Over the first six months of its financial year, Real Estate Credit Investments (RECI) has seen the fair value of its loan portfolio decrease from £113m to £101m. That's because several loans were repaid at values at or above the balance sheet value when the obligations were met, including RECI's largest loan position - a whole loan secured against German multi-family properties was substantially repaid, returning €21.3m (£14.8m).
However, management was keen to emphasise that the portfolio offers solid returns, with a weighted average yield of 12 per cent a year. During the period under review, the group also struck two new deals, which comprise £18m worth of new commitments.
On the bond portfolio side, 28 bonds were given a valuation of £31.9m on 30 September, while the total gross return of the bond portfolio was £1.9m, compared with £1.5m a year ago. Although the group recorded higher net losses on options, lower net losses on foreign exchange helps explain the upward movement in net profits.
But management is wary about the UK's decision to leave the European Union. Following the pull-back in the value of sterling and the partial retracement in gilt yields, bosses believe a "worst case exit scenario" is being priced into UK real estate assets, particularly cyclical assets, which have seen a "material downward adjustment".
| REAL ESTATE CREDIT INVESTMENTS (RECI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 163p | MARKET VALUE: | £118m | |
| TOUCH: | 163-166p | 12-MONTH HIGH: | 174p | LOW: 140p |
| DIVIDEND YIELD: | 6.6% | DEVELOPMENT PROP: | nil | |
| DISCOUNT TO NAV: | 0.2% | |||
| INVESTMENT PROP: | £133m | NET CASH | £26m | |
| Half-year to 30 Sep | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 163 | 4.1 | 0.1 | 5.4 |
| 2016 | 163 | 4.3 | 0.1 | 5.4 |
| % change | - | +4 | - | - |
Ex-div: 15 Dec Payment: 11 Jan | ||||
