Paragon signs new warehouse f
RNS ANNOUNCEMENT
28 September 2010
THE PARAGON GROUP OF COMPANIES PLC
Paragon signs new warehouse funding facility
The Board of Directors of The Paragon Group of Companies PLC ("PGC") is pleased to announce the signing of a new mortgage warehouse, a £200 million senior secured loan facility, provided by Macquarie Bank. As a consequence, the Group will recommence new buy-to-let lending with immediate effect.
The facility, to be rated by Fitch Ratings, will be available for a four year term to Paragon Fourth Funding Limited, a 100% owned subsidiary of PGC and interest will be charged on the amount drawn at one month LIBOR plus 2.875%. The Group's intention will be to use the facility to warehouse loans prior to arranging term funding in the mortgage backed securitisation markets, where the Group has considerable experience stretching back over 20 years. Consequently, the facility is structured to permit drawings and re-drawings in its first two years.
The facility will allow the Group to recommence lending to the private rented sector, a segment of the UK housing market that has seen considerable expansion in recent years and in which the Group has been a major participant. Demand from tenants for rental properties in the UK has been strong and is expected to remain buoyant going forward.
During the eleven months to 31 August 2010, £231.1 million of the Group's buy-to-let loan book has redeemed and the new revolving facility provides the basis for the origination of new buy-to-let loans and a return to balance sheet growth.
The acquisition of loan portfolios and loan servicing of third party clients will remain a core part of the strategy going forward.
Trading update
The Group's trading performance during the eleven months to 31 August 2010 has been strong, consistent with the trends outlined in the Interim Management Statement dated 29 July 2010. The number of accounts in arrears across the portfolio has continued to fall and buy-to-let accounts more than three months in arrears have reduced to 0.86% of the book and remain significantly below buy-to-let market peers and also the wider mortgage market. Redemption rates have remained low.
As a result of this strong trading performance, the Board expects Group operating profits (before exceptional and fair value items) for the year to 30 September 2010 to be above the current market consensus forecast (£58.2m), around the upper end of analysts' current expectations (range £40.5 million to £65.0 million). In addition, as previously disclosed, pre-tax profits will include an exceptional profit of £5.7 million on the purchase of Group securitised bonds.
For more information please contact:
Nigel S Terrington Chief Executive 0121 712 2024
Nicholas Keen Finance Director 0121 712 2000
Andy Berry Fishburn Hedges 020 7544 3044 / 0776 737 4421
This information is provided by RNS
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