Monthly income

Thrugelmir

JohnRo wrote: »

UKML is expected to deliver it's first dividend this April so intend adding that at some point thereafter. It's been on the radar for some time, I see it rightly or wrongly as a useful proxy for tapping directly into the UK residential housing market.

From the same stable Select Income offers a more diverse exposure to RMBS.

bowlhead99

JohnRo wrote: »

Cannot decide on a suitable selection for the specialist slot, I've pencilled traditional infrastructure, currently HICL, but feel it's too pedestrian overall, I want something reasonably high on the risk reward scale offering a decent/strong yield that isn't likely to totally crash and burn but struggling to think what. Not afraid of volatility, if anything it helps the rebalancing as long as it's not too turbulent, but don't want to pick something so risky that it just ends up swirling down the pan. Any pointers are welcome.

A few specialists, though you might find too specialist: - all in the healthcare industry which I like as a long term theme but not the volatile and R&D-focussed biotech stuff which would struggle to find a place in an income portfolio.

THRL - Target Healthcare REIT - UK investment into carehomes. It is real estate of course which is a category you have - but will not necessarily perform the same as generalist global industrial / retail /office property. It is relatively new on the scene but the individual guys behind it have track records. http://www.targethealthcarereit.co.uk/

PHP - Primary Health Properties plc - again a UK group running as a REIT, this time investing in a variety of primary healthcare properties leased mainly to NHS organisations, GPs and other healthcare users. Return has been good over last few years. http://www.phpgroup.co.uk/

Healthcare Royalty Trust plc - a new IPO in a couple of weeks time which will invest in existing royalty contracts for license; credit royalty financing; and project finance for companies that have something which has completed stage 3 clinical trials and need capital or loan in exchange for equity/warrants/mezz. Targeting 6% yield and 10%+ total return and will be mostly US & UK focused. Perhaps too new to market to have proven the model in a closed ended listed vehicle but will be taking some seed assets from the manager / advisors to get the ball rolling.
http://ipo.tddirectinvesting.co.uk/ipo/healthcare-royalty-trust.htm

I hold the first two and will be adding the third when available (not a huge amount, until I see how its portfolio shapes up).

JohnRo

Thanks for that, I've been looking at medicX on and off for a couple of years, PHP seems a similar proposition. The one thing that's put me off medic X, more so recently, is the huge premium and it seems PHP is afflicted with the same.

I know it can be seen as an endorsement of the underlying business model and future prospects but I'm still a little uneasy with such a high differential between cost and value. Both trusts had a huge spike in their premium towards the back end of 2015, at first glance it looks AGM related, for PHP possibly related in some way to the shift from bi-annual to quarterly payouts?

That said the historic PHP dividend certainly looks attractive if it proves sustainable.

With all that in mind it makes the IPO you've listed look a whole lot more interesting.

I already have Target in a list of "ones to watch" but the performance in recent years hadn't peeked my interest beyond that.

JohnRo

Thrugelmir wrote: »

From the same stable Select Income offers a more diverse exposure to RMBS.

Thanks, I've looked at SMIF in the past, it holds a lot of junk, in the end I decided the regional diversification and slightly higher aggregate quality of the debt in TFIF was probably the better option.

I'm wary of debt securities and the ratings they're given, which brought the financial world to it's knees in 2008 but hope that things are now a little more robust and honest.

The reason for looking at UKML is that I can't envisage anything but the very best ratings for the securities within if they are what they claim to be, UK mortgage backed securities, since the default rates on UK housing debt is impressively minuscule. The question will be what else is being packaged and hidden in there but as above I'd hope the painful lessons of past dodgy practice alongside lax/corrupt ratings and complicit trustees is learned and the practice gone.

With that UKML should help to lift the quality of the portfolio's debt based investments and also up UK exposure which I sincerely hope has a little more integrity than some other regions.

choochootrain

Are your graphs done in Excel?

JohnRo

choochootrain wrote: »

Are your graphs done in Excel?

I use Openoffice, the spreadsheet and charts are done with Calc. I've transferred some of the basic stuff to googlesheets.

Thrugelmir

Update from UKML today.

Monthly Factsheet

The Board of UK Mortgages Limited (UKML) and TwentyFour Asset Management LLP (TwentyFour) are pleased to present the latest factsheet for the fund, together with an update on progress with further investments. Please click here to view the factsheet.

Transaction Update

As indicated in the last monthly factsheet the portfolio managers have been pursuing a number of potential trades, and can update investors with the following progress. Transactions are generally subject to non-disclosure agreements, or a loss of competitive advantage should full disclosure be provided before final closing, but the information below should provide good colour on deal progression. It should be noted though that these are all complex transactions to negotiate with many moving parts, and whilst they are in our pipeline because the deals fit the fund's risk profile there is ultimately no guarantee that the deals will close.

1 - The Mortgage Lender (TML)

TwentyFour have signed an exclusivity agreement with TML following a competitive process. The agreement contemplates a long-term commitment to purchase mortgages originated by TML specifically for UKML. The transaction is expected to close in April, with origination to begin immediately at that point and ramping up as TML's products become broadly available across the mortgage intermediary market. TML is a new mortgage lender whose management successfully ran Mortgages PLC from inception to its sale to Merrill Lynch and beyond. TML will offer a range of mortgages, and are working closely with TwentyFour to provide attractive products to homeowners that also fit UKML's objectives of high quality and predictable performance. It is anticipated that the overall yield from this transaction will ultimately be higher than the yield on the first portfolio acquired, and whilst difficult to predict accurately, we would be budgeting for TML to originate in the region of £250mm in the first year. Further and more precise details will be announced when the transaction closes.

2 - Buy to Let

TwentyFour are in discussion with a mainstream UK mortgage lender with respect to the proposed acquisition of a portfolio of newly originated buy to let mortgages. Current expectations on timing would indicate a close in Q4 of UKML's financial year (the first year end will be 30 June 2016).

3 - Vintage pool

TwentyFour are engaged in early stage discussions with a seller of heavily seasoned mortgages originated prior to the global financial crisis. As non-core assets the seller is exploring a variety of options, however TwentyFour believe they can offer a competitive solution to the seller's requirements. The sale is not driven by asset performance, which is strong.

4 - New opportunity

TwentyFour are having initial discussions with an ongoing originator of a wide range of mortgage products. At this stage a product set has not been identified and the discussions are at the stage of discussing high level requirements for both UKML and the seller.

UK Mortgages Limited aims to provide Shareholders with stable income returns through low leveraged exposure to portfolios of loans secured against UK residential property. The Board and TwentyFour Asset Management are both pleased with current progress.

JohnRo

If they manage to deliver what appears to be on offer and don't start concocting a toxic brew then it should be a decent income investment. At this stage I'm very much on board with it.

george4064

Thanks for the updates, very interesting as always.

Ive been considering adding NRR to my portfolio, the company primarily owns properties in shopping centres which they rent out on long-term leases. Looks like a decent income generator. Any thoughts or comments on NRR?

JohnRo

NRR looks reasonable to me as a going concern, it's a large fund with a growing asset portfolio but quite heavily indebted as a result, though the interest payments and running costs are well covered by income.
I've only scanned the annual report briefly.
I suppose longer term there's the online trend to consider and whether profits from retail shopping centres are set to decline over the longer term.
The premium is quite high though but view that as a vote of confidence.