Real Estate Credit Inves... Share Discussion Threads

[badtime] 07/5/2020 10:54

Steady stream of sells as there has been for a while...someone's unloading..next months div announcement will help make things clearer ...but a way off yet

[badtime] 06/5/2020 15:02

I bought some yesterday to trade at just below 101..it does zing around a bit ..toying with setting up a limit sell as I can't sit by computer all day unlike some :)

[skyship] 06/5/2020 14:43

Back in @ 101.45p; hoping that the support at c100p holds again...

[badtime] 04/5/2020 14:24

Sp softening again

[badtime] 01/5/2020 17:50

2p a quarter will do me on my current purchase pricesCouple of chunky transactions today

[skyship] 01/5/2020 16:40

I would expect a reset from 3p/Qtr down to 2p/Qtr...got to wait until nearly the end of June to find out.

[kenny] 01/5/2020 15:56

Does anyone think that the dividend will be cut? After all, RECI's accounting means that it is using valuation profits as, effectively, part of the profit which it distributes.

It's complex, but if valuation profits disappear then the net profit available for distribution is a lot less. They could continue as before but it then means they are using capital to provide dividends and that is not a good idea or sustainable.

[badtime] 27/4/2020 11:24

Directors buy....small but nevertheless welcome

[badtime] 16/4/2020 16:54

Bit of a pull back today after a nice little run

[davebowler] 09/4/2020 09:33

Liberum;
RECI's NAV per share at 31 March 2020 was 147.0p, representing a decline of 10.1% in the month.

The key driver of the NAV decline was unrealised mark-to-market volatility in the bond portfolio, resulting in a NAV decrease of 10.1p (60% of NAV reduction in the month). The bonds are valued using independent pricing.

RECI also reduced the valuation of the loan portfolio to reflect lower recovery values on loan investments in a prolonged recession. This reduced NAV by 6.2p per share, predominantly relating to a loan to a UK housebuilder (5.4p). A writedown has also been made on a loan to a UK retail park (0.8p NAV impact).

A loan secured on an asset in Dublin fully repaid in the month (19.5% IRR). The company has decided not to proceed with any of the pipeline deals that were due to close in March. Cash on the balance sheet at the month end was £36.7m (10.9% of NAV). Outstanding debt is £81.7m (24.2% of NAV).

The manager has initiated a review of each position under the prudent assumption of a lengthy recession and a two to three year recovery period. A report will be provided in due course.

Liberum view

Despite the mark-to-market volatility, the portfolio is defensively positioned with a focus on senior loans and core income bonds. LTVs are relatively low (bonds 57%; loans 66.6%). The majority of the investments are relatively short duration (loans 1.2 years; bonds 2.2 years). Some of the borrowers are likely to experience cash flow difficulties but there is significant headroom in valuations. Risk is mitigated by collateral quality, loan structuring, borrower strength and robust documentation. The borrower's equity is invested before RECI provides debt capital, ensuring a further layer of protection and alignment of interests. RECI has not experienced any realised principal losses since inception.

The current discount to NAV is pricing in an extreme situation for property values. At the current discount to NAV (-21%), we estimate the implied headroom in the underlying collateral value is c.50% for the loans. This compares to a peak to trough drawdown of 44% in UK commercial property values in the financial crisis between 2007 and 2009. The manager has considerable experience of workout situations in loans and bonds.

Valuation policies differ across the lending sector. Most lending funds hold assets at amortised cost less any adjustments for expected credit losses and will therefore have relatively smooth NAV return profiles. A number of funds, including RECI, fair value their loans and make adjustments on the basis of credit quality of the borrower or the underlying collateral. RECI's NAV movement is broadly in line with the level experienced by RM Secured Direct Lending, which also holds assets at fair value.

[cerrito] 09/4/2020 08:09

Yes no nasties.
Good that they have given us more info on the financing situation at the bottom of the fact sheet.

[badtime] 08/4/2020 12:21

Doing better than I thought this am

[badtime] 08/4/2020 10:49

And out of my recent dabble at 107.5pBring my previous buys to slightly in profit

[badtime] 07/4/2020 18:37

Don't blame you....toyed with the idea of selling half...might still tomorrow..who knows

[skyship] 07/4/2020 18:24

Well, with an abundance of caution I ducked out again just before the close @ 107.2p.

[badtime] 07/4/2020 12:23

Added yesterday at a shade over 98.....if they hold the div this will be a good earner Recent update was encouraging

[skyship] 06/4/2020 13:19

Back in for a few @ 99.1p....hoping for a double bottom!

[holts] 04/4/2020 07:49

Given their navigation through the last crisis I think the decline is overdone .

[badtime] 03/4/2020 14:18

Looks like a put a toe back in too early

[cwa1] 30/3/2020 13:02

In at EQi now FWIW

[cerrito] 28/3/2020 16:01

I wonder when we will get the fact sheet for March 31, it being the financial year end.
The calculation of NAV will be interesting, full of judgements and time consuming.
Remember that at September 30th 2019, there were no level 1 assets, £107m level 2 assets and £168m level 3 assets.
Eventually when the annual report comes out I will be interested to see what comments the auditors make on the valuations of assets.
Of course the RECI valuation may be more accurate as it has no level 1 assets where the comparators are thinly traded with v wide spreads.

[cerrito] 28/3/2020 16:01

Thanks Stemis.
I will ask the company. At this time full transparency and consistency is vital.

[stemis] 28/3/2020 11:36

Investment portfolio 31 Jan = 394.5m
- Loan portfolio = 163.6m
- Bond portfolio = 230.8m

Investment portfolio 28 Feb = 411.0m
- Bilateral loan and bond portfolio = 311.8m
- Market loan portfolio = 99.2m

It does look like they've reclassified some 'bonds'. If I was guessing I'd say 'Bilateral..' includes bonds they own directly and 'market loan portfolio' where it's part of a pooled arrangement such as a CMBS. That's just a guess though...

[cerrito] 28/3/2020 09:54

Reviewing what to do here I have had a look at the recent factsheets.
My reading of the ones of Feb 29 and Jan 31 was that in the month of February the bond portfolio fell from £231m gto £99m  and there was no comment. I see the January figure was described as bond portfolio and february figure as market bond portfolio.
Comments appreciated

[alter ego] 27/3/2020 22:54

No problems with HL on RECI and BBOX