Real Estate Credit Inves... Share Discussion Threads

[jonwig] 12/2/2013 20:11

Dave, I'm reading page 4 of the LBOW prospectus:

The Company will not employ gearing or invest in derivatives for
investment purposes. However, the Company may enter into hedging
transactions for the purposes of efficient portfolio management.

So that's balance sheet gearing, though portfolio gearing (ie. buying subordinates) is a different matter: I haven't checked that.

Kenny - we know (from previous posts) what the potential negatives are for RECI and, it has to be said, they aren't yet on my horizon.
However, like your own I imagine, my portfolio has done well over the past few months, and I'm taking some profits - ie. taking control, as you put it - though not here.

[skinny] 12/2/2013 19:52

Garry - sorry for any confusion - I was alluding to Kenny's posts about the new kids on the block and possibly the sector in general.

[kenny] 12/2/2013 19:27

Jonwig – I need to hear negative views about RECI. I have a large holding in RECI so, from time to time, I too get nervous about how it will work out over the next few years. Investing in the stock market is, in effect, giving up control over the amount invested – irrespective of what all the experts say. Hopefully, it will be a better return than keeping it under the mattress where one can have total control.

Keep posting an alternative view and I will be a fan of yours!

[davebowler] 12/2/2013 18:59

LBOW from memory only lends on a first charge basis.

[jonwig] 12/2/2013 18:02

Kenny - you really are selective, and your fans love you for it!

LBOW is ungeared (see prospectus ... stated policy), SWEF I don't know: you tell me, maybe. I can't find a listing doc.

RECI has gearing of 81% (prior charges divided by shareholder funds).

Whew (!?)

Mind, the factors which will persuade me to sell this stuff aren't on the horizon yet, so I suppose I'm a fan of yours!

[gary1966] 12/2/2013 17:31

Skinny - NAV 145p, fantastic fund performance over the last 12-18 months. Definitely not overheated, just recognising all the above at last. With recent performance this could easily trade at a premium to NAV as highlighted by post #556.

[pyemckay] 12/2/2013 16:35

dont forget we have a top notch manager identifying profitable bonds and opportunies. last rns mentioned medium term strength and further opportunities.
given the economic conditions there is scope for good gains over next few years.

[skinny] 12/2/2013 16:00

Hmmmm - getting a bit over heated maybe.

[kenny] 12/2/2013 15:57

...SWEF has announced a NAV of 97.99p and is being bought at 104.5p - a premium of 6.6% over NAV. I know which one I prefer to own!!

[kenny] 12/2/2013 14:59

Two new funds to invest in real estate debt have raised money at 100p and just started to trade, namely LBOW and SWEF. Despite the fact they have probably invested little or none of the funds raised, both are trading at above 100p.

Comparing RECI with those two funds puts the current share price in context - RECI is trading at a 10% discount to NAV, unlike the other two who are on a premium, and is soon to go ex-div.

Going forward, it will be good to have two more funds to compare with in relation to performance, yield etc.

[pyemckay] 11/2/2013 16:21

Nice. This is now my biggest holding in the portfolio. Seems like a very niche share that will do very well in the current climate

[skyship] 11/2/2013 15:24

ANNINGTON FINANCE NO.5/13% Bond now at 117.00

[eeza] 08/2/2013 11:56

Thanks for figures, Kenny.

[kenny] 08/2/2013 11:41

Based upon information contained in today's IMS I am able to update my estimate of pure income arising to RECI; that is earnings excluding fair value gains or losses. See my posting number 525 for background.

My post 525 assumed that dividends would be 2p per quarter – they will be increased but the 6% of NAV is not a projection. Therefore, as with all other companies, dividends are discretionary, the only exception being registered REIT's.

Anyway, it looks like annual earnings, before dividends and excluding fair value gains but after all expenses and interest on the preference shares, could be around 17p for the year to 31.03.13.

If that turns out to be the case it really is stupid for the share price to be restricted to trading at a cap of whatever happens to be the NAV at any particular point in time; of 145p currently. Many companies would be considered cheap if they were trading on a P/E of 10 – that would equal a share price of 170p in RECI's case. At a share price of 170p, surely a company paying a twice covered dividend and on a P/E of 10 would be considered cheap? Time will tell!

An important warning – in order to arrive at 17p per share of income earnings I have taken the figures for the half year to 31.12.12 and multiplied by two. Unfortunately, the company did not release the same level of detail in its immediately prior IMS so it is not possible to be absolute. I am fairly certain that income earnings for the first quarter to 30.06.12 would have been, pro-rata, lower but, on the other hand, it is highly likely that the quarter to 31.03.13 will be higher – both due to the acceleration of values in the portfolio when combined with sales to recycle profits into higher yielding bonds and loans. Therefore, I think it is reasonable to take the half year in the middle of the year as the average on an annualized basis.

Irrespective of my "warning" and whether or not in the year to 31.03.13 pure income earnings turns out to be 17p or a few pence higher or lower, what it is possible to predict with some degree of certainty is that income earnings for the subsequent year are likely to be a minimum of 17p per share.

As stated in my post 525, it appears the market may only wake up to the situation in June when the full annual accounts to 31.03.13 are released. I also stated in that post to hold on tight to your shares. Of course, no investment advice is intended and you should do your own research, check my figures, and come to your own conclusion about selling, holding or buying RECI shares. Personally, I have a material holding in RECI and I am holding very tight, most likely until 2017.

[jaws6] 08/2/2013 10:27

dave
Tks.

[davebowler] 08/2/2013 10:23

Skyship -yes this is a tremendous bargain still,even after todays move, compared to HDIV.
jaws6 -I have replied on ERII thread.

[eeza] 08/2/2013 09:50

Thanks Gary.
Liberium don't seem to realise that the 6% is a target.

[gary1966] 08/2/2013 09:48

Reply from Richard Lang re divi is that 6% of NAV is a target and not set in stone but going forward the aim is to re-base the dividend to meet the target.

[jaws6] 08/2/2013 09:42

davebowler
As you read Lib note on RECI hope you seen ERII note today ,any thoughts of still 50% discount in ERII ,Tks .

[jaws6] 08/2/2013 09:09

Any one knows what this RNS means for ERII ?can not work out

[gary1966] 08/2/2013 08:58

Holts many thanks, I will send an e-mail now.

[holts] 08/2/2013 08:27

[e-mail]

[holts] 08/2/2013 08:24

Gary its [e-mail] , try Richard Lang

[eeza] 08/2/2013 08:17

2p Div gives yield of 6.3% - against yield of 6.85% at 2.175p Div.

Div seemed to rise @ 6% of NAV until it reached 2p - then stopped. Obviously a cap at 2p.
Secret surprise.