Real Estate Credit Inves... Share Discussion Threads

[t-trader] 29/11/2023 11:18

Williamcooper104,

Agree entirely,

Looks well run with decent management.

[williamcooper104] 29/11/2023 11:12

It's been a great one to buy, largely forget about and watch the divis roll in V happy long term holder

[t-trader] 29/11/2023 10:04

Been on my watch list for a while and have taken a position this morning

[davebowler] 29/11/2023 09:39

Liberum-
H1 24 results – Capital recycling creates the opportunity for more attractive future yields
Analyst: Bjorn Zietsman

Mkt Cap £297m | Share price 130.5p | Prem/(disc) -12.3% | Div yield 9.3%

Event
RECI reported its interim results this morning. NAV per share as at 30 September 2023 was 147.7p and RECI generated an annualised NAV total return of +9.4% (dividend yield of 9.1%). EPS increased c.51% y/y to 6.8p mainly as prior period losses from the bond portfolio and currency instruments reversed with RECI generating gains in the current period. Expenses have been well contained, with other operating expenses (excl. management and administration fees) declining c.32% y/y. Finance costs increased +63% y/y due to the impact of higher interest rates.

The portfolio comprises 45 positions with an aggregate value of £334.1m. RECI had cash of £14.9m at the month end.

The outlook statement cites caution around current macro-economic conditions, but confidence in Cheyne’s management expertise which positions RECI well, stating that scheduled portfolio repayments will boost available cash resources for investment into attractive higher yielding opportunities identified by Cheyne. RECI’s latest investor presentation showed: (i) The portfolio experienced no defaults; (ii) Cash reserves are targeted at between 5% and 10% of the NAV (September’s cash levels were c.4.8% of the NAV); (iii) The outlook is positive, guiding for a growing opportunity set as bank lending becomes more constrained. RECI stated they have a strong pipeline of floating rate senior loans.

Liberum view

RECI’s portfolio of real estate debt offers higher yielding returns than direct real estate investments whilst still being underpinned by tangible property in the event of default, thereby offering investors a higher risk adjusted return profile than direct real estate. Moreover, RECI also pays a higher dividend yield than UK REITs. When compared to banks, RECI is more capital efficient as its permanent capital structure allows for lower regulatory capital requirements enabling a higher return on equity than some traditional bank lenders.

The opportunity set for more attractive non-bank real estate debt investments can only expand (in our view) as banks lenders continue to tighten their lending on liquidity concerns in a rising rate environment and increasing need to maintain capital adequacy and increase deposit rates. The H1’24 performance is in line with our expectations. The opportunity set for new investments is very strong in this environment and the current 9.3% 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

[spangle93] 29/11/2023 09:08

Looks a very solid company

[speedsgh] 16/11/2023 11:55

New Hardman research note...

Portfolio management to optimise risk/reward -

[davebowler] 09/11/2023 09:45

Liberum-

NAV +0.5% MoM, £5.9m of market bond portfolio realised

Mkt Cap £297m | Share price 129.0p | Prem/(disc) -13.1% | Div yield 9.3%

Event
RECI’s NAV per share as at 31 October 2023 was 148.4p representing a +0.5% NAV total return MoM (+8% over the last 12 months). The change in the NAV for the month largely relates to 1.1p of interest income, -0.4p decrease in asset valuations, 0.1p in FX offset by expenses of -0.2p.

The portfolio comprises 36 positions with an aggregate value of £321.4m. The weighted average LTV is reported at 10.1%. RECI had cash of £22.7m at the month end.

RECI’s latest investor presentation showed: (i) The portfolio experienced no defaults; (ii) Cash reserves are targeted at between 5 and 10% of the NAV (October’s cash levels are c.6.6% of the NAV); (iii) The outlook is positive, guiding for a growing opportunity set as bank lending becomes more constrained. RECI stated they have a strong pipeline of floating rate senior loans.

Liberum view

October’s performance is broadly in line with expectations. The opportunity set for new investments is very strong in this environment and the current 9.3% dividend yield represents attractive relative value, particularly given the focus on senior loans at low LTVs. Despite wider market challenges in October, RECI successfully realised £5.9m (net of repo financing) of value from its Market Bond portfolio, realising a small loss equivalent to 0.4p per share against the NAV; these proceeds will be reinvested in senior secured mortgage loans on attractive terms. 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] 03/11/2023 10:27

This dividend worry which is far from unique to RECI, is very often (not just often) misplaced. Especially in loan funds where the quick rise in rates (as seen and on this occasion, remarkably/"uniquely" quick rise) leaves portfolios of low coupons hence low cash generation. They have marked the bonds lower in price hence lowered the NAV, but this all comes back (so long as they have no material refinancing which is generally the case).

The do say "follow the cash", but if you are not looking at all of it over a cycle, you would be better off taking the dog(s) to the groomers. Even if you don't have one.

[mwj1959] 03/11/2023 09:55

Company remain confident on the dividend cash coverage, helped by the higher yields on offer as they recycle cash...
"Our granular cash forecasting and stress scenarios give us the confidence that the Company can maintain its dividend cash coverage for the long term"
...but this is not going to stop some from worrying about the divi going forward, which is reflected in the 10%+ discount that the shares currently trade at.

[cerrito] 03/11/2023 08:21

I note that in this morning's RNS, reference was made to dividends and their aim of dividend cover
Quote
Dividends predominantly covered by net interest income generated from RECI's assets. The aim is for dividend cover from net interest income
Unquote
In the years to 3/23 and 3/22 net interest income was £ 28m and £25m so was in excess of the £27m of dividends paid last year but not the year before and ignores the approx £6m pa of operating expenses.
Remember that net profit was £20.5m and £24.5m compared to dividends of £27.5m in the years to 3/23 and 3/22 respectively.
Put it another way eps was 9p and 10.7p compared to the 12p dividend in the respective years.
We need to take the dividend yield with a pinch of salt.

[davebowler] 18/10/2023 14:53

??Liberum Events? Date: Monday 6th November 2023Time: 14:00 – 15:00 BSTManagement Host: Ravi Stickney (Chief Investment Officer) and Richard Lang (Head of Business Management)Real Estate Credit Investments: Mkt cap: £299m, Div yield: 9.2%, Prem/(Disc) -12.7%Real Estate Credit Investments (RECI) is a specialist investor in European real estate credit markets. The majority of the portfolio is in senior loans secured against high quality assets with conservative LTVs. The Company aims to deliver a stable quarterly dividend with minimal volatility, across economic and credit cycles. Cash collection across the portfolio remained robust over the last 2 years as a result of prudent underwriting and strong underlying collateral.Investment case:9.2% dividend yield supported by a high-quality portfolio with no historical defaults.Conservative 60.1% average LTV offers substantial downside protection.Short-duration portfolio allows the Company to take advantage of rising interest rates.Recycling capital almost exclusively into floating rate loans.Majority of portfolio comprises senior loans to experienced, well-capitalised borrowers.Diversified portfolio by geography and asset class.Strong pipeline as competitors continue to retreat from the market.RSVP to our Corporate & Investor Relations team for registration details:[e-mail] call [phone]

[davebowler] 18/10/2023 14:51

Liberum-September NAV in line with expectationsAnalyst: Bjorn ZietsmanMkt Cap £297m | Share price 129.5p | Prem/(disc) -12.3% | Div yield 9.3%EventRECI's NAV per share as at 30 September 2023 was 147.7p representing a +0.8% NAV total return MoM (+5.8% over the last 12 months). The change in the NAV for the month largely relates to +1.0p of interest income, +0.3p increase in asset valuations, +0.1p in FX offset by expenses of -0.2p and the payment of a 3.0p dividend.The portfolio comprises 45 positions with an aggregate value of £334.1m. The weighted average yield is reported at 10.4% and the weighted average LTV is 60.1%. RECI had cash of £14.9m at the month end.RECI's latest investor presentation showed:  (i) The portfolio experienced no defaults; (ii) Cash reserves are targeted at between 5 and 10% of the NAV (September's cash levels are c.4.8% of the NAV); (iii) The outlook is positive, guiding for a growing opportunity set as bank lending becomes more constrained. RECI stated they have a strong pipeline of floating rate senior loans.Liberum viewSeptember's performance is in line with expectations. The opportunity set for new investments is very strong in this environment and the current 9.3% 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.

[cwa1] 13/10/2023 08:45

Well, if nothing else, it's always nice to see a thumping great dividend land in the account when all else around you is trying :-)

[cwa1] 05/10/2023 19:53

I assume it is referring to an upcoming investor/analyst briefing

[mcunliffe1] 05/10/2023 18:52

davebowler: is the date correct on your post? 6th November 2023? BST reverts to GMT in late October.

[davebowler] 05/10/2023 13:26

Date: Monday 6th November 2023

Time: 14:00 – 15:00 BST

Management Host: Ravi Stickney (Chief Investment Officer) and Richard Lang (Head of Business Management)

Real Estate Credit Investments: Mkt cap: £299m, Div yield: 9.2%, Prem/(Disc) -12.7%

Real Estate Credit Investments (RECI) is a specialist investor in European real estate credit markets. The majority of the portfolio is in senior loans secured against high quality assets with conservative LTVs. The Company aims to deliver a stable quarterly dividend with minimal volatility, across economic and credit cycles. Cash collection across the portfolio remained robust over the last 2 years as a result of prudent underwriting and strong underlying collateral.

Investment case:

9.2% dividend yield supported by a high-quality portfolio with no historical defaults.
Conservative 60.1% average LTV offers substantial downside protection.
Short-duration portfolio allows the Company to take advantage of rising interest rates.
Recycling capital almost exclusively into floating rate loans.
Majority of portfolio comprises senior loans to experienced, well-capitalised borrowers.
Diversified portfolio by geography and asset class.
Strong pipeline as competitors continue to retreat from the market.

RSVP to our Corporate & Investor Relations team for registration details:

[e-mail]
Or call [phone]

[my retirement fund] 22/9/2023 22:56

Seems to have taken a day to catch up

[panshanger1] 21/9/2023 19:06

Nice finish on XD day

[cwa1] 21/9/2023 08:05

XD this morning to be paid 13/10

[williamcooper104] 19/9/2023 21:51

Good news Well actually bad; but good for RECI Apparently banking regs getting tightened to make loans with substantial capex funding be treated as development, which has a much more penal capital weighting So means more loan opportunities for non bank lenders