RM Secured Direct Lending (RMDL) announced dividend payout for investors and a new portfolio target in a busy annual statement.
Despite “difficult” market conditions in 2020, RMDL saw its gross portfolio yield rise to 9.3%, while the net asset value (NAV) for the year was 93.25 pence.
This represents a total NAV of 3.15% for the year, compared to 8.2% for the year ending December 31, 2019. Shareholders have been informed that they will receive a dividend of 6.5 pence. , to be paid by the end of March 2021.
In its annual results, the investment trust – which specializes in secured debt investments – revealed that it will focus on the social and environmental infrastructure sectors in the future.
The company also said it will provide shareholders with a liquidity opportunity ahead of its annual general meeting later this year.
“The Board of Directors is pleased to announce a resilient year for RMDL in an unprecedented market environment,” said Norman Crighton, President of RMDL.
“We entered 2021 in a strong position and with a high quality pipeline of secured loan opportunities. The Board has every confidence in the long term future of RMDL and in our ability to meet the needs of our shareholders. “
Crighton added that the board of directors and the investment manager quickly anticipated and reacted to the effects of the pandemic, halting new loans in March 2020 and join the Coronavirus Business Interruption Loan Program (CBILS). The company’s annual results showed that 12 percent of its portfolio NAV was invested in CBILS-eligible loans last year.
“This year… has been the most difficult to date, but I am delighted with the resilience the portfolio has demonstrated,” Crighton said in a statement to shareholders.
“The dividends for 2020 are in line with the target set when the company was launched, an exceptional achievement in a difficult year.”
Crighton added that RMDL will focus on social and environmental infrastructure over the next three years.
“We have always adhered to the highest standards of corporate governance and expect the same from the companies we lend to,” he said.
“Over the past four years, social and environmental infrastructure projects have been the focus and the company has allocated 40% of its capital to assets in these areas. The advice and [the investment manager] now plans to focus investment on social and environmental infrastructure over the next three years. “
RM will allocate loans only in six areas: energy efficiency and reduction of carbon emissions; clean energy and renewable energies; Waste Management; social housing, education and childcare, and health care.
“In a challenging market environment, RMDL’s performance has been reasonably strong,” Numis analysts said.
“There are still a few struggling assets, but that would be expected given a difficult environment and the loans appear to have been structured to protect the position of debt holders. The mark-to-market approach has had an impact on valuations, so there is room for some recovery as economies reopen in 2021.
“We believe RM has a proven track record as one of the highest quality managers in the listed direct lending industry.”
In a separate note to the market, RMDL announced that its ZDP shares are expected to come to the end of their three-year term on April 6, 2021 with a final payable capital entitlement of approximately £ 12.1million.
The board announced that alternative funding for the ZDPs has been agreed through a new £ 12million loan facility with OakNorth Bank. This loan facility may be repaid in whole or in part by RMDL at any time during its term without penalty. On a pro forma basis, it is expected to add about 0.5 percent per year to total business performance.