UK Mortgages Ltd UK Mortgages Limited Transaction

 
TIDMUKML 
 
21 February 2017 
 
UK MORTGAGES LIMITED 
 
(A closed-ended investment company incorporated in Guernsey with registration 
number 60440) 
 
The Board of UK Mortgages Limited ("UKML" or "the Fund") and TwentyFour Asset 
Management LLP ("TwentyFour") are pleased to announce that UKML has today 
completed the purchase of the existing pool of residential mortgages that was 
discussed in the Fund's announcements dated 7 December 2016 and 3 January 2017. 
 
In line with the structure described in UKML's prospectus dated 23 June 2015, 
UKML invested in profit participating notes ("PPNs") issued by its dedicated 
acquisition company ("Corporate Funding") which has for settlement today, 21 
Feb 2017, purchased a pool  (the "Purchase Pool") of approximately GBP590.5m UK 
predominantly Buy-to-Let Mortgages ("BTL"), originated primarily between 2004 
and 2008 by Capital Home Loans ("CHL"), then the UK specialist BTL mortgage 
lending arm of Permanent TSB.  CHL was sold to an affiliate of Cerberus Capital 
Management, L.P. ("Cerberus") in July 2015. The Purchased Pool has also been 
purchased from another Cerberus affiliate. Following the transaction CHL will 
continue to service the mortgages, resulting in a seamless transaction for the 
mortgage borrowers. 
 
The pool comprises 4,896 loans with an average balance of GBP120,610, and a 
weighted average indexed loan-to-value of 69.65%.  Given the age of the loans, 
which on a weighted average basis have almost 10 years of payment history 
encompassing the financial crisis, performance is very strong with 
just 0.92% of the loans more than one month in arrears. 
 
This will be UKML's third transaction and as previously advised, will deploy 
the Fund's remaining investable capital. To supplement UKML's funding for this 
transaction, and for ongoing financing purposes, Corporate Funding has 
established a loan financing facility with Bank of America Merrill Lynch which 
is available for up to 18 months, thereby providing maximum flexibility on the 
timing of the intended securitisation, which will provide longer term funding 
for the portfolio. Given current securitisation market levels, the estimated 
annualised return of this portfolio over its life is 8.28% gross* (assuming 
securitisation takes place as intended). 
 
Prior to its acquisition, CHL was a well-known regular issuer in the 
securitisation market, having previously completed six publicly-placed and two 
retained transactions between 1998 and 2015.  All of the notes issued from 
previous transactions have been fully performing before, throughout and since 
the financial crisis.  Subsequent to CHL's sale, Cerberus affiliates have 
completed two further securitisations, the most recent a GBP1bn transaction 
occurred this month. 
 
Chris Waldron, Chairman of UK Mortgages Ltd said "The Board is very pleased 
that UKML has been able to fund this transaction and to deploy its remaining 
initial investable capital. A great deal of work has been completed by all 
sides to allow this transaction to take place. We look forward to adding 
further transactions and growing the Fund in the future." 
 
Rob Ford, Founding Partner and Portfolio Manager at TwentyFour said "We are 
very pleased that we have been able to complete this transaction. Whilst it has 
taken longer than originally hoped and anticipated to fully employ the Fund's 
investable capital, this purchase now provides UKML with a firm footing from 
which to move forward and furthermore to grow as future opportunities become 
available." 
 
 
 
END
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