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 £590.5m 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 £120,610, 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 £1bn
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.”