Real Estate Credit Inves... Share Discussion Threads

[davebowler] 08/8/2014 09:43

Liberum;
Real Estate Credit Investments (BUY, TP 168p)

£6.1m new loan commitment

Event

NAV per share at 31 July 2014 was 158.1p (Jun-14: 156.5p) which represents a 1.0% increase in the month.

A new £6.1m loan commitment to a purchaser and developer of UK distribution assets was made, and RECI also expect borrowers to make further drawdowns on their unutilised loan commitments in the near future. Several new investments are also in the near-term pipeline.

The bond portfolio delivered a strong 1.25% return in the month. £2.5m of bonds were sold in the month at an average price of 1.04 (vs. an average purchase price of 0.94 - an 11% uplift). £2.9m of bonds were purchased during the month at an average purchase price of 0.98.

Liberum view

The latest £6.1m new loan investment forms part of the £30m pipeline discussed in the year-end results published in June. We believe there to be two further remaining investments in the pipeline with expected loan commitments by RECI of c£17m. Drawn loans now comprise 34% of gross assets with total loan commitments as a percentage of gross assets standing at 47%. We estimate this could rise to 57% based on loan investment projections.

RECI's shares continue to perform well, delivering 11.8% TSR YTD and 26% over the last 12 months. We forecast NAV total return to average 9.6% over the next 3 years with further NAV growth potential from the early repayment of bonds and credit spread tightening.

RECI has delivered NAV total return of 4.3% over their financial year to date (since Mar-14) and now trades on a 4.5% premium to NAV (6.4% dividend yield), in line with peers LBOW, SWEF and TFIF which also all trade on a 4.6% premium to prevailing NAV.

[skinny] 25/7/2014 19:44

From IC :-

Share tip summary

RECI's set-up is relatively complex, but it works well, and there are significant checks and balances to accommodate adverse swings in sentiment. That said, the preference shares do increase risks and a turn in the property credit market could prove painful. Developing its own loan portfolio makes sense too, and the potential for further gains makes the small premium in the share price to net asset value well justified and the yield is highly attractive. Buy.

[skyship] 24/7/2014 19:00

Tipped in tomorrow's IC...

[davebowler] 09/7/2014 10:15

Investec;
Real Estate Credit Investments (RECI) Portfolio Update & ERII Mandatory Announcement

RECI

¢ The investment portfolio now stands at £132.5m, with cash at £24.8m and derivatives at £1.9m, bringing total gross assets to £159.2m

¢ Liabilities total £45.2m, of which the preference share accounts for £41.9m and the ordinary dividend £2.0m. Other liabilities which include the accrued performance fee total £1.3m

¢ Net assets therefore stand at £113.9m, representing 156.5 p/share (after the deduction of the dividend)

¢ Bond Portfolio: number of bonds = 76 with the dirty fair value at 30 June 2014 being £79.1m and the nominal face value being £97.57m

¢ There were no new bond purchases during the month.

¢ Bond Sales: £7.2m of bonds were sold at an average sale price of 1.00 which had an average purchase price of 0.86.

¢ Loan Portfolio Summary: Number of loans now totals 12 with the drawn dirty value of £53.4m and total loan commitments of £68.6m. Loans now stand at 33.5% of GAV (drawn loan balance) with a weighted average LTV 71.1%

¢ New Loans: The total number of loans has increased, bringing further diversification to the book. The two new loans have total drawings of £6.6m.

¢ The first new loan is a £2.2m senior loan to a site in Stratford, London which benefits from a pre-let agreement with Accor Hotels.

¢ The second loan made was a £4.4m mezzanine loan investment in a South East of England focused residential house builder with security over residential properties under construction and with planning consent.

¢ ERII Cell

¢ Redemption: ERII is to redeem 73.7% of the cell's issued share capital on 25 July 2014. The redemption will be effected pro rata to individual holdings, with fractions of shares being ignored.

¢ Payment: The aggregate payment to shareholders will be €7.85m, equivalent to €0.51 per each of the 15,392,148 current outstanding shares.

Investec Insights

¢ The NAV of 156.5 p/share is ex-div after the declaration of an ordinary dividend of 2.7p/share which meets the company's 7% dividend target.

¢ Premium Rating: RECI is today trading at a premium of +5.3%, having broken through par during the last month.

¢ Index Inclusion: RECI joined the FTSE Small Cap on 20 June, and consequently traded volumes have been significantly larger since the inclusion. 1 month average traded value per day is £456,000 versus 6 month average traded value of £160,000. The enhanced liquidity may be attractive to larger investors.

¢ The redemption of 73.7% of the ERII cell is encouraging news as it will go some way to simplifying the structure of the company. At 30 June the number of positions were 4, with cash held in the cell being €8.35m

¢ RECI remains our preferred option for those seeking a higher / mezzanine return through the property debt asset class.

¢ The top ten exposures are formed of 6 loan investments and 4 bond investments and have a WA effective yield of 10.2%.

¢ Mitigates underlying risk: RECI mitigates underlying risk to some extent through holding mezzanine tranches with restrictive covenants that trigger ahead of the senior debt holders.

¢ This acts as an early warning signal and can enhance the level of control of the mezzanine holder through a pre-agreed standstill period or allowing the Mezzanine to take control via its security over the shares in the Borrower, without triggering a change of control covenant in the Senior Debt. The quality and methodology of the real estate underwriting is also a critical part of RECI's mezzanine investing.

¢ Cheyne have an established framework to underwrite loans, a significant network and in many instances will work with sponsors with whom they have a historic relationship.

¢ Since 1 Jan 2013 RECI has produced a total return of 64.3% versus SWEF total return of 4.16%

[grahamburn] 09/7/2014 09:57

Accept your reasoning, Skinny, but all the announcements you post are easily and instantly available in chronological order on the News Tab, so you could follow the dateline there. Alternatively, you could have a document on your own PC with the information.

Readers on this particular thread are, IMO, probably (if not definitely) more astute and seasoned investors (compared to the many pump and dump thread participants). They automatically have news alerts and know their way around investor websites, so making this thread longer than it need be tends to be counter-productive, as we should be interested in "comment" on RNS's rather than the RNS's themselves.

However, having said that, don't worry if you want to continue posting RNS's as, for readers such as me, it isn't too difficult to scroll through them quickly.

[skinny] 09/7/2014 09:15

Mainly for my own purposes as I have a memory like a sieve.

If I come back to a thread after a period of time, the chronology of events is there to see in one place.

Hardly contentious or speculative content!

[mozy123] 09/7/2014 09:07

It soon vanishes from the header....

[deadly] 09/7/2014 08:59

Why mindlessly post text and links that are available in the header?

[skinny] 09/7/2014 07:06

RETURN OF CAPITAL TO CELL SHAREHOLDERS

Unless otherwise defined herein, terms used in this announcement shall have the same meanings as those defined in the prospectus issued by the Company dated 16 October 2013 and the Company's subsequent supplemental prospectus issued 18 June 2014.

In accordance with the powers granted to the Directors under the Company's Articles of Incorporation, the Directors announce that they intend to implement a distribution to Cell Shareholders of the cash proceeds from the recent realisation of the Cell's assets by way of a compulsory share redemption of Cell Shares (the "Redemption").

Redemption of Cell shares

The Company today announces that approximately 73.7 per cent of the Cell's issued share capital will be redeemed at close of business on 25 July 2014 (the "Redemption Date") by way of a compulsory redemption of Cell Shares.

The Redemption will be effected pro rata to holdings of Cell Shares on the register at the close of business on the Redemption Date (which is the record date for the purposes of the Redemption), being 25 July 2014. The aggregate payment made to Cell Shareholders will be €7,850,000 (equivalent to €0.51 per each of the 15,392,148 current outstanding Cell Shares).

Fractions of Cell Shares will not be redeemed and so the number of Cell Shares to be redeemed for each Cell Shareholder will be rounded down to the nearest whole number of Cell Shares. The amount to be applied to the partial redemption of the Cell Shares comprises the monies from the realisation of the Cell's assets to be received up to and including the Redemption Date, less the costs and expenses of the Redemption.

As at today's date, the Cell has 15,392,148 Cell Shares in issue of which none are held in treasury. All of the Cell Shares redeemed on the Redemption Date will be cancelled.

Settlement

In the case of Cell Shares held in uncertificated form (that is, in CREST), redemptions will take effect automatically on the Redemption Date and redeemed Cell Shares will be cancelled. All Cell Shares in issue will be disabled in CREST on the Redemption Date and the existing ISIN applicable to such Cell Shares (the "Old ISIN") (which, for the Redemption, is GG00BCZQ7837) will expire. A new ISIN (the "New ISIN") in respect of the Cell Shares in issue and which have not been redeemed will be enabled and available for transactions from and including the first Business Day following the relevant Redemption Date (or such other date notified to Cell Shareholders). The New ISIN will be GG00BNZB0D17. Up to and including the Redemption Date, Cell Shares will be traded under the Old ISIN and, as such, a purchaser of such Cell Shares would have a market claim for a proportion of the redemption proceeds. CREST will automatically transform any open transactions as at the Redemption Date (which is the record date for the purposes of the redemption) into the New ISIN.

For every 1,000 Cell Shares held in the Old ISIN, 263 Cell Shares will be issued in the New ISIN.

In the case of Cell Shares held in certificated form (that is, not in CREST), redemptions will take effect automatically on each Redemption Date. As the Cell Shares will be compulsorily redeemed, certificated Cell Shareholders do not need to return their Cell Share certificates to the Company in order to claim their redemption monies. Cell Shareholders' existing share certificates will be cancelled and new share certificates will be issued to each such Cell Shareholder for the balance of their shareholding after each Redemption Date. Cheques will automatically be issued to certificated Cell Shareholders upon the cancellation of any of their Cell Shares. All Cell Shares that are redeemed will be cancelled with effect from the relevant Redemption Date. Accordingly, once redeemed, Cell Shares will be incapable of transfer.

Payments of redemption monies are expected to be effected either through CREST (in the case of Cell Shares held in uncertificated form) or by cheque (in the case of Cell Shares held in certificated form) within 14 Business Days of the relevant Redemption Date, or as soon as practicable thereafter. Cell Shareholders will be paid their redemption proceeds in the currency in which their Cell Shares are denominated or as determined by the Directors.

-ENDS-

[davebowler] 08/7/2014 09:14

Liberum-
Loan investment progress

Event
NAV per share at 30 June 2014 was 156.5p (May-14: 158.9p) which represents a 0.2% total return in the month after adjusting for dividends of 2.7p per share.

RECI completed 2 new loan investments in the month with total drawings of £6.6m. The new investments include a £4.4m mezzanine loan in a South East of England focused house builder with security over residential properties currently under construction and development land with planning consents. In addition, RECI has provided £2.2m for a senior secured loan against a site in Stratford, London which has a pre-let agreement with Accor hotels.

The bond portfolio generated a m-t-m return of 1.12% in June. £7.2m of bonds were sold in the month at an average price of 1.00 (vs. an average purchase price of 0.86 - 16% uplift).

Liberum view
The two new loan investments form part of the £30m pipeline discussed in the recent year-end results. There are now three remaining investments in the pipeline with expected loan commitments to RECI of c£23m. Loans now comprise 34% of gross assets which we estimate could rise to 56% based on projected loan commitments.

RECI's NAV total return in the quarter to Jun-14 was +3.3% which follows a 9.4% total return in the year to Mar-14. We forecast an average 9.6% total return over the next 3 years and we believe there is upside risk to these numbers from the early repayment of bonds and credit spread tightening. The shares have delivered 10.8% total return in 2014 to date and now trade on a 6.7% premium to NAV (6.4% dividend yield).



We recently published an update note on RECI which is available on the following link: Download Real Estate Credit Investments (BUY, TP 169p) - The real deal (17 pgs)

Other news - Infrastructure

[skinny] 27/6/2014 16:33

Thanks DB - I just tried to add another 1000, without realising the time!

[wirralowl] 27/6/2014 16:20

Thanks DB, highlights quite nicely that there's still plenty to go for here.

[davebowler] 27/6/2014 15:26

Liberum;
Real Estate Credit Investments

The real deal

BUY

Target price 168p | Publication price 161p

RECI delivered 9.4% NAV total return in FY2014 with the potential for greater returns going forward from investment in high yielding loans. We also see upside risk to forecasts from the early repayment of bonds. Management's track record and ability to access deals and allocate capital to both loans and bonds give it an edge over peers in our view. We forecast an average 9.6% NAV TR over the next 3 years and reiterate our BUY recommendation.

9.4% NAV TR

RECI generated 9.4% NAV TR in FY2014 with performance driven by 11% return from the bond portfolio. NAV has risen a further 3% in the 2 months post year end.

Catalysts

There is upside risk to our numbers from credit spread tightening and the early repayment of bonds. Bonds trade on an average 19% discount to par (27p of NAV upside).

Growing loan pipeline

Loan allocation could rise to 56% of gross assets with £30m of new investments in the pipeline. This should drive NAV growth going forward with yields of 10%+.

6.7% dividend yield

NAV returns have driven a 7% increase in our target price to 168p (Old: 157p). We forecast an average NAV total return (incl dividends) of 9.6% pa over the next 3 years.

[gary1966] 25/6/2014 12:37

Xd today and looking forward to the increased divi coming through.

[davebowler] 24/6/2014 11:55

Investec;
RECI – Ideally positioned to make attractive loan investments


773p


800p


RECI can provide highly innovative flexible loan investment deals, reducing lead times for the borrower while also enhancing security through innovative structuring for the loan holder.

Manager Cheyne Capital is a market leader in the European real estate loans and bonds markets, securing plentiful deal-flow for RECI which on a risk adjusted basis provides attractive investor returns.


¢ We like the real estate backed debt space and continue to consider RECI shares highly attractive with excellent yield credentials in addition to potential for further NAV upside.

¢ RECI provides a differentiated investment approach to recently launched pure real estate loan funds as the managers opportunistically buy and sell property backed bonds in the secondary markets (which also serves to reduce cash drag while loan opportunities are sought). The manager can also apply portfolio protection through hedges.

¢ RECI has an ordinary share dividend policy to pay out 7% p.a. (based on the November 2013 placing price of £1.5222).

¢ The shares are currently trading around par, with the discount having narrowed significantly, trading in from a 1Y low of -14.18%.

¢ Following the £50m raise in November 2013, the improved size and liquidity has allowed RECI to join the FTSE Small Cap / FTSE All-Share. The expected influx of tracker purchasing could potentially see the shares continue to trade at a small premium to NAV.

¢ Loans are an increasing area of focus with commitments accounting for 36.4% of gross assets as at May 31 2014, with a weighted average yield of 13.7% p.a.

[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.