UK Mortgages Ltd - Portfolio Disposal Announcement

UK Mortgages Ltd - Portfolio Disposal Announcement

PR Newswire

London, February 8

UK Mortgages Ltd: Portfolio Disposal Announcement

THE INFORMATION IN THIS ANNOUNCEMENT IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION DIRECTLY OR INDIRECTLY IN OR INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, THE REPUBLIC OF IRELAND OR JAPAN.

8^thFebruary 2021

UK MORTGAGES LIMITED
(a closed-ended investment company incorporated in Guernsey with registration number 60440)

LEI 549300388LT7VTHCIT59

Agreement to Dispose of Two Portfolios Under Revised Strategy

The Board of UK Mortgages Limited ("UKML", or the "Company") and TwentyFour Asset Management LLP ("TwentyFour") are pleased to announce that on Friday 5^thFebruary 2021, UK Mortgages Corporate Funding Designated Activity Company ("UK DAC") signed agreements under which, Godiva Mortgages Limited ("Godiva"), a subsidiary of Coventry Building Society ("Coventry") has made a commitment to purchase two buy-to-let mortgage portfolios originated by Godiva and currently financed within the Cornhill No.6 and Malt Hill No.2 vehicles. Subject to successful completion, the timing of these sales is expected to coincide with the payment dates in February and May 2021 respectively. Strong market conditions have enabled these portfolios to be disposed of at economics that improve on those indicated to investors in late 2020 and also ahead of anticipated timing for the Cornhill No.6 portfolio.

On the 4^thDecember 2020, shareholders voted overwhelmingly in favour of an updated strategy for UKML. The first objective was achieved on the 15^thJanuary 2021 through the successful securitisation of existing Keystone BTL loans in the inaugural Hops Hill No.1 transaction. As the first European RMBS transaction of 2021, this transaction locked in better funding levels when compared to those achievable in the fourth quarter of 2020, improving income materially.

The second phase of the strategy aimed to free up capital, initially through the sale of the two Coventry portfolios, to enable capital to be returned to shareholders by way of a tender and to fund the second Keystone investment. The combination is expected to increase capital efficiency and to continue the growth trajectory of income. Today's announcement marks a significant milestone in achieving this second strategic aim.

On behalf of UK DAC, TwentyFour has simultaneously mandated a warehouse provider for the second Keystone investment and has commenced documentation work with an expectation of completing during March. Material improvements in overall funding conditions will benefit this new investment over its life.

The sale of the two Coventry portfolios is expected to release capital enabling two tenders to be carried out, returning an aggregate at the higher end of the previously communicated £35-40 million range. These tenders are expected to take place following the payment dates expected to be in February and May respectively. The Board's expectation is that the tenders will take place at 75p per share.

Chairman Chris Waldron commented, "We are pleased to deliver this important transaction ahead of schedule providing enhanced certainty for shareholders and further advancing the updated strategy."

Douglas Charleston commented, "This sale represents the first portfolio disposal for UKML. Its successful conclusion is recognition of the high quality of assets within the fund. We are pleased to work again with our close partner, Coventry."

TwentyFour Asset Management LLP
Douglas Charleston
020 7015 8900

Numis Securities Limited, Corporate Broker
Hugh Jonathan
Vicki Paine
020 7260 1000

Important notice

This announcement has been prepared for information purposes only, it is not a prospectus.

The distribution of this announcement in certain jurisdictions may be restricted by law. Persons into whose possession this announcement comes are required by the UKML, TwentyFour and Numis to inform themselves about, and to observe, such restrictions.

Recipients of this announcement who are considering acquiring New Shares in UKML are reminded that any such acquisition must be made only on the basis of the information contained in the Prospectus and any supplementary prospectus(es) thereto which may be different from the information contained in this announcement. This announcement does not constitute or form part of and may not be construed as an offer to sell, or an invitation to purchase, investments of any description, nor as a recommendation regarding the possible offering or the provision of investment advice by any party. No information in this announcement should be construed as providing financial, investment or other professional advice and each prospective investor should consult its own legal, business, tax and other advisers in evaluating any investment opportunity. In particular, an investment in UKML involves a high degree of risk and prospective investors should read the section in the Prospectus entitled "Risk Factors" for further information.