-Full year results beat expectations

-Buy to let drives growth

-Confidence reflected in maiden dividend of 4.4p

Shares in property asset management lending platform Lendinvest (LINV) edged 0.7% higher to 167.7p following the announcement of full year results that were ahead of expectations.

Management has announced a maiden dividend of 4.4p per share, reflecting management’s confidence in developing future returns by scaling the platform.

The group has grown assets under management by 36% to £2.1 billion, and reported adjusted earnings before interest, tax, depreciation and amortisation of £20.3 million, nearly double last year’s level.

Lendinvest currently provides bridging, development and buy to let mortgages equivalent to only 1.1% of the £1.5 trillion of total outstanding property loans.

These three segments constitute annual originations of £42 billion a year, indicating the scope for the group to grow within these areas.

The market is also highly profitable and benefits from secular growth due to the undersupply of housing and high house prices relative to incomes.

BUY TO LET DRIVES GROWTH

Barclays (BARC) recent decision to acquire specialist mortgage lender Kensington Mortgages for £2.2 billion, highlights the continued demand for buy to let underwriting, and the trend towards consolidation as the sector becomes increasingly dominated by professional participants.

The Barclays deal is indicative of the current trend of banks to acquire  mortgage books.

Starling Bank recently agreed to buy a mortgage loan portfolio from the specialist lender Masthaven worth £500m.

Lendinvest has witnessed record growth in buy to let applications and assets under management.

The specialist nature of the group's buy to let mortgages is reflected in a higher average yield of 3.6% which is considerably above the average yield of banks’ and other lenders’ overall mortgage portfolios.

Momentum for the group’s seven-year fixed product continues to grow. It accounted for over one quarter of its buy-to-let completions in the first quarter of this year.

EXPERT VIEW

Broker Panmure Gordon ‘In our view LendInvest offers a compelling investment opportunity as a technology-disruptor in a market plagued by poor service and dated products offering by lumbering incumbents…Our Sum of the Parts target of 290p, should be regarded, we believe, simply as a staging post en route to a materially larger market capitalisation.’

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Issue Date: 29 Jun 2022