Real Estate Credit Inves... Share Discussion Threads

[kenny] 15/6/2014 19:07

Mention of the advantages RECI has as a longer term investment in this interview with one of the Henderson managers:

hxxp://www.theaic.co.uk/aic/news/citywire-news/henderson-value-trust-the-investments-to-ensure-our-continuation

[holts] 12/6/2014 21:17

They have sold 68% of the residual portfolio , hopefully another big slug to be returned.

[skinny] 12/6/2014 07:05

Ordinary Dividend for RECI LN (the Core shares)

Real Estate Credit Investments PCC Limited announces today that it declares an ordinary dividend for the Core for the period 1 January 2014 to 31 March 2014, of 2.7 pence per share (a total amount of GBP 1,966,099). The dividend is to be paid on 25 July 2014 to ordinary shareholders on the register at the close of business on 27 June 2014. The ex dividend date is 25 June 2014.

[skinny] 12/6/2014 07:03

RECI records full year profit of £8.1 million; Real Estate Loan Portfolio sees rapid growth

· RECI reported operating income of £13.7 million in the financial year ended 31 March 2014, up from £12.9 million in the previous year.
· RECI raised £50 million, before expenses, through a placing on 12 November 2013. The Company has successfully invested this additional capital in a combination of bonds and loans
· Net profits of £8.1 million included £1.0 million of gains on the financial assets through profit and loss, building on the exceptional gains of £12.3m reported in the prior year as a result of the significant rally in the CMBS and RMBS markets.
· The Company's commercial and residential loan portfolio grew to £51.0 million as at 31 March 2014, which is a 155% increase from the £20.0 million loan portfolio held a year previously
· Suitable loans originated by Cheyne continue to feed the investment pipeline; RECI has committed to make a further £14.8 million in loans post financial year end
· RECI declared a dividend of 2.7 p per share (equating to a 7% annualised yield) in respect of RECI Ordinary Shares for the period ending 31 March 2014

[kenny] 06/6/2014 10:15

Thanks Dave. Another excellent performance from management. We have the next dividend to look forward to; presumably it will be announced with results on 12 June.

The ordinary shares still look cheap to me. Note the weighted average yield on the loan portfolio is 13.7% and the weighted average yield on the top 10 investments (about 51% of the total loan and bond portfolio) is 10.7%. Then we have, more high yield loan investments in the pipeline. Also, we have potential gains to redemption in the bond portfolio of 26.5p per share and, finally, a dividend yield of 6.7%.

What more does one need from an investment!!!

[davebowler] 06/6/2014 09:27

Liberum;
Real Estate Debt

Real Estate Credit Investments (BUY)

NAV uplift & investment progress

Event

RECI's NAV rose by 1.0% in May to 158.9p per share (April 2014: 157.2p) driven by strong mark-to-market gains in the bond portfolio and interest income from a growing bond loan portfolio (which now yields 13.7% and accounts for 30% of GAV).

Two new loans were completed in the month. A £5m loan secured on a branded boutique hotel in Shoreditch, London which is currently under construction was completed along with a €2.3m loan secured against mixed use commercial assets in the Netherlands. Several new loans are in the pipeline including one in the final stages of closing and two others in documentation.

Separately, following the FTSE Index Annual review, RECI has been promoted to the FTSE Small Cap Index and FTSE All Share Index (effective from close of markets on 20 June).

Liberum view

This is a positive update from RECI with NAV performance maintaining growth experienced in recent months (+6% NAV TR since capital raise in November) and further evidence of progress on new investments.

The current loan pipeline appears strong and should ensure the majority of remaining cash is deployed in the short term. RECI continues to benefit from the manager's ability to access dealflow in an increasingly competitive lending market as highlighted by research from Savills which estimates there is £40bn of lending opportunities in the UK compared to lender ambitions of £75bn. It is worth noting that many lenders are targeting big-ticket transactions (£100m+) which is typically not the market RECI operates in.

RECI trades on a marginal 0.6% discount to NAV (vs. a weighted average 2.5% premium for peers in the asset-backed fund space). The shares offer a 6.7% dividend yield compared to a peer average of 5.6%. We believe RECI's track record, portfolio positioning and ability to access attractive deals warrants a premium rating relative to the sector.

[skyship] 05/6/2014 14:37

34% discount - a licence to print money being the other side of a bank's distressed sale...

[davebowler] 05/6/2014 09:56

hxxp://www.fundweb.co.uk/2010960.article?cmpid=fwam_327318

[davebowler] 04/6/2014 12:12

Liberum re HDIV;
HDIV's NAV per share at 30 April 2014 was 89.4p reflecting a total return of 4.7% for H1 2014. This follows a strong performance in 2013 with 12% NAV TR.

The portfolio has benefited from credit spread tightening particularly for financial bonds and high yield bonds (where HDIV is relatively overweight). HDIV's relatively high exposure to high yield bonds versus loans is likely to continue in the short term due to the manager's muted rate rise expectations.

Liberum view

We note comments from the manager regarding the possibility of some credit valuations looking stretched given the level of credit spread tightening experienced in the market (ITraxx Crossover 5 year CDS spreads are now at their lowest level since June 2007). The strong total return in 2013 is unlikely to be repeated going forward as income will provide the majority of returns going forward.

We believe HDIV offers an attractive investment proposition with its ability to take advantage of relative value opportunities across the credit spectrum. Floating rate secured loans account for 44% of the portfolio and this should increase over the medium term offering greater protection against eventual interest rate increases. The shares trade on a 5.4% premium to NAV and offer a 5.4% dividend yield.

[skinny] 30/5/2014 10:49

Thanks Dave.

[davebowler] 30/5/2014 10:33

Previously mentioned P2P (with a prospective yield next year of 8%) is trading up by 5% this morning on its first day of dealing.

[davebowler] 28/5/2014 14:37

Here's an idea which may be of interest-its a new Peer to Peer Lending Investment Trust called P2P and floats on Friday.Its yield should be 8% in a year's time if all goes to plan.95% of its £200m raised will be lent via Funding Circle ,Zopa etc in the U.K.and other platforms in Europe and the U.S.


P2P will be taking minority stakes in their favoured Peer to Peer lenders-both by equity options (given in exchange for volume) and by purchases of stakes.They have earmarked 5% of the funds raised -i.e.about £10m of the £200m raised to do that.
I have heard that the issue was oversubscribed by about 15%.




Midas Stockbrokers view;

"retail banks are dinosaurs" Bill Gates

"Banking is very digitisable... Lending Club's peer to peer model is changing personal lending" Peter Sands, CEO of Standard Chartered.

P2P Global Investments ("P has announced its intention to apply for admission of its ordinary shares ("Shares") to the premium listing segment of the Official List of the UK Listing Authority and to trading on the main market for listed securities of the LoP")ndon Stock Exchange (together, "Admission").

I am sure you are all aware that banks are valued at multiples of book value (roe –g/coe-g). Most banks earn a return on equity of between 10 per cent and 15 per cent and trade on 1.2x to 1.8x book value. So imagine you were offered a peer to peer fund with a forecast return on equity of >10 per cent at 1x book... with a forecast dividend yield of over 8 per cent. Beyond the aforementioned, the fund is being managed by the blue chip house Marshall Wace.

We are pleased to announce that Midas Investment Management Limited have been appointed as an intermediary for the forthcoming of P2P Global Investments which we think is an attractive offer for the following reasons:

· Compelling economics - floating at ~1x book with a forecast ROE of ~10 per cent on modest leverage ratios.

· Structure - expected to be ISA & SIPP eligible, expected 0 per cent corporation tax, diversified by platform, geography and loan type.

· Attractive yield - potential dividend yield of ~8 per cent in 2015, superior to listed comparable debt investment funds (average of debt fund group ~5 per cent yield).

· Strong historical performance of P2P lending - historic low volatility of returns, strong risk/reward metrics (Sharpe ratio), average industry yields of >8 per cent net of loan losses.

· Potential for alpha generation - based on beneficial fee agreements with platforms and proprietary loan selection technology.

· Low volatility of loans - expected annual loans losses of ~3.2 per cent.

· Precedent - these type of funds have done very well in the USA especially the Eaglewood fund which returned 16.2 per cent last year.

· Access to Lending Club for non USA citizens - arguably Lending Club is the platform providing the best returns yet only USA citizens can access it.

Banking sector implications

The lending function of developed market retail banking is going to change and the peer to peer platforms and vehicles are the players that should benefit. Please re-read what Peter Sands has said above. We advise clients to consider selling all their banking shares (excluding Standard Chartered and HSBC) and repositioning into these industry changing catalyst. There are two reasons the banks are in trouble:

1. P2P platforms have a cost base ~60 per cent lower than banks; and

2. The interest spread banks charge is ~4.2 per cent whereas P2P's has a spread of ~2.0 per cent.

People will start to understand that depositing money with banks and borrowing from the banks is not the best value for money route. Liberum estimate that by 2024 US and UK P2P platforms will increase to £292bn which is roughly 20 per cent of all lending. How will the banks then cover their fixed costs?

Our conclusion

This is a game changing, sector smashing investment. We think this investment is a far superior, risk adjusted investment proposition to buying life insurance or bank shares and we also see it as a very compelling alternative to depositing your money at the bank. After all, how are the risks dissimilar? Yet the returns are stratospherically different.

[holts] 23/5/2014 13:57

Residual has been rising nicely over the last couple of months.

[kenny] 23/5/2014 10:04

Some fairly large buying over the last couple of weeks. I wonder if another of their bonds have redeemed at par? If so, we private investors will be the last to be told. I am speculating here but, as with previous redemptions, if that is the reason, it could provide a useful boost to NAV.

[kenny] 19/5/2014 15:16

Dividend is 7% of placing price of 152.2p - so about 10.65p in total (not 10.2p) paid in four quarterly instalments.

[the monkster] 19/5/2014 13:53

future growth i meant (obviously) - pity i cant invest retrospectively though.

[davebowler] 19/5/2014 13:43

Look at the graph then.
They are buying mortgage Backed securities below par so that has brought in the past and might in the future bring capital growth.

[the monkster] 19/5/2014 13:40

ok bd cheers. looks like they are paying about 10.2p a year which based on current prices amounts to c. 6.5%. not massive - suppose it depends on capital growth as well which i've got no idea on.

[davebowler] 19/5/2014 13:37

hxxp://www.drccap.com/wp-content/uploads/2014/05/2014-05-15-ERED-II-Final-Announcement.pdf

[davebowler] 19/5/2014 10:17

Best to read this www.recreditinvest.com/investmentmanagerreports and previous posts.

[the monkster] 16/5/2014 22:24

i'm in the prefs but looks more lucrative here. has this still got some meat on the bone can anyone advise in light of the performance over the last couple of years. also, whats the yield here ??

thanks.

[wirralowl] 09/5/2014 09:36

Thanks DB, a very good month for RECI it would seem.

Incidentally, anyone have a calendar of ex-divi and payment dates for RECI, or even know when the next ex-divi date is? TIA.

[kenny] 09/5/2014 08:01

Excellent performance by management, once again. Strange that RECI's consistent performance is not acknowledged, for example, by the shares trading at a premium. I am not complaining as it has enabled me to accumulate a large holding.