the NAV % Total Return for the quarter to 1.59%.

 The NAV % Total Return over the last twelve months was 4.83% and inception to
 date (ITD) 43.85%.

 The Ordinary Share NAV as at 31(st) December 2023 was 90.35 pence per share.
 This monthly NAV return of 0.003 pence per share arose primarily from the
 ex-dividend effect of the 1.625 pence per Ordinary Share dividend for the
 period Q3 2023, declared and paid in December 2023. Otherwise, there was
 positive interest income, net of expenses, of 0.556 pence per share and an
 increase in portfolio valuations of 1.07 pence per share.

Summary for December 2023 (pence per share)
 Net interest income             +0.556p
 Change in portfolio valuations  +1.072p
 Payment of Dividend (Q4 2023)   -1.625p
 Net NAV Movement                +0.003p

 

 Since inception, the portfolio's valuation approach has been based around fair
 value where the independent third-party valuation agent looks at observable
 pricing for similar sectors and values the assets based upon where comparables
 are valued. This incorporates the broader market returns as well as any
 idiosyncratic risks. Through review of the latest iteration of the extant IPEV
 guidelines and discussions with the Company's valuation agent and a review of
 industry practice in light of the change in guidelines, the Company has now
 moved to a valuation process that is driven by a yield-based methodology. This
 change has given an uplift to the portfolio valuation over the month.

Market Update

Government bonds saw a big reversal in the final quarter with 5-year yields
 moving from 4.6% to 3.45% over the quarter and this was the same picture
 across the gilt curve. Credit spreads moved in from 450 to end the year at 310
 in ITRX Crossover index. So overall it was an exceptional quarter for fixed
 income products.

                    Total Return (%)
                     1yr     3yr      5yr
 RM Infrastructure Income NAV           4.83%   18.44%   32.17%
 RM Infrastructure Income Share Price   -4.63%  7.66%    7.28%
 S&P European Leveraged Loan Index      5.16%   -1.50%   -1.40%
 iShares Core Corp Bond UCITS ETF GBP   8.53%   -14.85%  3.09%

 

 Portfolio Update

 The Investment Manager remains confident with regards to the low interest rate
 sensitivity of the portfolio. This is largely driven by its short average
 duration, which is currently 1.69 years. The weighted average yield of the
 portfolio has increased to 10.91% at the end of the reporting period, a
 widening in yield of 53bps versus September 2023 or 176bps versus same period
 last year.

 We outline below the key investment activities for Q4 2023:

 New Investments:

 Given the outcome of the Board's strategic review and the resulting
 Shareholder-approved managed wind down of the Company, there will be no new
 investments (save for drawdowns against committed facilities) unless the Board
 considers that doing so will maximise returns to Shareholders in the timeframe
 in which the Company will otherwise be dealing with the managed wind down.

 Material Repayments:

 ·      Healthcare, Ref #82: £5m

 ·      Healthcare, Ref #83: £2.8m

 ·      Accommodation, Ref #84: £4m

 In addition, during the reporting quarter, the Company claimed against its
 CBILS guarantee for investment loans Ref #78 and Ref #89, successfully
 recovering £4.4m in aggregate, in line with book values. Proceeds of said
 guarantee payment receipts have been utilised in repayment of the Company's
 outstanding leverage.

 The Company is also expecting prepayment at par of investment loan Ref #71
 during the month of January 2024.

 As disclosed in December 2023, the Company has Investment loans (Ref #58, #80,
 #92 and #79) junior secured against and / or exposed to the Virgin Clyde
 Street Hotel in the city-centre of Glasgow, Scotland. The senior secured
 lender has initiated an administration process to recover value with the hotel
 now being closed. The Company's total nominal outstanding balance in respect
 of said loans is circa £15m, with investment loans Ref #80, #92 and #79 (or
 circa 83% of nominal outstanding) underwritten via the Coronavirus Business
 Interruption Loan Scheme ("CBILS") and / or the Recovery Loan Scheme ("RLS)
 which benefit from a partial contractual government-backed guarantee. CBILS
 and RLS related investment loans have all been marked at their guarantee
 level, and as a result, RM does not foresee any further write downs of these
 loans. We are currently forecasting CBILS and RLS claims being made towards
 the end of H2-2024 with funds being received in December 2024 - this has been
 factored in the Portfolio's duration workings. Investment loan Ref #58
 benefits from a valuable additional 3(rd) party security package and has
 therefore been valued accordingly by the valuation agent.

 Finally, the Company has been pursuing a legal claim against the former main
 contractor of investment loan Ref #68, a wholly owned 79 beds student
 accommodation located in the city centre of Coventry-UK, since September 2022
 via an adjudication process. On the 2(nd) of January 2024, RMII was
 successfully awarded circa £1.2m by the adjudicator (or circa 1 pence per
 Ordinary Share), with circa 90% of said sums now having been received in
 cleared funds. Following a lengthy legal process, it is very pleasing to be
 able to deliver a positive value accretive outcome for Shareholders.

 All leverage facilities were fully repaid during the reporting quarter with
 the Company now completely ungeared. Current cash balance sits at circa £9m.
 The Company will seek to hold circa £6m in unrestricted cash reserves to fund
 undrawn committed facilities and other Company-related working capital
 requirements. This is expected to start decreasing in Q2-2024 as and when
 undrawn committed facilities are utilised.
 The Company also announces that the Monthly Report for the period to 31
 December 2023 is now available to be viewed on the Company website:

 https://rm-funds.co.uk/rm-infrastructure-income/rm-funds-investor-monthly-fact-sheets-2/

 END

 For further information, please contact:
 RM Capital Markets Limited - Investment Manager
 James Robson
 Thomas Le Grix De La Salle
 Tel: 0131 603 7060

 FundRock Management Company (Guernsey) Limited - AIFM
 Chris Hickling
 Dave Taylor
 Tel: 01481 737600

 Apex Listed Companies Services (UK) Ltd - Administrator and Company Secretary
 Jenny Thompson
 Tel: 07767102572

 Singer Capital Markers Advisory LLP - Financial Adviser and Broker
 James Maxwell
 Asha Chotai
 Tel: 020 7496 3000

 About RM Infrastructure Income

 RM Infrastructure Income Plc ("RMII" or the "Company") is a closed-ended
 investment trust established to invest in a portfolio of secured debt
 instruments.

 The Company aims to generate attractive and regular dividends through loans
 sourced or originated by the Investment Manager with a degree of inflation
 protection through index-linked returns where appropriate. Loans in which the
 Company invests are predominantly secured against assets such as real estate
 or plant and machinery and/or income streams such as account receivables.

 For more information, please see
 https://rm-funds.co.uk/rm-infrastructure-income/

 

Since inception, the portfolio's valuation approach has been based around fair
value where the independent third-party valuation agent looks at observable
pricing for similar sectors and values the assets based upon where comparables
are valued. This incorporates the broader market returns as well as any
idiosyncratic risks. Through review of the latest iteration of the extant IPEV
guidelines and discussions with the Company's valuation agent and a review of
industry practice in light of the change in guidelines, the Company has now
moved to a valuation process that is driven by a yield-based methodology. This
change has given an uplift to the portfolio valuation over the month.

Market Update

Government bonds saw a big reversal in the final quarter with 5-year yields
moving from 4.6% to 3.45% over the quarter and this was the same picture
across the gilt curve. Credit spreads moved in from 450 to end the year at 310
in ITRX Crossover index. So overall it was an exceptional quarter for fixed
income products.

 

                                        Total Return (%)
                                        1yr     3yr      5yr
 RM Infrastructure Income NAV           4.83%   18.44%   32.17%
 RM Infrastructure Income Share Price   -4.63%  7.66%    7.28%
 S&P European Leveraged Loan Index      5.16%   -1.50%   -1.40%
 iShares Core Corp Bond UCITS ETF GBP   8.53%   -14.85%  3.09%

 

Portfolio Update

The Investment Manager remains confident with regards to the low interest rate
sensitivity of the portfolio. This is largely driven by its short average
duration, which is currently 1.69 years. The weighted average yield of the
portfolio has increased to 10.91% at the end of the reporting period, a
widening in yield of 53bps versus September 2023 or 176bps versus same period
last year.

We outline below the key investment activities for Q4 2023:

New Investments:

Given the outcome of the Board's strategic review and the resulting
Shareholder-approved managed wind down of the Company, there will be no new
investments (save for drawdowns against committed facilities) unless the Board
considers that doing so will maximise returns to Shareholders in the timeframe
in which the Company will otherwise be dealing with the managed wind down.

Material Repayments:

·      Healthcare, Ref #82: £5m

·      Healthcare, Ref #83: £2.8m

·      Accommodation, Ref #84: £4m

 

In addition, during the reporting quarter, the Company claimed against its
CBILS guarantee for investment loans Ref #78 and Ref #89, successfully
recovering £4.4m in aggregate, in line with book values. Proceeds of said
guarantee payment receipts have been utilised in repayment of the Company's
outstanding leverage.

The Company is also expecting prepayment at par of investment loan Ref #71
during the month of January 2024.

As disclosed in December 2023, the Company has Investment loans (Ref #58, #80,
#92 and #79) junior secured against and / or exposed to the Virgin Clyde
Street Hotel in the city-centre of Glasgow, Scotland. The senior secured
lender has initiated an administration process to recover value with the hotel
now being closed. The Company's total nominal outstanding balance in respect
of said loans is circa £15m, with investment loans Ref #80, #92 and #79 (or
circa 83% of nominal outstanding) underwritten via the Coronavirus Business
Interruption Loan Scheme ("CBILS") and / or the Recovery Loan Scheme ("RLS)
which benefit from a partial contractual government-backed guarantee. CBILS
and RLS related investment loans have all been marked at their guarantee
level, and as a result, RM does not foresee any further write downs of these
loans. We are currently forecasting CBILS and RLS claims being made towards
the end of H2-2024 with funds being received in December 2024 - this has been
factored in the Portfolio's duration workings. Investment loan Ref #58
benefits from a valuable additional 3(rd) party security package and has
therefore been valued accordingly by the valuation agent.

Finally, the Company has been pursuing a legal claim against the former main
contractor of investment loan Ref #68, a wholly owned 79 beds student
accommodation located in the city centre of Coventry-UK, since September 2022
via an adjudication process. On the 2(nd) of January 2024, RMII was
successfully awarded circa £1.2m by the adjudicator (or circa 1 pence per
Ordinary Share), with circa 90% of said sums now having been received in
cleared funds. Following a lengthy legal process, it is very pleasing to be
able to deliver a positive value accretive outcome for Shareholders.

All leverage facilities were fully repaid during the reporting quarter with
the Company now completely ungeared. Current cash balance sits at circa £9m.
The Company will seek to hold circa £6m in unrestricted cash reserves to fund
undrawn committed facilities and other Company-related working capital
requirements. This is expected to start decreasing in Q2-2024 as and when
undrawn committed facilities are utilised.

The Company also announces that the Monthly Report for the period to 31
December 2023 is now available to be viewed on the Company website:

 

https://rm-funds.co.uk/rm-infrastructure-income/rm-funds-investor-monthly-fact-sheets-2/

 

 

END

 

 

For further information, please contact:

RM Capital Markets Limited - Investment Manager

James Robson

Thomas Le Grix De La Salle

Tel: 0131 603 7060

FundRock Management Company (Guernsey) Limited - AIFM

Chris Hickling

Dave Taylor

Tel: 01481 737600

Apex Listed Companies Services (UK) Ltd - Administrator and Company Secretary

Jenny Thompson

Tel: 07767102572

Singer Capital Markers Advisory LLP - Financial Adviser and Broker

James Maxwell

Asha Chotai

Tel: 020 7496 3000

About RM Infrastructure Income

 

RM Infrastructure Income Plc ("RMII" or the "Company") is a closed-ended
investment trust established to invest in a portfolio of secured debt
instruments.

The Company aims to generate attractive and regular dividends through loans
sourced or originated by the Investment Manager with a degree of inflation
protection through index-linked returns where appropriate. Loans in which the
Company invests are predominantly secured against assets such as real estate
or plant and machinery and/or income streams such as account receivables.

For more information, please see

https://rm-funds.co.uk/rm-infrastructure-income/

 

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