Real Estate Credit Inves... Share Discussion Threads

[wirralowl] 09/1/2013 11:30

thanks for sharing, db, appreciate it.

[skyship] 09/1/2013 11:24

db - thnx as always,,,

[skinny] 09/1/2013 10:12

Very informative, thanks.

[davebowler] 09/1/2013 10:00

Liberum;


Real Estate Credit Investments (RECI / BUY / 117.5p) – Strong NAV TR of 43% over 2012

n NAV return -0.38% in the second half of December: NAV per share was 137p at 31 December 2012 with net assets falling slightly by £0.2m (down 0.38%) to £54.9m from £55.1m at 15 December. A 2p per share dividend was paid on 31 December.

n Continued consistent bond performance and strong pipeline: The bond portfolio has maintained the strong performance seen this year with a further 1.12% rise in December. The first half of December saw a rise of 0.86%. RECI say they see a strong pipeline of bond investments in Q1 2013 and will see a continued rotation out of lower yielding bonds.

n New purchases since 15 December: RECI has invested £769.5k since 15 December, bringing the total cost in December to £1.41m and an average purchase price of 0.81. No bond sales were made since 15 December and thus net bond sales in December were £1.54m.

Liberum View:



n RECI was one of the strongest performing companies in our alternatives universe over the past 12 months, both in terms of share price return and NAV Total Return, as a result of consistent gains in the bond portfolio throughout the year. NAV total return in 2012 was a commendable c.43% with the shares rising 35% to 31 December 2012.

n Since the year end, the shares have risen a further 8.3% from 108.5p to 117.5p and now trade on a 14.2% discount to NAV with an implied prospective dividend yield of 6.8% assuming a quarterly distribution of 2p per share. The discount continues to narrow materially following the recent removal of a persistent share overhang and we expect the significant re-rating to continue considering the NAV growth prospects for RECI (weighted average market price of the bonds at the end of December was still only 70% of par). We reiterate our BUY recommendation.

[davebowler] 09/1/2013 09:57

Investec;

Real Estate Credit Investments (RECI) Factsheet published; NAV at 31 December 2012 was 137p/share

¢ The Bond portfolio was up 1.12% in December though gains were partially offset by the Itraxx market hedge.

¢ A strong pipeline of bond investments in Q1 will see continued rotation out of lower yielding bonds.

¢ The investment portfolio is now valued at £94.8m, with a further £3.8mm in cash.

¢ The portfolio's weighted average purchase price was 0.72 of par and the market price of the portfolio was 0.83.

¢ Sales exceeded purchases in the December with sales bringing in £2.9m into the portfolio (average sale price achieved was 0.91 of par) RECI purchased £1.4m of bonds during the month at an average purchase price of 0.81.

Investec Insight:

¢ On a total return basis NAV was up 1p/share over the month as shares went ex a 2p/share dividend during December.

¢ Performance therefore continues to be robust and we would note the effective double discount at which the shares trade as RECI's NAV is based on mark to market valuations of its CMBS/RMBS investments (which are traded on secondary debt markets). RECI buys loans and bonds in the market at discounts to par, as demonstrated by the average purchase price of the portfolio of 81% of par. Bonds are purchased with the expectation that RECI will get par back as and when the bonds mature. The weighted average marked to market price of the portfolio at 31 December 2012 was a 17% discount to par so there is still headroom for capital growth if the underlying bonds are repaid at par.

¢ The sales made during the month, at a 9% discount to par also demonstrates RECI's opportunistic approach to secondary CMBS/RMBS markets as the bonds sold during the month were previously purchased at a 20% discount to par.

¢ The effective gross yield to maturity of the portfolio is 12.4%.

¢ We continue to like the loans and specialist debt space and view the real estate backed debt market as particularly attractive as opportunities to pick up paper at attractive prices in secondary markets, as RECI does, persists.

¢ RECI had a good year in 2012 with a total share price return of 42.6%, however we think the shares still offer further value as they continue to trade on a 14% discount to NAV. With continued opportunities in secondary property bond markets for the manager to take advantage of and continued narrowing of the discount providing an extra kicker the shares still look good value and yield 7.0% based on the 6% distribution of NAV per annum dividend policy which was introduced last year.

[holts] 08/1/2013 12:02

insipiens , thanks .

[kenny] 08/1/2013 11:39

So, a quiet 2 weeks to 31.12.12 but I am encouraged by this statement "Bond markets have had a strong start to the quarter."

Onwards and upwards; in due course!

[insipiens] 07/1/2013 18:04

yes Holts, I did via TDW yesterday

[deadly] 07/1/2013 16:37

Glad I bought another 10k at 107.5 last week. Should have a lot further to go given the discount to NAV.

[owenski] 07/1/2013 14:59

I hold the 'P's for income and some of these for income and maybe cap gains. I understand the risks of where one chooses to park ones money, but I've never understood the attraction for gov. bonds at next to nought coupon compared with a half decent 6,7 or 8% income vehicle.

Still think there is upside for gains here but am not unduly bothered as the income is key for me here.

[rat attack] 07/1/2013 14:41

As part of the €1.1 billion deal it would be standard for all existing debt to be taken out by the new acquisition structure unless the terms of the existing instrument specifically provides otherwise eg Nat West 9% prefs.

[kenny] 07/1/2013 14:25

I still think that RECI is cheap - whether or not the Karstadt bonds have been redeemed at par.

This is not to suggest that I think the share price will increase further in the next few months or even during 2013 - I am hopeless at predicting short term share price movements. However, I do think that by September 2017 it will be a lot higher than where it is at present - my prediction is somewhere between 200p and 230p.

In the interim we have a rather nice yield so that even if RECI is not wound up in 2017, it will still prove to be a worthwhile long term investment.

[gary1966] 07/1/2013 13:49

Not a lot of stock around today. Price moving with each trade. Looks like somebody may have confirmation of what you are suggesting in post 464 Kenny.

[skyship] 07/1/2013 09:13

Thnx for that Kenny

Incidentally, have you found a link to the size of the Karstadt loan. I've looked at the regular factsheets & portfolio info....but have missed it! Another bullish point is the manager's major play in the Annington bond - it has recently progressed another 2points to 111.

Wouldn't be surprised to see the Monthly Fact Sheet as at 30 Dec'12 coming out this afternoon.

[kenny] 07/1/2013 08:42

I think that another of their loan investments may have repaid at par – the Karstadt loan being repaid on sale of the properties to a new owner – listed as RECI's sixth biggest investment.

I cannot confirm the above for definite as I cannot find clear confirmation but it should not be too long before the company issues the next fact sheet.

[skyship] 21/12/2012 09:06

Kevin Gardiner,MD and Head of Investment Strategy at Barclays Wealth Asset Management, just interviewed on Bloomberg TV. "High yielding speculative bonds still a good investment space for 2013".

[skyship] 20/12/2012 17:24

Looks pretty useful. Thanks mainly to that Annington bond the portfolio is up 1.4% over the past 2weeks, making good the 2p dividend. Result is NAV N/C.

============================================================
Manager Commentary:
Investment in a £5.67 million mezzanine loan backed by a hotel in London with 68% LTV and yield in excess of 12%. Current yield of the loan portfolio is 13.5%, loan portfolio has grown to 19% of gross asset value. Bond portfolio has performed well in period, in particular the recently purchased Annington Finance bond has seen the price increase to 108 versus a purchase price of 100.

Figures for RECI Core stated in GBP for 30 November 2012 & 15 December 2012

Pro Forma Monthly RECI Core NAV1 (in £m).....30/11/20128.......15/12/20128
Investment Portfolio2........................ 90.13... 94.34
Cash and Cash Equivalents.................... 9.52.... 6.37
Derivative Assets............................ 1.71.... 1.55
Other Assets 3,4............................. -....... -
............................................. 101.35.. 102.26

Other Liabilities5........................... (0.63).. (0.63)
Preference Dividend6......................... (0.60).. (0.75)
Ordinary Dividend7........................... -....... (0.80)
Preference Share Liability................... (44.96). (44.96)
............................................. (46.19). (47.14)

Net Assets (estimate)........................ 55.16... 55.12
Shares outstanding........................... 39,966,985 39,966,985
Net Assets per Ordinary Share (estimate)..... 1.38.... 1.38

[skyship] 19/12/2012 17:49

We should be getting the mid-month factsheet RNS tomorrow or Friday - might kick-start RECI again after the recent profit-taking...

[skinny] 19/12/2012 16:53

Real Estate Credit Investments PCC Limited announces that following the realisation of a significant asset within the ERII portfolio, the adjusted ERII Cell Position Summary and Cell Cash Summary is now as follows:

ERII Cell Position Summary (in EUR million)

Number of Positions 6
Residual Income Portfolio Valuation (30 September 2012)1 EUR15.8 million
ERII Cell Cash Summary (in EUR million)

Cash as at 19 December 2012(2) EUR19.0 million
1. This figure contains the Residual Income Positions remaining as at 19 December 2012, but at the pro forma dirty fair value per 30 September 2012.

2. The Cash balance reflects the expected cash settlement of the realised asset, which is expected to occur before 28 December 2012. The Cash balance also includes certain amounts which had previously been segregated or reserved and now have reverted to forming part of the distributable component of the cash balance.

[holts] 19/12/2012 16:50

look at the cell anouncement :-)

[skyship] 18/12/2012 07:52

thnx for those links you two...

[hieronymous1] 17/12/2012 18:40

You can search on a bond by name or ISIN at this URL: