Real Estate Credit Inves... Share Discussion Threads

[davebowler] 10/3/2014 10:15

Liberum;
Event

Following on from the 0.5% increase in the first half of February, RECI's NAV TR in the second half of the month was +0.8%. A dividend of £1.7m was accrued (2.3p per share) and will be paid on 21 March to shareholders on the register at 28 February. After adjusting for the dividend, NAV stood at 153.1p, aided by a strong performance in the bond portfolio, up 1.27% in the month. Furthermore, the Annington Finance bond was a notable strong performer.

£239k of bonds were purchased during the month at 87% of par with an average effective yield of 4.6%. No disposals were undertaken during February.

Liberum view

The bonds are currently priced at 80% of par, equivalent to c.31p of further NAV upside and February's bond performance of 1.27% was the highest monthly return since September 2013 (+2.61%). Further loan purchases are expected in the near term and we expect these to be both loans secured against London & UK regional commercial property and a Dutch commercial loan.

RECI trades on a 0.7% discount to NAV and provides a 7% prospective dividend yield, following the increase in distributions from 2014. With further upside from the bond portfolio, stable NAV growth expected and near-term investment expect in the loan portfolio, RECI remains our top pick in the real estate debt space. BUY.

[davebowler] 24/2/2014 10:03

Liberum;
Further loan purchases expected this quarter

Event

RECI's NAV rose marginally by c.0.5% from 153.5p at 31 January to 154.2p at 15 February (Net assets rose from £111.8m to £112.3m), with the bond portfolio gaining 0.35% and UK CMBS the main contributor to performance. RECI made no bond purchases or sales during the first half of February, but on the loan portfolio they state that they are working on several opportunities and remain confident of making further loan purchases this quarter.

Liberum view

The bond portfolio has delivered positive m-t-m performance in the past 3 months (December +0.57%, January +1.11%, H1 February +0.35%). The bonds are priced on a weighted average 20.5% discount to par which is equivalent to c.33p of NAV upside. Management have reiterated guidance on expectations of a number of new loan investments this quarter. We understand the pipeline currently includes loans secured against commercial property in London, UK regional loans and a Dutch commercial loan.

RECI is trading at par and the high dividend yield (6.9% prospective dividend yield), strong NAV growth prospects and attractive pipeline warrants a premium rating relative to the peers single-digit average premium.

[davebowler] 14/2/2014 16:48

Cheyne mentioned;
hxxp://www.realestatecapital.co.uk/pdf%20files/REC%2011.12%20ISSUE%20LOW%20RES..pdf

[kenny] 13/2/2014 14:30

I think it will increase in time but for the next few quarters will likely be in the order of 2.7p per quarter.

Over the next few quarters they need to find a home for the balance of the placing money that is currently earning less than the dividend yield. This does take time.

However, yesterday's announcements from the BoE - rates may stay below 2% until about 2016 or 2017 and then may only rise to no more than 3% - bodes well for RECI. Also, it suggests to me there is no point in selling up an investment yielding over 6% when there is not a lot otherwise available at a near 7% yield. Indeed, after Mr Carney's announcement yesterday, my current view is that I am not inclined to even consider a sale of any of my RECI shares before 2017 - even if management do not increase the dividend before then!!

As always, only my own view; which may not be appropriate to your circumstances.

[davebowler] 13/2/2014 12:46

DREF might be worth a look -below NAV and about to pay a big divi

[wirralowl] 13/2/2014 12:25

I'd be interested in Kenny's thoughts too, but from the Interims, it did state a MINIMUM of 7% of placing price, so does still give scope for them to increase from this level if they see fit? See below:


Raising target dividend

On 16th October, the Board declared a dividend of 3.4 pence per share on RECI ordinary shares for the period 1 July 2013 to 30 September 2013, and to cover the period from 1st October 2013 to the date of admission of the new shares. The Directors intend to announce a full quarter's dividend for the quarter ended 31 December alongside the IMS scheduled to be announced in February 2014.

The Board will thereafter increase its target annualised dividend yield, to a minimum of 7 per cent of the placing price of GBP1.522 per share, up from the previous target of 6 per cent of NAV. This increase reflects its confidence in RECI's ability to continue delivering strong returns from real estate debt investments combined with the reduction in the expenses per ordinary share resulting from the placing

[speedsgh] 13/2/2014 10:04

"The Company has also increased its target annualised yield for future dividends, commencing in 2014 from 6% of NAV to 7% of placing price [152.2p]."

Kenny - does this mean that their dividend policy will not be progressive going forward but fixed indefinitely to 7% of the placing price of 152.2p i.e. 10.65p p.a.? Or do you expect them to revisit the policy again within the next 12 months or so? TIA

[holts] 12/2/2014 12:00

and another payout on the cell

[gary1966] 12/2/2014 08:06

Ok Kenny I will get off my high horse then. Thanks for correcting me.

[kenny] 12/2/2014 08:03

Gary1966 - the 7% yield commences from 01.01.14. This dividend is for the quarter to 31.12.13 and is therefore correctly paid at the historic percentage of 6% of NAV.

Note; the new dividend ratio is 7% of 152.2p and not NAV from time to time.

[skinny] 12/2/2014 07:31

RECI1 Highlights

· RECI made a net profit of £0.5 million in the quarter ended 31 December 2013, compared with £2.7 million the previous quarter. In the financial year to date the Company has made a profit of £4.4 million.
· From 30 September 2013 to 31 December 2013, RECI's NAV decreased 2.6% from £1.56 per share to £1.52 per share2, following the capital raising in November.
· Since year end NAV increased to £1.54 per share as at 31 January.
· The Board has declared a dividend of 2.3p per share in respect of RECI Ordinary Shares for the quarter ended 31 December 2013.
Bonds
· Since 30 September 2013 RECI has made £49.9 million of new bond investments, limiting cash drag.
· As at 31 January 2014 the bond portfolio's market value was £94.9 million and nominal value was £119.7 million.
Loans
· New loan commitments of £25.0 million were made in the quarter ending 31 December 2013, significant progress already made in investing the proceeds of the capital raise.

The loan portfolio has grown in absolute terms to a dirty fair value of £50.2 million as at 31 January 2014 from £43.1 million as at 30 September 2013. As at 31 December 2013, RECI's loan portfolio accounted for 32.3% of gross assets. As at 31 January 2014 RECI has undrawn loan commitments of £11.9 million.

[gary1966] 12/2/2014 07:20

So much for the dividend being minimum 7% of the placing price going forward. 2.3p is annualised 9.2p which just about equates to 6%. Not too shabby but I am struggling to understand why the 7% previously stated hasn't been met.

[johnandrew47] 05/2/2014 15:16

brilliant analysis erstwhile2.

[davebowler] 05/2/2014 10:56

Liberum
Event

NAV per share grew by 1.3% to 153.5p at 31 January representing growth of 1.3% in the month and 0.4% in the second half of the month. NAV performance was driven by gains in the bond portfolio (+1.1% in January) and interest from the portfolio.

£18.3m of bonds were acquired during the month at an average price and yield of 0.93 and 4.37% respectively. Further loan investments are expected this quarter as the manager currently has a healthy pipeline of loan opportunities under consideration.

Liberum view

The 1.3% NAV uplift is ahead of our expectations for the month particularly as most of the proceeds from the recent capital raise have been invested in lower yielding bonds. The investment programme is on track and management have reiterated guidance of further loan purchases this quarter.

RECI is trading in line with today's published NAV compared to an average premium of 2.9% for peers. We believe the company's 7.0% prospective dividend yield and strong NAV growth prospects warrants a premium rating relative to peers and we mainta

[davebowler] 03/2/2014 16:00

Investec;
Real Estate Credit Investments (RECI) Monthly Fact-sheet

¢ RECI has increased its funded exposure on one of its German Multi-Family loans by €0.9 million in the period, taking the total funded amount on this loan to €6.9 million.

¢ The Company purchased £14.4 million of bonds during December at a yield of 5.2%. The Company will rotate from bonds to loans as new investment opportunities arise.

¢ RECI is on track for investing the proceeds from the November capital raise.

¢ NAV =£131.3m. Cash & cash equivalents= £22.4m, Derivative assets = £1.2m. Total = £154.8m

¢ Liabilities: Pref share liability = £44.0m, 'other liabilities' = £0.5m.

¢ NET assets = £110.4m , equivalent to £1.52 / share.

¢ Bond portfolio summary:

¢ Average purchase price (December 2013 purchases ) = 0.86

¢ Average effective yield (December 2013 purchases) = 5.23%
........................................................................

¢ Loan Portfolio: No. of loans = 9

¢ Drawn dirty value £50.1m, Total loan commitments = £62.4m

¢ Loans as % of GAV = 32.3%

¢ Weighted average yield of loan portfolio = 12.9%

¢ Weighted average LTV of loan portfolio = 65.0%

¢ Top ten exposures = £72.3m

¢ WA Original LTV 62.5%, WA Cheyne Current LTV 60.7%, WA Effective yield 10.6%

[wirralowl] 30/1/2014 13:29

I think he probably was, but I presume he agrees with it, or why else would he have gone to the trouble of copying it onto several boards?

All smacks of someone having a go, which doesn't seem right when its against a poster who contributes a lot of useful info to these boards.

[asmodeus] 30/1/2014 12:01

I think DC was referring to Loverat's post 1341, though, wasn't he?

[wirralowl] 30/1/2014 11:47

Well I've come across Kenny too both here and on the GLIF board and feel any criticism is most unfair.

For me, he's an extremely knowledgeable and valued poster, and presents his information in a fair and reasoned manner, usually supported with facts, figs and references.

DC on the other hand is filtered.