Real Estate Credit Inves... Share Discussion Threads

[cerrito] 09/11/2021 23:50

I read the Hardman review.
I was interested in their financial forecasts. Hardman forecasts a big expansion by RECI in the next couple of years with total assets going from a forecast £426m at 12.21 to £684m at 12.23.
Thus will be financed by equity issues such that NAV per share is forecast a modest increase from £151.3p at 13.21 to 155.1p at 12.23.

[davebowler] 09/11/2021 10:08

LiberumAttractive investment pipelineMkt Cap £350m | Share price 152.5p | Prem/(disc) 0.1% | Div yield 7.9%EventReal Estate Credit Investments' NAV per share at 31 October 2021 was 152.3p, representing a NAV total return of 0.6% in October. Performance was driven by robust income generation. £39m has been committed to three new deals in October:£20.7m to a housebuilder portfolio in France (9.2% yield)£12.0m loan secured on a hotel in France (11.5% yield)£6.6m to a loan secured on a later living facility in the UK (10.7% yield)RECI had cash of £29m at the end of October. Gross and net leverage were 28% and 20% of NAV at the month-end.?Liberum viewThe manager's recent quarterly update highlighted the strong operating performance of the portfolio with no positions of concern across the £404m portfolio. The opportunity set for new investments is very strong with attractive risk-adjusted returns on offer. A recent example is a £20m commitment to a loan secured on a hotel development at Helsinki airport where the borrower is a state-backed entity (9% expected return and 50% LTV).  RECI has generated an 8.0% YTD NAV total return with robust interest collection augmented by mark-to-market gains. We expect continued strong NAV performance from RECI as believe there is potential for further NAV growth. The company is reviewing exit opportunities for one of its UK housebuilder loans and we believe this could result in a reversal of a valuation reduction taken in March 2020 (we estimate the loan is currently held at c.50% of par).The short duration portfolio is well-positioned to mitigate the potential impact of interest rate increases. The manager's differentiated origination capabilities provide a consistent pipeline of potential deals. The manager's pipeline of new investments comprised 14 potential deals in the UK, France and Spain at the end of September. All of the bilateral loans and bonds are self-originated, providing greater control and security

[skyship] 09/11/2021 07:41

MONTHLY UPDATE:

•NAV as at 31 October 2021 was £1.523 per share, representing an increase
of 0.9p per share from the 30 September 2021 NAV of £1.514 per share.

•RECI committed £39.3m to three new deals during the month :-
o £20.7m to a housebuilder portfolio in France, with an expected
unlevered yield of 9.2%.
o £12.0m to a hotel in France, with an expected unlevered yield
of 11.5%.
o £6.6m to a later living facility in the United Kingdom, with an
expected unlevered yield of 10.7%.

•Profits driven by continued strong interest income on the portfolio following
recent deployment.

•The Company had cash at the month end of £28.7m and gross leverage
of £98.1m (representing 28.1% of NAV and 1.20x net/effective look through
leverage).

•The pipeline for the Cheyne real estate debt business continues to grow
with a number of attractive opportunities.

[catch007] 28/10/2021 10:18

Excellent September update out today. No defaults on book!

[...]

[williamcooper104] 08/10/2021 16:53

Yep - that's what I was looking for too

[catch007] 08/10/2021 08:16

No impairments advised in September fact sheet an upbeat update

[skyship] 08/10/2021 08:02

MONTHLY UPDATE:

•NAV as at 30 September 2021 was £1.514 per share, representing an increase
of 0.8p per share from the 31 August 2021 NAV of £1.506 per share.

•Two loans have repaid, Cambridge Aparthotel has repaid at an 8.8% IRR and
a hotel in York has repaid at an 8.6% IRR.

•RECI committed £26.1m to two new deals :-

o £20.4m to a hotel in Finland, with an expected unlevered yield of 8.9%.
o £5.7m to student accommodation in the UK, with an expected unlevered yield of 9.8%.

•Profits driven by continued strong interest income on the portfolio following
recent deployment.

•The Company had cash at the month end of £58.4m and gross leverage of
£99.3m (representing 28.6% of NAV and 1.12x net/effective look through
leverage).

•The pipeline for the Cheyne real estate debt business continues to grow with
a number of attractive opportunities.

•The Company expects to deploy its currently available cash resources to 3
new deal commitments imminently, which have an expected average
unlevered yield of 10.2%.

[williamcooper104] 06/10/2021 16:47

They've been proactive in marking their book conservatively so if it's not been impaired then they ought to have good reason to think it's still money good The GABI loan was riskier as it was a holdco loan and thus structurally subordinate to RECI/other asset level creditors The one to watch is cost overrun/inflation risks on development loans. On site developments will have fixed price contracts in place, but these are just the times that builders go insolvent

[skyship] 06/10/2021 16:09

After a 2month top formation it looks to me like further weakness ahead. A pullback to 150p for sure; but could retrace back to the rising 200day SMA at 147p; or even the bottom of the uptrend at 142p:


free stock charts from uk.advfn.com


free stock charts from uk.advfn.com

[loglorry1] 05/10/2021 14:52

Looks like about 1% off RECI NAV if they write down the Co Living loan at 50%. I'm not entirely sure it is worth worrying about by now.

[catch007] 05/10/2021 14:02

In the RECI annual accounts Co Living investment balances were 6.7m. GABI (which I also hold) took action to declare the problem and an impact on NAV.

GCP Asset Backed Income Fund Ltd - UK asset backed loan investor - Says certain entities within Co-living Group were placed into administration. Company, together with the co-lenders, in its loan to Co-living along with an operator, have proposed to fund an acquisition vehicle with the intention of completing a credit bid in respect of six of the Co-living's assets to maximise returns. The six assets are a split of three operational assets and three development assets. Five of the assets are situated in London with one asset in New York.

[williamcooper104] 04/10/2021 18:48

Looks like the Collective had asset level debt and then holdco unsecured debt. (Always it's the holdco debt that kills) The holdco debt is going to get heavily impaired The asset level debt ought to be ok Seems that GABI have a position in the holdco and have written that down by c50 percent Cheyne have a mezz position in one of the asset level security structures

[cwa1] 04/10/2021 17:51

Director share purchase:-

[williamcooper104] 19/9/2021 12:38

Cheyne have lots of pots of money so there may be no/little exposure in RECI The lending in March was presumably to fund operating losses to keep the show on road ahead of a sale GABI have taken a loss and publicised it; so hopefully no news from RECI is good news

[holts] 19/9/2021 09:50

Given that the Cheyne funding for The Collective was only in March this year , it is concerning to say the least that six months later it is in administration , you would expect the signals to have been there at the due diligence stage . I would like to think RECI had rejected any request to participate , would be interesting to know . Cheyne were already lenders so it may have been a calculated gamble on their part , given that it would be surprising if RECI didn’t have exposure , or of course the calculation may be that the assets would be effectively picked up on the cheap as a result .

[williamcooper104] 14/9/2021 15:48

The Collective (co-living developer) looks like it's going into adminCheyne have exposure, not sure how much, if any, is in RECI. Doesn't look like it's in their top 10 positions

[jonathan49] 14/9/2021 14:27

Thanks,
so carry is not a factor in NAV performance at the moment.

[hpcg] 14/9/2021 13:43

It is covered in note 18 of the accounts. Extract of which:

On 1 October 2017, the Company entered a new Performance Period which is expected to run until the end date of the quarter in which the second continuation resolution, to be proposed at the AGM to be held on 16 September 2021, is passed. With the commencement of a new Performance Period, the NAV on which the Hurdle Assets will be determined in accordance with the above formula was reset to the NAV per share on 2 October 2017 (being the Starting Date of the new Performance Period).

During the year ended 31 March 2021, the Performance Fee totalled £Nil (31 March 2020: £(1.0) million) and the related aggregate Performance Fee payable at the year end date amounted to £Nil (31 March 2020: £Nil).

---------

So a reset up coming, but the NAV has basically recovered so no big deal.

[jonathan49] 13/9/2021 17:04

Doesn't the carry fee have a high watermark?
Most that I am familiar with do have that feature which means that they can't get paid
to recover from a crash otherwise they would be paid twice?

[williamcooper104] 13/9/2021 16:50

They've always kept their leverage pretty low Could make a lot more carry just by gearing at 50 percent

[loglorry1] 13/9/2021 16:20

It probably explains why we didn't get a full write back to pre-pandemic NAV.

If the start of the period was the depth of covid when NAV was very low and the end when it was high then we could see a NAV difference of say 30%. That means they would get a payment of 20% of 23% of NAV which is nearly a 5% drag on performance.

[williamcooper104] 13/9/2021 16:16

Yep - standard PE type arrangement - if the loan IRR is 10 then Cheyne will get 20 percent over 7 or 0.6 percent - such that the returns to investors will be c9.4 percent 7 is quite a low hurdle and would be better if the carry pot was 10 or 15

[loglorry1] 13/9/2021 16:04

The Manager will be entitled to a performance fee in relation to the adjusted performance NAV by reference to the following performance fee formula: ((Adjusted performance NAV - NAV per share at the beginning of the performance period increased by an annual rate of 7%) x 20%) x the time weighted average number of core shares in issue in the period since the starting date. Contract terminable on notice period of 24 months.

I've no idea exactly what that means but its probably good for management ;-) They should work for Burford ;-)

Do they get 20% of anything above 7% that they make for shareholders?

[williamcooper104] 13/9/2021 15:33

There's a performance fee on RECI - from memory it's 10 over 8