Property income fund RECI Q3: 9% yield, low LTV exposure

Real Estate Credit Investments Limited (LON:RECI) has announced that the Investment Manager’s Q3 Investor Presentation is now available:

An extract from the Summary section of the presentation is set out for investors in the Appendix to this announcement.

Appendix: Q3 Investor Presentation Extract

Key Quarter Updates

•     Portfolio

–    1 new deal completed (£45.2m of commitments) since 30 September 2022

–    No defaults in the portfolio

–    Continued migration of portfolio to senior lending

–    During December, three French loans fully repaid, lowering the WA LTV of the overall portfolio,and providing headroom to invest in new deals at enhanced IRRs

•     Cash

–    Cash reserves remain targeted at between 5% to 10% of NAV

•     Dividend

–    Dividends maintained at 3p per quarter, 9.0% yield, based on share price, as at 31 December 2022

•     Financing

–    A mix of flexible, short-dated financing employed, alongside term-matched structured financing on selected high-quality senior loan deals

•     Opportunities

–    The present crisis is set to continue through 2023, resulting in further constraints in bank lending and alternative sources of capital. The opportunity to provide senior loans at low risk points, for higher margins, is increasingly compelling

–    The core European CMBS markets are experiencing market price declines due to increasing indiscriminate selling, presenting opportunities in the market

–    The Company expects to deploy its currently available cash resources to its near term commitments and to build cash resources towards a very compelling emerging opportunity set in both senior loans and bonds

– Attractive returns from defensive , Senior, low LTV credit exposure to UK and European commercial real estate assets

•     A focus on senior, 1st lien loans:

– Senior, 1st lien loans now account for 89% of the book by value

– Mezzanine loans have reduced to 11%

– Top 10 positions are 100% Senior Loans

– New origination is 100% Senior

•     Weighted Average LTV on underlying investments of 56.3% as at 31 December 2022

•     Predominantly large, well capitalised, and experienced institutional borrowers

•     Minimal exposure to shopping centres (<2% of GAV), secondary offices (0% of GAV) and logistics (3% of GAV)

•     RECI retains absolute governance, covenants and control, afforded by senior ranking and bilateral singular lending relationships

•     Portfolio has withstood COVID19 and is well place to withstand the current revaluations in real estate

Quarterly dividends delivered consistently since October 2013

•     The Company has consistently sought to pay a stable quarterly dividend from its distributable profits

•     This has led to a stable annualised dividend of around 7% of NAV

Highly granular book

•     60 positions

Transparent and conservative leverage

•     Net leverage 25.0% (with £24.0m cash) as at 31 December 2022 versus a leverage limit of 40%

•     Non-recourse and limited-recourse, term, structured finance provides returns optimisation and financial flexibility on senior loans

Access to established real estate investment team at Cheyne, which manages c$5bn AUM

– Access to pipeline of enhanced return investment opportunities identified by Cheyne

– Robust mitigation against a rising rates environment

•     A high yielding portfolio, combined with a short weighted average life of 2 years, ensures minimal exposure to yield widening and the ability to redeploy quickly at higher rates

•     Pipeline is 100% floating rate senior loans

Click to view all articles for the EPIC:
Or click to view the full company profile:
Facebook
X
LinkedIn

More articles like this

European property market showing signs of stabilisation

Latest data reveals that European residential properties have retained nearly all their value, while the overall decline in commercial property prices has significantly slowed after nearly two years of continuous drops. There is a glimmer of

Optimism fuels investment surge in commercial property

Last year’s slowdown in activity frustrated the investment market, but with diminished competition as funds and property companies cut back their ambitions, cash-rich family offices are seizing prime assets they might normally struggle to secure. Nationwide,

Key Commercial Real Estate trends to watch in 2024

The industrial sector is experiencing significant growth driven by the rise in e-commerce and online sales. This surge is creating increased demand for warehouse and manufacturing properties, as well as facilities like refueling and rest stops

UK commercial property market improves in Q1 2024

The latest RICS Commercial Property Monitor has revealed that whilst the market in the UK showed some improvements in Q1 2024, certain areas of the market continue to struggle against structural headwinds. Tenant demand rose in

Real Estate Credit Investments Investor Day at Cheyne Capital

Real Estate Credit Investments Ltd (LON:RECI), a non-cellular company incorporated in Guernsey, has announced that its Investment Manager Cheyne Capital LLP will hold a RECI investor day at their offices on Thursday 27th June 2024. The day will

Understanding Real Estate asset management in the European market

The European real estate landscape is undergoing significant changes: heightened market fluctuations, surging inflation, and escalating interest rates. This landscape makes it complex for investors to find secure, diversified, and stable investment avenues. The emergence of ESG and sustainability-related topics

Commercial Real Estate: Brighter days ahead

Brighter days could be coming for the commercial real estate industry after a cooldown in recent years. Private real estate investment funds remain highly attractive to investors globally, with 39% of them intending to put more

2024 European property market transformation

The European property market, poised on the cusp of transformation in 2024, beckons investors and stakeholders with a blend of cautious optimism and strategic foresight. Amidst the backdrop of a decade-low in real estate investment, emerging