This company invests in UK real estate debt, predominantly in secured loans. This trust may use gearing.
In wind down
In the property debt sector of aic
Total share price total Returns over 1,5,10 years are dire.
https://www.theaic.co.uk/aic/find-compare-investment-companies?sec=PRD&sortid=Name&desc=false
Lent money to business (hotels among others) on interest only loans.
Average loan (I stress average) to value are 69%. Implied within that is that if they foreclosed and put the properties up for auction shareholders SHOULD get there money back.
Trading on a 36% discount to NAV.
NAV being the value of the loans.
As the loans have come to an end and the company is not going to renew them, they have to pay back the capital.
All the last 6 lenders are late. They have 2 option refinance the loans or sell the property/business.
All in the process of refinancing/selling but are taking there time over it. The main reason for the late payments are COVID.
All are still paying interest. The company says the coupon is 7.5% (another way of saying interest)
The coupon is based on the value of the loans. So 7.5 of NAV. Around 10%
As you can see from the dividend payments the dividend is falling as properties are being sold.
The special dividends are a return of capital IE the proceeds of the previous sales.
The discount has widened significantly (17% to 36%), as a product of the short lived bank crises (my opinion).
I am having a brain dead day. If the loans are paid in full I make it a 56% gain. Feel free to come up with alternative figure.
And of course the dividend in-between.
Note some of the borrower’s will go onto late interest increases.
Guernsey based no purchase tax.
I assumed there would be nill possibility of this being available on freetrade as this would meet the “oh so complicated and risky investment!”.
Hence I only had £1,300 left in my ISA to invest.
Will be investing dividends from other companies in it. Depending on the discount.
Do your own research.
Tried to post link to dividend on Hargreaves Lansdown but comes up “not allowed to post link to that site ”
So you will have go to the site and click on dividend history to see dividends and special dividends.