Real Estate Credit Inves... Share Discussion Threads

[williamcooper104] 17/5/2023 04:50

US BDCs mostly have performance fees too - I've invested in ARCC for years - and it's total return is > S&P - which is pretty amazing for a debt fund

[williamcooper104] 17/5/2023 04:47

The fees are quite high, accrued performance fee should be included in the NAV, and the running fee comes out of gross income to get to NOI so it's thus in the NAV too 80-100bps base man fee with no performance fee is the market norm (higher for lower AUM) Fortunately they've never levered up the balance sheet aggressively - which is the easiest way of triggering a performance feeI'm personally happy with p fees though I'd rather the base man fee was a little lower But I'm not going to sell up over 25bps

[return_of_the_apeman] 16/5/2023 22:44

They don't deduct any fees from the 12p paid out in dividends

Sure the fees below will reduce the nav, however it is already trading at a significant discount to nav

Management Fee 1.25% of NAV
Performance Fee 20% above 7% hurdle

Hope that helps, perhaps someone else will chip in with a better answer :-)

[mcunliffe1] 16/5/2023 15:53

This thread caught my interest via a circuitous route from L&G (or Phoenix) via the Fixed Income Discussionn thread.

Whilst the current price (1.26475) appears to be a relatively low point I'm a little concerned by the ongoing charge of 2.23% and the effect that may have combined with any further drop in the unit price.

I appreciate a longer term hold is recommended (5 years) and that may be too long for me. I'm rather keen on income and hence hold Phoenix and L&G (£25k in total) at the moment.

Any thoughts? Can anyone convince me this is a good investment for a two year period?
Thanks in adv.

[return_of_the_apeman] 15/5/2023 15:07

Couldn't resist picking up some of these today at 125.3

Gla

[spangle93] 12/5/2023 13:36

Thanks folks

With a 9.5% yield on a 12p dividend, and at a discount only matched in post- 1st Covid lockdown and transient-Truss times, I'm hoping that there's more upside potential than downside risk at these share price levels

[my retirement fund] 12/5/2023 11:28

Theres risk where ever you go, but the loans are quality and the management well proven, highly competent and trustworthy. (but then this is what we are paying them for!). The loan book certainly does not deserve a stupid 13% discount to NAV imo and the share price looks undervalued to me. I think it has been beaten down by a persistent seller.

[williamcooper104] 12/5/2023 11:09

Actually high yield property debt has always been a minefield full of dodgy operators (remember mini-bonds) Which is why who the manager is really matters

[skinny] 12/5/2023 10:45

Anyway, the factsheet :-

[chucko1] 12/5/2023 10:39

Better??? One is a known felon, and the other is Cheyne Capital! I would not make any comparison.

[cc2014] 12/5/2023 10:28

The question is the quality of loan book.

See LBOW RNS today. All is not good in the high yield property debt area. Credit risk has become a reality for them.

I consider the fund manager on RECI better than LBOW.

[davebowler] 12/5/2023 10:01

Liberum-
Attractive yield and good deployment prospects
Analyst: Bjorn Zietsman

Mkt Cap £289m | Share price 126.0p | Prem/(disc) -14.9% | Div yield 9.5%

Event

RECI’s NAV per share at 30th April 2023 was 148.0p, representing a 0.7% NAV increase MoM (+6.4% NAV TR over the last 12 months). The change in the NAV for the month largely relates to 1.1p of interest income. The company states that it has continued its rotation of the market bond portfolio into strong senior loans with attractive returns.

The portfolio comprises 47 positions with an aggregate value of £307.4m. The weighted average LTV has increased to 60.2% (+1% for the month). The Company expects to deploy its currently available cash resources in near-term commitments and continue to see growth in its pipeline of new opportunities at attractive floating rates. RECI had cash of £26.7m at the month end. The gross and net leverage ratios were 17.6% and 10.8% respectively at the end of April.

RECI has also released its Q423 investor presentation. Key takeaways are: (i) The portfolio experienced no defaults; (ii) Cash reserves are targeted at between 5 and 10% of the NAV (April’s cash levels are c.8% of the NAV); (iii) The outlook is positive, guiding for a growing opportunity set as bank lending becomes more constrained. RECI states they have a strong pipeline of floating-rate senior loans.


Liberum view

April’s performance is in line with expectations. The opportunity set for new investments is very strong in this environment and the current 9.5% dividend yield represents attractive relative value, particularly given the focus on senior loans at low LTVs. We expect the company to continue rotating its bond portfolio into senior loans as it views senior loans as offering better risk-adjusted returns.

[chucko1] 12/5/2023 10:01

Irrelevant. The net profit includes a degree of bond loss, which is only a transient thing absent of actual credit losses.

The higher achieved interest on the new loans results in a low degree of leverage required to maintain the 12p annual dividend, now way below their 40% limit. It seems they have taken the view that they will m maintain the target of 12p, rather than increase it by having a higher LTV in combination with higher achievable loan rates.

I am quite happy simply letting the current management get on with what they do, as they seem to be able to do it pretty well.

[spangle93] 12/5/2023 09:01

The key line was in slide 29

Net Profit of £20.5m, being 0.75x covered against annual dividends paid of £27.5m in this 12 month period.

[killing_time] 12/5/2023 08:50

In the Q4 presentation this morning it states

"Dividend predominantly covered by interest income"

Hope this helps, KT.

[spoole5] 12/5/2023 08:15

Year ending march 22 net profit 24.6m divis paid 27.5 so a modest gap.

[spangle93] 12/5/2023 08:05

Just looking at this stock - am I right from the presentation today that dividends are only 75% covered?

I guess as loans are recycled this coverage should improve, but it seems a wee bit low. As they've paid 12p/year for as long as H-L shows, it makes you wonder what dividend coverage was when bank rate was zero

[cwa1] 09/5/2023 15:57

Interesting to see a 100K block on the bid at 126p, it's the first block of any real size I've seen on the bid for quite some time.

Wonder if the seller will take it out now or in the closing auction?

[cwa1] 04/5/2023 16:35

SOUNDS like a decent price to buy at to me...but who knows where we're headed?

[starpukka] 04/5/2023 16:32

Bought this afternoon @ 126.1

[cwa1] 03/5/2023 16:31

Yet again, plenty on the ask in the auction today

[cwa1] 03/5/2023 16:09

Somebody's spent their WHOLE week's pocket money :-)

[wilwak] 02/5/2023 20:46

CWA1 ….. Good for buyers right now.

[cwa1] 02/5/2023 16:34

Plenty on the book at 128p, seller still around

[wilwak] 02/5/2023 09:19

I’ve just topped up at 128.6p.

Even if there’s some more slippage in nav this seems a good buy at 9%+ yield.

Once general interest rates start to fall these should climb again strongly imo.