Real Estate Credit Inves... Share Discussion Threads

[kenny] 07/3/2013 23:04

The latest factsheet is not all good news for anyone (like me) who is looking at the longer term value, for example, upon a potential windup in late 2017.
Potential eventual value has slipped, presumably because of the churn. My estimates are:
28.02.13 15.02.13
NAV 151p 148p
Potential redemption
gains 70p 75.25p
Totals 221p 223.25p

Not material but worth tracking in case any trend emerges.

Newer bond purchases may be higher yielding but that may be - marginally - offset by lower potential redemption gains.

[pyemckay] 07/3/2013 16:59

nav going up 2 or 3p every fortnight. great investment at the minute. Fantastic stuff from the managers here and definitely earning their corn.

[skyship] 07/3/2013 16:38

P/F Monthly Core NAV (in £ million) 15/02/20138 28/02/20138
Investment Portfolio............ 101.1... 100.8
Cash and Cash Equivalents....... 3.8..... 5.1
Derivative Assets............... 0.6..... 0.8
Other Assets.................... -....... -
................................ 105.4... 106.7

Other Liabilities............... (0.7)... (0.8)
Preference Dividend............. (0.4)... (0.6)
Ordinary Dividend............... -....... -
Preference Share Liability...... (45.0).. (45.0)
................................ (46.1).. (46.3)

Net Assets (estimate)........... 59.3.... 60.4
Shares outstanding.............. 39,966,985 39,966,985
Net Assets per Ordinary Share (est) 1.48.... 1.51

[davebowler] 07/3/2013 16:31

Manager Commentary
• Strong returns from bonds secured by German retail properties accounted for 25% of bond gains in the month
• The cash yield on the portfolio (interest coupons + principal) was 27.8% over the past 12 months
• Bond portfolio trades at a greater than 25% discount to par and with scope for further price appreciation in the coming months

[gary1966] 05/3/2013 18:44

Must be due the latest fact sheet this week. Would be nice to see the 150p brought up for NAV.

Xd tomorrow.

[davebowler] 04/3/2013 15:13

Yes its even better than you thought!

[kenny] 28/2/2013 23:57

davebowler – thanks very much for posting the link to the Liberum buy note, which in my opinion is an excellent analysis of RECI. Well worth a detailed study.

I think Liberum have been quite conservative with their forecast for the year to 31 March 2014. However, on balance, I would rather have a conservative forecast for the shorter term and then review where we stand in March 2014 according to how the various influences are looking for the then future.

Interesting that Liberum is forecasting total earnings, before dividends, of 17.4p for the year to 31.03.14. Onwards and upwards!!

[davebowler] 28/2/2013 15:49

The TwentyFour Income fund (TFIF) raised £150m!

[holts] 28/2/2013 13:43

100k at 139.5 online

[spittingbarrel] 28/2/2013 12:11

I paid 1.39 this morning for 7500, I had to phone my broker as only 1000 was available online. The price immediately moved up and you can still only by 1000 online so I guess the market is short.

[jaws6] 28/2/2013 09:07

on up move again today ?

[jonwig] 28/2/2013 08:47

I'd basically agree with your last analysis, Kenny, although events can always spoil the 'pull to par' scenario.

Can't the question of the portfolio yield be answered most simply by going to the accounts? These aren't unfortunately, produced in the RNSs.

The 2011 FY isn't helpful, but the 2012 H1 shows interest income of £6.05m on £87.13m of bonds.
Simply doubling up gives a portfolio yield of 13.9%. However, FY bond value should be higher, reducing the yield. Your 13.3% looks right.

As for alternatives, Duet Real Estate [DREF] is targeting dividend payments of 7p on assets of about 98p once fully-invested.
It makes direct property loans at (usually) floating rate - which could help - but there wont be any 'pull to par'.
No recommendation implied.

[kenny] 28/2/2013 08:27

insipiens – as always you have to DYOR and make your own decision.

I can only comment from my own viewpoint. It is not only the income yield that remains attractive it is the "pull to par" of their bonds that will continue to produce returns. There is still 75p per share of that – on top of the latest NAV of 148p. Even when RECI have received the full benefit of the pull to par I believe they will remain a good investment; for the simple reason that they will then have a much bigger portfolio of bonds/loans. Although that larger portfolio will, no doubt, be producing a more sedate level of income – say 8% instead of over 13% - it could still lead to bigger dividends. The other factor in my own investment thinking is that there is a strong chance that by September 2017, RECI could announce that it is winding up; coinciding with the preference shares redeeming. Therefore, I am a long term shareholder in RECI - if 4 years is considered a long term?!

In the shorter term, I believe the share price will always be trying to catch up with the continuing pull to par. Indeed, I have recently been topping up at this level.

[flying pig] 28/2/2013 06:58

Insipiens - I think you have to identify a better share to move into that gives a similar/better "reasonably" secure return. Ideas?

[insipiens] 28/2/2013 01:55

Kenny, Are you saying its getting close to a divestment case for anyone who has held from the sub £1 point... :)

[kenny] 27/2/2013 23:06

It is never easy to admit one's mistakes but I think I have overestimated RECI's likely pure income; excluding gains and losses on bonds. Thanks to davebowler who spotted my mistake – arising from the overlap between the tables on page 2 and 3 of the twice monthly Fact Sheets.

I now think a more likely outcome is pure income earnings of about 13.5p over the next 12 months – it could transpire to be more but that would involve some guesstimate of the "churn" into higher yielding loans and bonds; which cannot really be baked in before it occurs.

Pure income earnings of about 13.5p would still be outstanding when added to the gains - so the investment case in RECI is still very much intact despite my mistake. Apologies if I got anyone over excited.

[skinny] 27/2/2013 15:14

Thanks Chester.

[chester] 27/2/2013 14:23

skinny - I rang and talked to someone at Hargreaves Landsdown with regard to the Twenty Four Income Fund.
This is the link to the main info...



Dealing
Minimum investment of £50,000 / £1,000 at launch via placing / offer. Daily trading on LSE.

[skyship] 27/2/2013 13:12

Wirral - pleased you're already in ACD - well done you...

Gary - yes, I'm just being conservative

[gary1966] 27/2/2013 12:31

O/T

Skyship,

Thought ACD were liquidating in Jan 2015 per Tilts post. Would change your GRY numbers a little.

[wirralowl] 27/2/2013 12:31

Thanks for the tip, Skyship, but I've been in ACD since last June too! ;-) Going very nicely now, as you say...

[skinny] 27/2/2013 11:42

Chester, can you post a link to the Hargreaves Lansdown page for TwentyFour Income fund please - I can't for the life of me find it.

[skyship] 27/2/2013 11:41

Wirral - diversification but in related sector - try the liquidating hedge fund Acencia Debt Strategies ("ACD"). 94p versus 105p NAV and growing. Considered likely to pay out well over 110p over the next two years of winding-up. Also dividend paying during the process at the rate of 3.5% of NAV.

Gross Redemption Yield to 30th Jun'15 would be:

# At current 105p - 9.3%
# at 110p - 11.4%
# At 115p - 13.5%

Investment managers and directors frequent buyers recently...

ACD is my largest holding. Well worth researching, starting with the ACD thread of course:

[davebowler] 27/2/2013 11:15

chester- I doubt if that minimum is correct as I have checked with Numis and they say it will be tradeable in normal sizes.It may be a maximum normal market size,possibly?