Real Estate Credit Inves... Share Discussion Threads

[stemis] 31/10/2022 15:40

With LBOW currently liquidating itself and SWEF having just announced the same, I wonder if RECI could be under pressure to do the same. Current discount, to last NAV, was 12%.

[catch007] 27/10/2022 14:33

Good Q2 presentation. No Defaults on portfolio & 87% now held in senior loan exposure. 9.45% yield on RECI at present.

[badtime] 17/10/2022 15:24

Likewise..and pleased to have added at recent lows

[cc2014] 17/10/2022 13:30

Thank you for your thoughts MRF.

I agree with you that as the debt matures which is all on a short maturity debt it can get replaced with better opportunities and having read the factsheets the fund manager seems to have steered a resaonable course over the last few years. Certainly if I compare with RMII I cannot understand why this is sitting on a bigger discount than RMII when RMII have difficulty getting some of their loans paid back on time.

Maybe I'll keep these long term. I don't really have a plan. I guess my plan will have to evolve over time...

[my retirement fund] 17/10/2022 13:11

Yes it is, well the dividend lots assured so 12p PA should allow for a 9% yield at 135 but there is a kicker of better opportunities as debt matures, this could improve NAV longer term. I think in light of that, sitting on a yield closer to say 8% say 145 or 150 could be possible. Whatever the future has, I'm happy with the income.

[cc2014] 17/10/2022 10:24

It's good to see the share price creeping up on what is fairly low volume, suggesting not excessive sellers out there.

I will have to decide where my exit might be. I'd take 135p, but I don't think it will get there. Maybe I'll keep this and collect the dividend. I'm not sure.

[mwj1959] 13/10/2022 16:30

Been speaking to the company and I'm told they're going to be providing an update at the end of the month in which they will be discussing the resilience of the portfolio in difficult market conditions. But I do note that the NAV only recovered some of its losses during the pandemic period (NAV fell from £1.64 to £1.47 in March 20 and only recovered to £1.54 at its peak). And of course we have already seen around 3p+ worth of M2M losses on the bond portfolio already this year, which has been the main driver of the NAV decline YTD (£1.52 to £1.48). How much more vulnerable is the bond portfolio and also where are the greatest risks to the loan portfolio are two areas that will need to be focused on. Safety of the dividend is also critical to prospects. Key to all of this will be how bad and for how long the downturn in RE markets is likely to be. So it will be interesting to hear what they say, albeit with the proviso that all fund managers will always try and paint the most positive picture of the risks / reward.

[chucko1] 12/10/2022 12:24

The actual selling by pension funds, even if in small amounts, trumps the fundamentals by a mile. Even the expectation of selling by the PFs achieves the same negative outcome.

I am happy to buy their pain.

[mwj1959] 12/10/2022 11:26

I agree that the risk of defaults has increased, but their loans are all senior secured, most with reasonable LTVs, so they're likely to get most / all of their capital back if there are defaults. But I can see why the share price has been weak in a mkt backdrop where all RE has been hit hard.

[cc2014] 12/10/2022 11:17

Retrospectively that looked like a distressed seller this morning, not that it was obvious at the time as other some other stocks were getting smashed too and it was hard to tell if it was an across the board thing.

In the end I think this fund will be OK. It's making loans rather than owning the assets so it's risk is defaults on the loan. To say there will be none would be foolish but surely some/most/all/too much of that is now in the price?

[mwj1959] 12/10/2022 10:59

Baffled by the share price movement, but I guess anything connected to RE and loans / bonds is under pressure in the current environment. And the portfolio is leveraged.

[davebowler] 12/10/2022 10:38

Liberum;
Tracking in line with expectations

Mkt Cap £289m | Share price 126.0p | Prem/(disc) -15.5% | Div yield 9.5%

Event

RECI’s NAV per share at 30th September 2022 was 148.3p representing a 0.3% NAV increase (6% over the last 12 months).

The portfolio comprises 62 positions with an aggregate value of £448.5m. The weighted average LTV remains relatively low at 60.4%. The Company expects to deploy its currently available cash resources in near term commitments and continuing to see growth in its pipeline of new opportunities. RECI had cash of £27.4m at the month end. The gross and net leverage ratios were 35% and 26.9% respectively at the end of September.

Liberum view

September’s performance are in line with expectations. The short duration portfolio generates a high level of cash repayments, providing scope to reinvest capital at higher rates (current unlevered yields for the portfolio are 9.2% for loans and 8% for bonds). The opportunity set for new investments is very strong in this environment and the current 8.9% dividend yield represents attractive relative value, particularly given the focus on senior loans at low LTVs.

[mwj1959] 12/10/2022 10:07

I guess this might have scared some, but at the end of the day RECI is a closed end fund and so is not a forced seller.

0.5p of negative mark-to-market (‘MTM’) adjustments across the
bond portfolio, due to volatility in bond markets, in particular the GILT
markets, has resulted in persistent forced selling across all fixed
income instruments, including CMBS. The selling has resulted in
significant mark to market movements across the Company’s CMBS
portfolio.

[mwj1959] 12/10/2022 10:02

Does seem a bit strange and discount now nearing 20%. Added to my position.

[stemis] 12/10/2022 09:29

Seems a little strange. Unlikely to be any big issue as they've just released a fact sheet, with a NAV of 148.3p, in which "the Manager has reflected its assessment of the long term negative impact of COVID 19 on real estate markets and to the long term potential recovery of its loan assets" and directors were buying 15 days ago.

Can buy at 118.5p, which is a yield of 10.1%.

[cc2014] 12/10/2022 09:25

Jeez 2. It seems I now own RECI which goes to show there's a price for everything as I'm not overly keen on this fund

3 lots. 118.5 worst price paid. This is crazy.

[davebowler] 12/10/2022 09:22

www.recreditinvest.com/investors/fact-sheets/

[davebowler] 12/10/2022 09:20

?-

[...]

The highlights of the monthly update are provided below:

-- NAV as at 30 September 2022 was GBP1.483 per share, representing an increase of 0.5p per share from the 31 August 2022 NAV of 1.478 per share.

-- The change in NAV per share was due to:-
-- 1.0p of interest income; and
-- 0.5p of negative mark-to-market ('MTM') adjustments across the bond portfolio, due to volatility in bond markets, in particular the GILT markets, has resulted in persistent forced selling across all fixed income instruments, including CMBS. The selling has resulted in significant mark to market movements across the Company's CMBS portfolio.

-- The Company expects to deploy its currently available cash resources in near term commitments and continues to see a growing pipeline of new attractive opportunities.

[my retirement fund] 12/10/2022 09:02

Jeez, never thought a 10% yield would be possible here, just took a few at 118.5

[holts] 12/10/2022 08:36

Try this one , seems rather over the top .

[badtime] 11/10/2022 21:08

Bit of a dip today

[mwj1959] 27/9/2022 16:27

Interestingly they all bought 10k shares each...hmmm! But I agree its probably the right thing to be doing at these levels given the historical stability of the NAV.

[my retirement fund] 27/9/2022 16:17

they are all at it