Honeycomb Investment Trust has predicted a surge in non-bank lending after the pandemic, with property lending expected to be a particular area of growth.
In its latest annual report, the alternative lending trust confirmed that it had maintained a steady net asset value (NAV) in 2020, despite an “exceptional” year.
For the 12 months ending 31 December 2020, the alternative lending trust delivered a NAV return of 7.7 per cent. Since then the NAV has risen by 2.1 per cent on a total return basis, including 0.75 per cent in March.
The company also met its annualised dividend target of eight per cent.
Honeycomb’s chairman Robert Sharpe said that the stability of returns was “particularly pleasing given the economic backdrop.”
“2020 has been an exceptional year,” added Sharpe. “The coronavirus pandemic continuing to have far-reaching effects on society and the economy with governments around the world providing unprecedented levels of support.
“Despite this hugely challenging environment, the group has performed very well throughout the year. This performance affirms our confidence in the resilience of the investment strategy.”
Over the course of 2020, the company’s portfolio shifted away from consumer whole loans to structurally secured loans.
In a call with Peer2Peer Finance News, Matthew Potter, a partner at Pollen Street Capital – which manages the trust – said that Honeycomb’s commitment to asset-backed lending has helped it to weather the pandemic.
“Being in that senior position we are insulated from volatility and we can deliver consistent returns,” Potter said.
He added that the trust sees huge opportunities in the property lending sector and expects non-bank lenders to take a larger market share.
In the year ahead, Honeycomb will focus on senior secured credit investments. Potter said that the trust would not rule out an investment in peer-to-peer lending platforms, but only if the lender has ‘skin in the game’ and can ensure that Honeycomb can take a senior position in the loan.
“The [non-bank lending] market is large,” Potter added. “The changes driving the non-bank lending market are structural and here to stay. We expect the non-bank lending market to continue to grow.”