Real Estate Credit Inves... Share Discussion Threads

[gary1966] 02/10/2013 17:13

Equity raising, if it happens, should be at a higher price now as linked to NAV. This in turn should increase the dividend going forward as this is initially going to be set at 7% of the issue price.

All good news with the good ship RECI.

[davebowler] 02/10/2013 16:51

Bonds are held at c 73 p in the £;


Bond Portfolio Summary
Number of bonds 67
Dirty Fair Value of Bond Portfolio as at 30 September 58,322,469
Nominal Face Value of Bond Portfolio as at 30 September 78,932,580
Bond Purchases 1 September to 30 September 2013 (cost) 1,157,266
Average Purchase Price between 1 September and 30 September 2013 0.88
Average Effective Yield of Purchases between 1 September and 30 September 20131 8.00%
Bond Sales 1 September to 30 September 2013 (cost) 2,035,982
Average Sale Price between 1 September and 30 September 2013 0.96
Average Purchase Price of Bonds Sold Between 1 September and 30 September 2013 0.55
1. The weighted average effective yield is based on Cheyne's pricing assumptions and actual returns may differ materially from those expressed or implied herein. Figures quoted include accrued interest.

[skyship] 02/10/2013 15:54

Manager Commentary:
Bond portfolio up 2.61% in month of September after material repayments and strong mark to market gains
Cheyne has a healthy pipeline of loan opportunities in excess of £150 million with further investments expected in Q4 of 2013
A blended loan and bond strategy continues to deliver income yield and NAV gains

P/F Monthly RECI NAV (in £m) 15/09/2013 30/09/2013
Investment Portfolio..... 99.7.... 101.4
Cash and Cash Equivalents 7.5..... 5.4
Derivative Assets....... 1.2..... 1.1
Other Assets........... -....... -
....................... 108.4... 107.9

Other Liabilities....... (1.0)... (1.0)
Derivative Assets....... -....... -
Preference Dividend..... (0.7)... -
Ordinary Dividend....... (0.9)... -
Preference Share Liability (45.0).. (45.0)
....................... (47.6).. (46.0)

Net Assets (estimate)... 60.8.... 62.0
Shares outstanding...... 39,966,985 39,966,985
NAV/Ordinary Share (est) 1.52.... 1.55

[davebowler] 02/10/2013 13:03

hxxp://www.recreditinvest.com/factsheet/20130930factsheet.html

[davebowler] 23/9/2013 10:08

Yes I agree, it ought to be at or above NAV (see recent TFIF issues)
Liberum;
Real Estate Credit Investments (RECI) - Proposed equity issue

n Proposed fundraising at or around NAV: RECI is considering raising additional equity in response to investor demand and in light of the positive investment environment in the real estate debt market. Any such raise would be undertaken at or around NAV.

n Target dividend to increase to 7% of placing price: RECI intends to increase the target dividend to 7% of the placing price as a result of the beneficial impact on the company's TER.

n Roadshow meetings are available with the management team of RECI from Wednesday 25th September 2013.

[gary1966] 23/9/2013 07:53

jaws6,

I would be very disappointed if it was at less than 150p and if there really is real demand for their shares then I don't see why they shouldn't insist on full NAV. Dividend will be well north of 10p pa, whatever the outcome, and so nice uplift for us income seekers.

[jaws6] 23/9/2013 07:29

nav WAS 152 last time ,does that mean placing near 152 or 148 ?

[skinny] 23/9/2013 07:07

In response to investor demand and in light of the positive investment environment in the real estate debt market, the board of RECI announces that the Company is considering raising additional equity capital. Any such fundraising would be undertaken at or around the Company's net asset value.

Subject to completion of such a fundraising, the Board intends to increase the Company's target dividend for 2014 to a minimum of 7% of the placing price of new ordinary shares issued under the fundraising, as a result of the beneficial effect on the company's total expense ratio that the fundraising would have.

Any fundraising will be subject to market conditions and further details will be announced in due course.

[kenny] 19/9/2013 12:52

Thanks Dave. Onwards and upwards!

[davebowler] 19/9/2013 09:24

Liberum;
Real Estate Credit Investments (RECI / BUY) – Bond repayment drives NAV growth

n Ex-div NAV +0.3%: RECI's NAV rose by 0.3% over the first half of September to 152p (31 August: 151.6p – 153.9p less the 2.3p dividend which went XD on 6 September)

n Bond repayment: The main contributor to the 1.05% increase in the bond portfolio was the repayment of the QUOKK 2006-1 E bond (marked at 89.25% of par at 31 August). The average purchase price was 59% of par.

n £2m of bond sales: RECI completed £2m of bond sales during the period at an average price of 96% of par, having purchased the bonds at an average of 55% of par. £0.85m was recycled into new positions.

Liberum View:

n The repayment of the QUOKK 2006-1 E bond illustrates the manager's ability to identify mispriced opportunities in higher yielding tranches (Class C and below) which offer the highest relative value when compared to the more senior Class A & B tranches.

n The portfolio continues to benefit from the manager's decision to recycle capital over the past 12-18 months out of lower yielding classes following significant price increases into the higher yielding tranches which offer greater potential for price appreciation.

n RECI trades on a 3.4% discount to NAV and offers a prospective 6.2% dividend yield. This compares to an average 2.9% premium and 4.2% dividend yield for peers. RECI shares have risen 42% ytd, but the stock remains our top pick in this space given the manager's track record, superior NAV growth potential and access to dealflow. Our conservative 157p price target offers 13% total return over the next 12 months.

[jaws6] 19/9/2013 08:51

skinny
Thanks.

[skinny] 18/9/2013 12:56

Here it is :-

[jaws6] 18/9/2013 12:53

davebowler
Thanks for info.still waiting for my copy.

RNS out on factsheet in RECI today.

[davebowler] 18/9/2013 10:41

jaws6, I read the Arrow Global info from Jefferies (hard copy) and it sounds a great company but as its not clear at what price it will float I will pass. Also the potential P/E range quoted seem very high c.17x

[davebowler] 18/9/2013 10:35

Here is what a similar fund is proposing;

NB Global Floating Rate Income Fund (NBLS / BUY) – £200m+ C Share Issue

n Proposed £200m+ C Share Issue: NBLS is targeting a C share issue in excess of £200m following the receipt of considerable interest from investors to the proposals announced on 28 August 2013.

n Positive outlook: The manager retains a positive outlook for the loan market with expectations of low default rates and recent market activity which has allowed issuers to push out loan maturities.

n Management fee change: The management fee will be reduced marginally from the current level of 0.75% of NAV to a blended fee calculated as follows: 0.75% of assets £1bn and £2bn.

Liberum View

n We would expect the raise to generate significant interest among investors given the success of the £363m C share issue in March 2013 which was well ahead of the original target ('in excess of £100m').

n The proposal will cement NBLS' position as easily the largest vehicle in the leveraged loan sector which brings obvious share liquidity benefits – NBLS's average daily volume is already well in excess of peers (6 month average daily traded value of £2.2m vs. £0.3m for AEFS). The C share issue will also help to spread the fund's operating costs over a wider shareholder base.

n The £363m proceeds of the last C share issue in March were invested very quickly (c 6 weeks) which was well received by the market. We would expect a large amount of the proceeds to have been invested in covenant lite loans (which accounted for almost half of new issues in H1 2013). The covenant-lite share of new issue volume remains high (60% in August 2013) and the new C share proceeds are likely to have a significant allocation to this part of the market.

[jaws6] 11/9/2013 11:57

DAVE
please let me know if you get more info before me.Thanks

[davebowler] 11/9/2013 10:43

Yes I did and I have sent an email to Numis to ask for more info.Looks interesting,thanks.

[jaws6] 10/9/2013 16:02

dave
Thanks, good read.
did you see link in above post ?

[davebowler] 10/9/2013 16:00

Liberum;


ALTERNATIVE INVESTMENT FUNDS

This month, we screen our alternative fund universe for high yielding stocks with significant capital upside potential. There are currently 29 funds in our universe which yield over 4% - the minimum threshold we set for this analysis. We seek to identify stocks with 1) a strong track record of historical NAV growth where we expect this outperformance to continue, or 2) capital upside from assets in the early stage of a recovery cycle.

1. Real Estate Credit Investments (BUY) – RECI has been one of the top performers in our coverage list with NAV total return of 66% since the start of 2012. The 6.3% dividend yield is underpinned by loans generating attractive returns (11.9% yield and 64% LTV) and secured on defensive assets located predominantly in London & Germany. The portfolio offers capital growth potential from bonds priced at a 27% discount to par. We expect 15% total shareholder return over the next 12 months with additional NAV upside from the early repayment of bonds and credit spread tightening.

[jaws6] 10/9/2013 09:27

Dave
There is new issue Arrow Global is coming too for debt co.It was on RNS this morning

edit
found it

[davebowler] 10/9/2013 09:16

Competitor fund trading at a premium;
TwentyFour Income Fund (TFIF / NR) – Proposed £20m equity raise

n £20m raise: TFIF is seeking to raise up to £20m under its placing programme. Indications of interest for £10m have already been received from existing shareholders.

n 2% premium to NAV: The issue price will be a minimum 2% premium to the NAV at 6 September (103.89p) implying a minimum price of 106.0p.

Liberum View:

n The proposed raise follows the £31m placing completed in June (against a target of £40m). TFIF is now virtually fully invested as cash accounts for 1.37% of assets and the proposed raise is not unexpected considering the current share price rating (4.7% premium to NAV).

n Under the placing programme, TFIF can issue up to a maximum of 300% of the ordinary shares issued at the time of the IPO up to a maximum of 500m shares in aggregate (i.e. up to 311m shares remaining under the placing programme). The company therefore has considerable flexibility to manage the share rating which should act as a cap on the share price premium to NAV. We therefore would be wary of buying the shares at greater than a 5% premium to NAV.

[spittingbarrel] 06/9/2013 15:29

Thanks for the update davebowler

[skinny] 06/9/2013 09:57

One not to have to watch too closely!

[davebowler] 06/9/2013 09:53

Liberum;
Real Estate Credit Investments (RECI /BUY) – NAV flat but significant new loan investment made

n NAV unchanged: RECI's NAV was unchanged over the second half of August at 154p, having rising 1p over 31 July's NAV per share of 153p.

n New loan investment: The 15 August factsheet highlighted an imminent loan investment and RECI have subsequently completed a 65% LTV whole loan secured against a prime London office portfolio.

n Loan investment to be restructured: The new loan investment will be subsequently restructured with RECI retaining the mezzanine loan with returns in line with target returns.

n Bonds +1.1% over August: The bond portfolio rose 1.1% over August driven by strong investor demand. Additionally, RECI purchased £1.2m of CMBS bonds yielding greater than 9% in the second half of August.

Liberum View:

n RECI continues to make progress with its loan investments. The portfolio now comprises 6 loans with a weighted average yield of 11.9% which account for 40% of gross assets. This figure is down from 14% at 15 August due to RECI taking the full new loan, but post restructuring, we expect this weighted average to rise again to c.14%.

n We expect further loan investments going forward, and forecast loans to make up 45% of GAV over the coming months.

n RECI trades on a 4.5% discount to NAV and offers a prospective 6.3% dividend yield. This compares to an average 3.2% premium and 4.2% dividend yield for peers. RECI remains our top pick in this space given the manager's track record, superior NAV growth potential and access to dealflow. Our conservative 157p price target offers 13% total return over the next 12 months.