Real Estate Credit Inves... Share Discussion Threads

[zastas] 09/2/2015 09:46

I no longer hold any , but good to see it's still going well.

Some of the bond and loan gains may be the result of the announced ECB QE program. Although per citizen much smaller than the US&UK ones, crucially the ECB is also planning to buy MBS packages. It means more credit for re-financing available, and consequently lower market yields and value uplifts.

[skinny] 06/2/2015 13:16

Quietly making news highs @172.75p.

[owenski] 04/2/2015 20:10

And is paying 6.3% at current price.

[davebowler] 04/2/2015 17:53

Liberum;
Real Estate Credit Investments (BUY)
Strong gains on Citypoint bond

Event
RECI's NAV per share rose 3.1% in January 2015 to 162.4p per share (December 2015: 157.5p) mainly as a result of a m-t-m uplift of 5.6% in the bond portfolio.

The bond portfolio's performance was driven by a significant increase in the value of the controlling interest in the CMBS bonds owned in EURO 27X E issue (secured on the City Point Tower in London). These had been valued at 10% of par and have been marked up to 70% of par. A par recovery is now likely following Brookfield's purchase of a subordinated B note in the CMBS structure.

£6.9m of bonds were sold in the month to build up cash proceeds ahead of imminent loan investments. The average sale price of the bonds was 40% above the acquisition price (sale price of 0.88 vs. purchase price of 0.63).

Liberum view
January's NAV performance highlights the benefits of RECI's combined bond and loans strategy. The loan portfolio will have a majority weighting going forward but the bond portfolio offers potential for capital uplifts on strategic acquisitions and opportunities to deploy capital in liquid assets to minimise cash drag. The material uplift on the City Point bond illustrates the investment manager's expertise and in-depth understanding of the CMBS structures.

RECI trades on a 5.3% premium to NAV in comparison to an average of 5.8% for the peer group. RECI remains our top pick in the sector given the company's NAV growth prospects, impressive track record and ability to source significantly accretive deals.

[davebowler] 04/2/2015 17:51

Investec;
NAV: NAV has risen from 157.5pps as at 31/12/14 to 162.4pps as at the end of January, a gain of 3.11% over the month.

¢ Underlying: The bond portfolio saw 5.56% gains during the month. Significantly, a MTM increase in the value of the controlling interest in the CMBS bonds owned in EURO 27X E issue (City Point Tower) which were a strategic purchase. These had been marked at 10p/£1, and have been marked up to 70p/£1 as a result of Brookfields recent cash purchase of a subordinated B Note, thus pointing to a par recovery for this Bond in time.

¢ Loan Portfolio: The weighted average yield is currently 13.5% and the LTV sits at 66.5%, which is attractive relative to what has been achieved in other investment vehicles in the Mezzanine space.

Investec insight

¢ The fund has been our favoured pick in the mezzanine space for some time, having repeatedly pointed out the clear discrepancy in premium between RECI and Starwood European Real Estate Finance (SWEF), despite better performance. This differential has since narrowed, with both funds trading roughly in line after RECI’s share price rally of 7.2% year to date. This said, we still think there is value in RECI’s bond portfolio and the active management under Graham Emmett, backed by the wider Cheyne team, has delivered significant value since he took over management of the fund.

[kenny] 04/2/2015 14:09

It is worth reading an article published yesterday on Investors Chronicle which I think explains very well why interest rates are likely to stay subdued for quite a few more years.

It is called "The stagnation threat" by Chris Dillow. Don't need to be a subscriber but may need to register:

[jaws6] 04/2/2015 07:37

good read from RNS today-
NAV increased from 1.575 to 1.624 driven by gains in both the loan and bond portfolio
The bond portfolio saw 5.56% gains during the month. Significantly, a MTM increase in the value of the controlling interest in the CMBS bonds owned in EURO 27X E issue (City Point Tower) which were a strategic purchase. These had been marked at 10p/£1, and have been marked up to 70p/£1 as a result of Brookfields recent cash purchase of a subordinated B Note, thus pointing to a par recovery for this Bond in time

[owenski] 03/2/2015 17:46

Agree with you on that Kenny

[kenny] 03/2/2015 15:33

I am guessing that RECI is attractive as people realise that interest rates are going to be low for a long, long time to come.

[skinny] 03/2/2015 14:49

A new high @171p.

[deadly] 28/1/2015 09:48

Glad I bought more on the recent weakness at 160. These look a strong bet for 2015 given the recent reviews above.

[badtime] 27/1/2015 16:49

Good recent strength

[davebowler] 09/1/2015 10:39

Liberum;
RECI completed two loan deals in December with total investment of £17.3m. A £7.8m subordinated loan was provided to assist a developer and operator of premium retirement villages in London and the South-East. A £9.5m mezzanine loan secured on two estates of retail, office and residential assets in located in Bayswater and Waterloo in London was also funded in December.

The loan investments were partly funded by bond sales of £4.4m at an average price of 0.87 (vs. an average acquisition price of 0.72).

Liberum view
The loan portfolio provides an attractive weighted average return of 13.5% given the weighted average LTV of 66.8%. The actual LTV ratio is likely to be lower as some of the underlying properties have not been revalued following successful asset management initiatives.

Drawn loan balances now account for 58.5% of GAV and this should increase to c71% with one loan of c.7m in the pipeline and once remaining undrawn commitments are utilised.

Following a broadly flat return in the month, RECI's NAV total return for 2014 was 10.8% which is comfortably ahead of real estate debt peers. Despite this, RECI trades on a 2.5% premium to NAV in comparison to an average of 6.3% for the peer group. We believe the company is well positioned to deliver strong NAV returns going forward given the return profile on the existing portfolio and the manager's ability to source accretive transactions.

[davebowler] 17/12/2014 09:56

It would have been kinder to offer to allow all borrowers to discharge their loans at a 50% discount!

[zastas] 17/12/2014 09:53

IIRC, it was of course the Treasury which forced RBS to dispose quicker these impaired assets , and it forced out Mr Hester, who wanted to hold on longer.

[redartbmud] 16/12/2014 17:08

RBS handing out Christmas presents then?

[davebowler] 16/12/2014 12:00

I just checked with RBS and the figure of 23p in the £ is indeed correct for how much Cerberus has paid for the mortgage book!And it has been agreed that Cerberus can hold some of the consideration back too!

[davebowler] 16/12/2014 10:31

Interesting news from RBS showing how big a haircut the Banks will take to offload poor Mortgage assets;

Royal Bank of Scotland Group PLC

16 December 2014

16 December 2014

Sale of a portfolio of Irish real estate loans

The Royal Bank of Scotland Group plc (RBS) announces today the agreement to sell a portfolio of Irish real estate loans to an entity controlled by Cerberus.

At completion, RBS will receive cash consideration of up to GBP1.1 billion* at current exchange rates. Completion is expected in the first quarter of 2015. The sale proceeds will be used for general corporatepurposes.

The transaction, which represents RWA equivalent of cGBP1.2 billion as at 30 September 2014, is part of the continued reduction of assets in its RBS Capital Resolution division and is in line with the bank's plan to strengthen its capital position and reduce higher risk exposures.

The carrying value of the loans is cGBP1 billion, the gross assets are cGBP4.8 billion and generated a loss of GBP0.8 billion, principally impairment provisions, in the year to 31 December 2013.

- END -

For further information:



Investors Media

Richard O'Connor RBS Press Office
Head of Investor Relations [phone]
[phone]
Ulster Bank Media Relations
[phone]

* The parties have agreed a list of matters requiring remediation that affect certain of the loans sold. This list will be finalised prior to completion. A portion of the consideration equal to 30% of the value of any loans so identified will be deferred pending and subject to remediation of these matters within a period of six months following completion.

This information is provided by RNS

The company news service from the London Stock Exchange

END

[davebowler] 11/12/2014 16:49

hxxp://www.recreditinvest.com/factsheets/20141130factsheet.html

[grahamburn] 11/12/2014 09:21

Ex-dividend today - hence the slight drop.

[santar] 11/12/2014 09:10

Jittery markets spooked by the Chairman selling 250k shares?

[badtime] 10/12/2014 13:24

Bit surprised these are weakening pre div