RM Secured Direct Lending (RMDL) has announced a dividend payout for investors and a new portfolio focus in a jam-packed annual statement.
Despite “challenging” market conditions in 2020, RMDL saw its gross portfolio yield grow to 9.3 per cent, while net asset value (NAV) for the year was 93.25p.
This represents a NAV total return of 3.15 per cent over the year, down from 8.2 per cent for the year ending 31 December 2019. Shareholders were told that they will receive a dividend of 6.5p, to be paid out by the end of March 2021.
In its full-year results, the investment trust – which specialises in secured debt investments – revealed that it would be shifting its focus towards social and environmental infrastructure sectors going forward.
The company also said that it would be offering shareholders a liquidity opportunity prior to the its annual general meeting later this year.
“The board is pleased to report a resilient year for RMDL amid an unprecedented market environment,” said Norman Crighton, chairman of RMDL.
“We have entered 2021 in a strong position and a high quality pipeline of secured lending opportunities. The board has every confidence in the long-term future of RMDL and our ability to deliver for our shareholders.”
Crighton added that the board and the investment manager were quick to anticipate and react to the effects of the pandemic, pausing new lending in March 2020 and joining the coronavirus business interruption loan scheme (CBILS). The company’s full-year results showed that 12 per cent of the net asset value of its portfolio was invested into CBILS-eligible loans last year.
“This year…has been the most challenging yet, but I am delighted at the resilience the portfolio has shown,” said Crighton in a statement to shareholders.
“The dividends for 2020 are in line with the target stated at the launch of the company, an exceptional achievement in a difficult year.”
Crighton added that RMDL will shift its focus to 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.
“During the last four years, social and environmental infrastructure projects have been a core focus, and the company has allocated 40 per cent of its capital to assets in these areas. The board and [the investment manager] now plan to concentrate the investment focus to social and environmental infrastructure over the next three years.”
RM will only allocate loans across six sectors: energy efficiency and carbon reduction; clean energy and renewables; waste management; social accommodation, education and childcare, and healthcare.
“In a difficult market environment it has been a reasonably solid performance from RMDL,” said Numis analysts.
“There remain a few troubled assets but that would be expected given a tough backdrop and the loans appear to have been structured to protect the debt holders position. The valuation approach (mark-to-market) has seen valuations being impacted, and therefore there is scope for some recovery as economies open-up again in 2021.
“We believe the RM have proved themselves one of the higher quality managers in the listed direct lending sector.”
In a separate note to the market, RMDL announced that its ZDP shares are set to come to the end of their three-year life on 6 April 2021 with a final capital entitlement payable of approximately £12.1m.
The board has announced that replacement funding for the ZDPs has been agreed through a new £12m loan facility with OakNorth Bank. This loan facility can be wholly or partly repaid by RMDL at any stage over its term without penalty. On a pro forma basis, it is expected to add approximately 0.5 per cent per annum to the company’s total return.