360 Capital Group Underwrites Significant Senior Loan Facility
TGP (TGP) Share Update September 2024 Monday 9th
360 Capital Group Underwrites $14.6 Million Senior Loan Facility
360 Capital Group (ASX:TGP) has announced the underwriting of a new $14.6 million senior loan facility within its Private Credit Fund, marking a strategic move to enhance its investment portfolio.
Instant Summary:
- 360 Capital Group underwrites $14.6 million senior loan facility.
- Loan secured by 19 first mortgages over completed homes in north-western Sydney.
- Loan term of 12 months with an interest rate margin of 6.6% above 3-month BBSW.
- LVR covenant set at 70%, to be reduced to 65% before releasing sales proceeds.
Loan Facility Details
360 Capital Group (ASX:TGP) has successfully underwritten a new $14.6 million senior loan facility within its 360 Capital Private Credit Fund (PCF). This loan was funded using proceeds from the sell-down of a previous $26.2 million loan established in July 2024.
The new loan is secured by 19 individual registered first mortgages over 19 completed 3 and 4 bedroom homes located in the growth corridor of north-western Sydney. Additional security includes personal and corporate guarantees and general security agreements.
Loan Terms and Conditions
The loan has a term of 12 months and an interest rate margin of 6.6% above the 3-month BBSW, which currently results in an 'all-in' rate of approximately 11.1% per annum. There is a floor rate of 11.0% if interest rates fall. The loan also includes an LVR covenant of 70%, which must be reduced to 65% before any cash proceeds from sales are released to the borrower.
Strategic Implications
This investment follows a previous $26.2 million loan underwritten in July 2024, which has been progressively repaid to the Group through a combination of sell-downs via PCF's investor network, home sales, and sell-downs to 360 Capital Mortgage REIT (ASX:TCF). This ensures that TCF remains fully invested, maximizing returns for its unitholders.
The underwriting of this new loan facility is a strategic move for 360 Capital Group, potentially enhancing its investment portfolio and providing stable returns. The secured nature of the loan, combined with the additional guarantees, reduces risk and makes this a relatively safe investment. The interest rate margin and LVR covenant further protect the Group's interests.
Investor Reaction:
Analysts are likely to view this announcement positively, as it demonstrates 360 Capital Group's proactive approach to managing its investment portfolio. The secured nature of the loan and the additional guarantees provide a level of safety that is appealing to investors. However, the high-interest rate margin may raise some concerns about the borrower's risk profile.
Conclusion:
Investors should keep an eye on how this new loan facility performs over the next 12 months. The strategic move by 360 Capital Group to underwrite this loan could lead to stable returns and enhanced portfolio performance. As always, staying informed and monitoring developments is crucial for making sound investment decisions.