Co-living loan bumps otherwise reasonable year for GCP Asset Backed

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GCP Asset Backed Income has announced its results for 2021. Highlights are:

  • Dividends of 6.30 pence declared, of which one dividend of 1.575p for the quarter to 31 December 2021, which was paid after financial year 

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  • Total shareholder return of 13.2%, total NAV return of 3.4% and an annualized total shareholder return since Initial Public Offering by 5.3%.
  • Profit for the year of £15.0m, penalized by the impact of the decline in the fair value of coliving loan.
  • Renewal of existing £50m revolving credit agreements with RBSI to extend maturity from August 2021 to August 2023.
  • Net asset value of 99.29p at 31 December 2021, down from 102.18p the previous year, mainly due to a 4.5p depreciation per share of the Coliving loan, partially offset by valuation gains elsewhere in the wallet and surplus income.
  • Diversified, partially inflation and/or interest rate hedged portfolio of 60 asset backed loans with a third party valuation of £443.64 million as of December 31, 2021.
  • Loans of £135.5m (new and subsequenton) advanced during the year, secured against 35 projects with a further £16.6 million secured against five projects, advanced after the end of the year.
  • Reimbursements of £118.1m during the year generating reimbursement costs of £2.5m, with a further £31.7m of reimbursements received after year-end.

The President said: “Throughout the year, government-issued Covid-19 restrictions continued to impact the normal flow of business, particularly retail and hospitality businesses. . However, despite the restrictions, the vast majority of the portfolio continued to perform well. »

Cohabitation Loan Update

The Co-living loan is described in the statement as a material disappointment, with the loan in default due to a breach of a liquidity commitment. The loan is a syndicated loan and GABI is part of a consortium of lenders.

Since the loan defaulted in May 2021, the consortium of lenders has been seeking to sell the assets of the Co-living group to recover as much value as possible. Significant progress has been made in this regard, with a number of assets sold during the period and exclusivity agreements in place to sell a number of others.

In terms of remaining assets, the following current positions are in place at the time of writing:

  • US assets – exclusivity in place and preparing for sales in the coming weeks;
  • UK HMO Assets – sale process has begun and over 50 parties have expressed interest and are reviewing sales information; and
  • Great British assets – an exclusive has been concluded with a project REITs (GCP Co-Living REIT); however, due to the situation in Ukraine, the IPO of the REIT was halted. Both operating assets have been stabilized and are operating at over 95% occupancy. If the REIT does not proceed with the IPO, a process to sell the assets will be launched in the coming months. GCP Asset Backed Income expects strong competition for these assets and remains convinced that they offer defensive and stable cash flow which will prove very attractive to investors.

GABI: The co-living loan breaks an otherwise reasonable year for GCP Asset Backed

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