Net Asset Value(s)

RM Infrastructure Income PLC

16 January 2024

 

RM Infrastructure Income Plc

("RMII" or the "Company")

LEI: 213800RBRIYICC2QC958

Net Asset Value

On 20 December 2023, at General Meeting shareholders approved the implementation of the Managed Wind-down of the Company as further described in the Circular published on 30 November 2023.  Accordingly, at that time the Company's investment objective was restated as follows: "The Company aims to conduct an orderly realisation of the assets of the Company, to be effected in a manner that seeks to achieve a balance between returning cash to Shareholders promptly and maximising value." NAV & Share Price Performance The Company's NAV % Total Return for the month of December was 1.80%, which brings the NAV % Total Return for the quarter to 1.59%. The NAV % Total Return over the last twelve months was 4.83% and inception to date (ITD) 43.85%. The Ordinary Share NAV as at 31st December 2023 was 90.35 pence per share. This monthly NAV return of 0.003 pence per share arose primarily from the ex-dividend effect of the 1.625 pence per Ordinary Share dividend for the period Q3 2023, declared and paid in December 2023. Otherwise, there was positive interest income, net of expenses, of 0.556 pence per share and an increase in portfolio valuations of 1.07 pence per share. Summary for December 2023 (pence per share) Net interest income +0.556p Change in portfolio valuations +1.072p Payment of Dividend (Q4 2023) -1.625p Net NAV Movement +0.003p Since inception, the portfolio's valuation approach has been based around fair value where the independent third-party valuation agent looks at observable pricing for similar sectors and values the assets based upon where comparables are valued. This incorporates the broader market returns as well as any idiosyncratic risks. Through review of the latest iteration of the extant IPEV guidelines and discussions with the Company's valuation agent and a review of industry practice in light of the change in guidelines, the Company has now moved to a valuation process that is driven by a yield-based methodology. This change has given an uplift to the portfolio valuation over the month. Market Update Government bonds saw a big reversal in the final quarter with 5-year yields moving from 4.6% to 3.45% over the quarter and this was the same picture across the gilt curve. Credit spreads moved in from 450 to end the year at 310 in ITRX Crossover index. So overall it was an exceptional quarter for fixed income products. Total Return (%) 1yr 3yr 5yr RM Infrastructure Income NAV 4.83% 18.44% 32.17% RM Infrastructure Income Share Price -4.63% 7.66% 7.28% S&P European Leveraged Loan Index 5.16% -1.50% -1.40% iShares Core Corp Bond UCITS ETF GBP 8.53% -14.85% 3.09% Portfolio Update The Investment Manager remains confident with regards to the low interest rate sensitivity of the portfolio. This is largely driven by its short average duration, which is currently 1.69 years. The weighted average yield of the portfolio has increased to 10.91% at the end of the reporting period, a widening in yield of 53bps versus September 2023 or 176bps versus same period last year. We outline below the key investment activities for Q4 2023: New Investments: Given the outcome of the Board's strategic review and the resulting Shareholder-approved managed wind down of the Company, there will be no new investments (save for drawdowns against committed facilities) unless the Board considers that doing so will maximise returns to Shareholders in the timeframe in which the Company will otherwise be dealing with the managed wind down. Material Repayments: ·      Healthcare, Ref #82: £5m ·      Healthcare, Ref #83: £2.8m ·      Accommodation, Ref #84: £4m In addition, during the reporting quarter, the Company claimed against its CBILS guarantee for investment loans Ref #78 and Ref #89, successfully recovering £4.4m in aggregate, in line with book values. Proceeds of said guarantee payment receipts have been utilised in repayment of the Company's outstanding leverage. The Company is also expecting prepayment at par of investment loan Ref #71 during the month of January 2024. As disclosed in December 2023, the Company has Investment loans (Ref #58, #80, #92 and #79) junior secured against and / or exposed to the Virgin Clyde Street Hotel in the city-centre of Glasgow, Scotland. The senior secured lender has initiated an administration process to recover value with the hotel now being closed. The Company's total nominal outstanding balance in respect of said loans is circa £15m, with investment loans Ref #80, #92 and #79 (or circa 83% of nominal outstanding) underwritten via the Coronavirus Business Interruption Loan Scheme ("CBILS") and / or the Recovery Loan Scheme ("RLS) which benefit from a partial contractual government-backed guarantee. CBILS and RLS related investment loans have all been marked at their guarantee level, and as a result, RM does not foresee any further write downs of these loans. We are currently forecasting CBILS and RLS claims being made towards the end of H2-2024 with funds being received in December 2024 - this has been factored in the Portfolio's duration workings. Investment loan Ref #58 benefits from a valuable additional 3rd party security package and has therefore been valued accordingly by the valuation agent.  Finally, the Company has been pursuing a legal claim against the former main contractor of investment loan Ref #68, a wholly owned 79 beds student accommodation located in the city centre of Coventry-UK, since September 2022 via an adjudication process. On the 2nd of January 2024, RMII was successfully awarded circa £1.2m by the adjudicator (or circa 1 pence per Ordinary Share), with circa 90% of said sums now having been received in cleared funds. Following a lengthy legal process, it is very pleasing to be able to deliver a positive value accretive outcome for Shareholders. All leverage facilities were fully repaid during the reporting quarter with the Company now completely ungeared. Current cash balance sits at circa £9m. The Company will seek to hold circa £6m in unrestricted cash reserves to fund undrawn committed facilities and other Company-related working capital requirements. This is expected to start decreasing in Q2-2024 as and when undrawn committed facilities are utilised.

The Company also announces that the Monthly Report for the period to 31 December 2023 is now available to be viewed on the Company website:

https://rm-funds.co.uk/rm-infrastructure-income/rm-funds-investor-monthly-fact-sheets-2/

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For further information, please contact:

RM Capital Markets Limited - Investment Manager

James Robson

Thomas Le Grix De La Salle

Tel: [phone]

FundRock Management Company (Guernsey) Limited - AIFM

Chris Hickling

Dave Taylor

Tel: [phone]

Apex Listed Companies Services (UK) Ltd - Administrator and Company Secretary

Jenny Thompson

Tel: [phone]

Singer Capital Markers Advisory LLP - Financial Adviser and Broker

James Maxwell

Asha Chotai

Tel: [phone]

About RM Infrastructure Income

RM Infrastructure Income Plc ("RMII" or the "Company") is a closed-ended investment trust established to invest in a portfolio of secured debt instruments.

The Company aims to generate attractive and regular dividends through loans sourced or originated by the Investment Manager with a degree of inflation protection through index-linked returns where appropriate. Loans in which the Company invests are predominantly secured against assets such as real estate or plant and machinery and/or income streams such as account receivables.

For more information, please see

https://rm-funds.co.uk/rm-infrastructure-income/

 

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