Share Name Share Symbol Market Type Share ISIN Share Description
Real Est.Cred LSE:RECI London Ordinary Share GB00B0HW5366 ORD NPV
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -0.50p -0.30% 168.00p 167.50p 168.50p 169.50p 167.00p 169.50p 194,164 16:35:21
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
General Financial 0.0 9.1 12.0 14.0 213.54

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Date Time Title Posts
08/2/201807:59Real Estate Credit Investments1,355

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Real Est.Cred Daily Update: Real Est.Cred is listed in the General Financial sector of the London Stock Exchange with ticker RECI. The last closing price for Real Est.Cred was 168.50p.
Real Est.Cred has a 4 week average price of 165.50p and a 12 week average price of 165.50p.
The 1 year high share price is 176p while the 1 year low share price is currently 158p.
There are currently 127,107,534 shares in issue and the average daily traded volume is 57,433 shares. The market capitalisation of Real Est.Cred is £213,540,657.12.
skyship: Kenny - I'll check that re uncovered dividend. In the meantime holders should be reassured by this extract from October's piece in the DTel. As for RUSP - holders have done well thus far; but I wouldn't sleep well at night holding stock in Putin's kleptocracy. Certainly NOT one for me! ============================================================== “We believe that the opportunity set available to RECI today, for the UK market, may be as compelling as that present in 2008 and 2009 in the immediate aftermath of the global financial crisis.” The fund manager gave the example of one £20m loan in April. It was for just 40pc of the property value, with the owner and other lenders ranking behind RECI in the event of default – but the return is expected to be 8pc a year. This kind of figure is normally associated with highly risky assets, not secured lending on London property when other parties have to lose 60pc of the asset’s value before any impact is felt. Across the £113m loan portfolio as a whole, RECI has lent about 69pc of the value of the properties concerned. The trust also owns about £50m in bonds backed by residential or commercial property. Some were bought below par value, which offers some limited scope for capital growth. The trust currently yields a highly attractive 6.8pc but there are good reasons to expect that figure to rise to about 8pc or perhaps even more, said James Burns, who holds it in multi-manager portfolios he runs for Smith & Williamson. “The trust used to have some expensive preference shares in issue, but they were redeemed last month,” he said. “These prefs cost 8pc a year but the fund manager expects to refinance at less than 2pc. “The other change is that the management fee will in future be calculated as a percentage of net assets, not the higher gross assets figure. Taken together, these two developments could see the yield rise by between 1.5 and two percentage points, so it could reach 8pc or more at the current share price.”
kenny: More important than the constant issue of shares, I am beginning to wonder if RECI are going to continue to struggle to earn an average of 3p per quarter net; to meet the quarterly dividend. Averaging the last 3 months, they just about made 3p in those 3 months but, importantly, those earnings include the effect of issuing shares at above NAV. Therefore in the last 3 months, in reality, they have not earned an average of 1p per month. You cannot keep issuing new shares at above NAV so your earnings are flattered. Essentially, if you look at the yield on recent loans, those investments have not been at a high enough yield to produce earnings after costs averaging 1p per month. Nothing to say the yield on new investments will improve even if interest rates nudge upwards because their loan rates are not really related to base rate. In essence, if future earnings are only just going to cover the dividend yield and for some periods not cover the dividends, there is no reason for the shares to trade at much over NAV. I appreciate people are desperate for yield – that might support the share price at a premium to NAV - but there are more risks below the surface with RECI than perhaps most investors appreciate. After careful consideration of the longer term outlook I sold some weeks ago and reinvested in RUSP. I appreciate that RUSP invests in Russian warehouses but this class is preference so the yield is fixed, higher and very well covered by earnings. I think all the political and other risks, if any transpire, will be borne by the ordinary class: RUS and not the preference I am invested in. I had held RECI for some years so it is sad selling the last of my holding of a share that had served me well for so long. However, I believe I have much less risk in RUSP (strange as that might sound!), my yield is higher, very well covered and, importantly to me, much more secure when comparing risks between the two investments.
grahamburn: And, so far, the share price has held up well.
davebowler: Liberum; Specialist Finance Real Estate Credit Investments (BUY, Mkt Cap £115m) 7.5% NAV return in 2016 Event RECI generated a NAV return of 1.1% in December 2016 bringing the NAV total return for 2016 to 7.5%. NAV performance in the month was driven by the loan portfolio and the third consecutive month of positive returns from the bond portfolio. December was an active month for portfolio activity with the company acquiring £15.4m of a bond secured against a prominent office building in the City of London (8.3% expected yield). £2.0m of bonds were sold above the prior month-end carrying values. In the loan portfolio, a new loan commitment was signed for a senior loan to fund the development of a site in Woolwich, London into 152 mid-market residential units. A €7.6m repayment on a loan secured on a Berlin shopping centre was received in the month. Liberum view 2016 has been another positive period for RECI and the 7.5% NAV return has been achieved despite volatility in the underlying real estate market during the year and cash drag in H2 2016 following a large loan repayment in August. Cash as a percentage of NAV at the end of December was 15% and outstanding loan commitments account for the majority of this. RECI's share price discount to NAV has widened to 3.2% which compares to an average 4.2% premium for peers. This is despite RECI's superior NAV total return track record and sector-leading dividend yield of 6.8% (6.0% for peer group).
grahamburn: Why buy this close to the ex-dividend date? Unless the share price rises by more than the two dividend amounts, all that you will achieve is getting some of your own money back, whilst losing some "capital" value. Add to that the uncertainty surrounding the next few days and you might get a double whammy. Personally, I'm sitting on my hands until after the ex-dividend date when I might get a much better price to add to my holdings. I might not, of course, but at least any downside risk is covered!
deadly: Results this Friday. Will they give a boost to the depressed share price? Hope so.
kenny: MRF- I don't understand your comment about limited EU QE depressing the share price of RECI. I would have thought that lower interest rates for longer will mean that RECI is a good yield investment for people looking for a decent income. Please explain as I am perhaps overlooking something?
davebowler: Liberum RECI's NAV total return was +1.4% in September after adjusting for the dividend of 2.7p paid in the month. NAV per share at Sep-14 NAV was 158.7p. The bond portfolio delivered a 2.52% return in the month, with no purchases made, but £8.4m of disposals at an average sale price of 0.93. The average purchase price of these bonds was 0.62. A further drawdown of £2.7m of RECI's £6.1m commitment (highlighted in the August factsheet) to a new loan investment in UK distribution assets was made. We calculate £1.2m remains to be drawndown from this commitment. Secondly, RECI funded a €9m mezzanine loan towards the acquisition of a major German residential development company. Liberum view The number of loans in RECI's portfolio now sits at 14, with total loan commitments of £92.6m. Drawn loans to date stand at £69.9m, or 50% of the investment portfolio. The weighted average yield of the portfolio is 13.2%. NAV total return calendar YTD is +9.8% and RECI now trades on a 4.9% premium to the Sep-14 NAV, versus a sector average of 5.5%. September was a particularly active month for the company, and demonstrated RECI's unique proposition where shareholders capital can be transferred out of bonds and into loans on a relative value basis. Share price total return remains strong (+14.2% YTD), and RECI remains our top sector pick. Real Estate Debt
kenny: Yieldsearch – everything you say seems soundly based and logical. Most journalists do not seem to understand RECI – it is too much hard work! My current view is that RECI will wind up because it is a very small fund compared to the other funds Cheyne are managing. There have also launched at least 3 new funds in the last 18 months which are all now a lot bigger. I do think that eventually RECI will move to trade much closer or above its NAV. These things sometimes take a lot longer than would appear logical – especially when compared to new funds, which seem to have a big marketing machine to draw in new investors e.g. the investors chronicle article. If RECI keeps adding a penny or three to its NAV every month, then it will eventually be noticed and, perhaps, all of a sudden it will move up. You heard it here first!! Another important point to bear in mind is that RECI has a pool of potential pull to par money of 64p per share – new entrants do not have this potential. That combined with the fact Cheyne seem to be able to source higher yield investments should ensure that, over the long term, RECI out performs the newer funds. Perhaps the RECI share price has to first consolidate its move up over the last 9 months, with all short termers being flushed out, before it makes its next move up. The US MBS market and US based MBS funds appear to have closed the gap to a much greater extent, so perhaps we will eventually follow the US market.
kenny: I think the positive attributes of RECI have been rightly described on this bulletin board as being a) the discount to NAV; at 88p RECI is trading at a discount of 26% to its last announced NAV of 119p, and b) the yield on the shares which is likely to be about 8% in the near future based on 119p. However, I think there is now a new and important factor; which might explain why an investment fund purchased 5m shares at 86p yesterday (12.5% of the share capital; which is a big investment in a small company like RECI). If Mario Draghi's plan comes to fruition and government bond prices improve by virtue of massive intervention then, I believe, subsequently the price of the type of property backed bonds that RECI invests in will also recover. In short, the hunt for yield will continue and likely expand into bonds backed by mortgages. Such high yields can only adjust lower in the market if and when Mario Draghi's plan is implemented – a case cannot be made that yields will increase. The effect upon RECI could be material. The latest valuation shows that the market price of the bonds is an average of 60.4% of face value. If over coming months the market price improves to, say, 70% of face value, I compute that adds 27p per share to NAV and takes it up to 146p per share. If we speculate further that the market price in fact moves to 75% of face value that would add 40p per share to NAV and take it up to 159p per share. This latter scenario may prove too optimistic; however, if we are facing an extended number of years during which interest rates are minimal, then mortgage backed securities are certainly going to improve in value - so longer term they could get there. Therefore, my view is that RECI should not be trading at the "double" discount its share price currently trades at. First, there is a discount in the market for the price of the bonds RECI invests in (40%) and, second there is a discount on the 119p that produces - of 26% down to 88p. It appears to me that the share price should be nearer to 119p because there is at least "hope" that the discount in its bond investments will narrow. I am not going to predict what RECI's share price should be on a "hope value" basis as I am useless at predicting share prices and in the short term the share price, as well as NAV, can fall as well as fall further!! Longer term I am fairly certain that mortgage backed securities will improve in value. What is the "insurance" should Mario Draghi's plan not be implemented or be watered down. It is a fact that interest rates are going to remain low for many years, perhaps the next decade, so the hunt for yield is going to continue for some time. Also, if Mario Draghi's plan is not implemented in the near future, the common view seems to be it is almost certain that eventually a plan will be implemented to buy government bonds in order to reduce yield and stabilize that market. And if nothing at all happens, the bonds RECI owns will eventually mature at par with very few defaulting. I started topping up my holding in RECI the day before the investment fund bought 5m shares and would speculate they would not take such a large and difficult to trade stake unless they were convinced of the longer term outlook for RECI.
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