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Urban Exposure shares dip as it expects 'significantly lower' income

The firm intends to assign its loan book off-balance sheet into the asset management business, which will hurt short-term earnings
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Shares have fallen below the placing price of the IPO

Urban Exposure PLC (LON:UEX), the housing development finance firm that made its debut on AIM in May, said it expects “significantly reduced income in the short term”, sending its shares lower on Friday.

Since the initial public offering, the group said it has experienced strong demand from developers for finance.

READ: Housing development finance firm Urban Exposure makes strong debut on AIM

But the company said it intends to assign its loan book off-balance sheet into the asset management business, which will have a negative impact on short-term earnings.

“However the company believes that the benefit of doing this will lead to greater earnings potential via a larger asset management business and will also free up capital to redeploy in further loans for the remainder of 2018 and into 2019," it said.

Higher quality loans with developers have also resulted in slower drawdowns, the firm added.

Urban Exposure is working on a number of new loans with aggregate potential commitments worth more than £300mln, which it expects to close by year-end. It expects to have closed loans totalling £530mln by the end of 2018.

The group made a strong debut on AIM in May after raising £150mln at a placing price of 100p per share, giving the company an initial market capitalisation of £165mln.

In Friday morning trading, shares dropped 5.5% to 94.50p.

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“We believe that our NAV forecasts are conservative and the shares are significantly under-valued given the company’s track record and growth prospects.”

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