Real Estate Credit Investments (RECI) views a post-EU referendum reduction in traditional lenders to the domestic real estate market as an opportunity. In particular, it says senior lending to developers for assets where value can be added can generate higher returns at a lower risk profile. In April this year it completed a £20m senior deal on a prime London residential development at an 8 per cent internal rate of return, but with a loan-to-value ratio at a manageable 40 per cent - and with RECI sitting higher in the capital structure than "substantial equity and mezzanine debt".
However, it was a reduction in foreign-exchange losses on its assets that was behind the rise in pre-tax profit during the 12 months to March. The drawn fair value of the loan portfolio was down slightly to £109m after several loans were repaid. However, the group made £35m in new loans during the year, spread across four deals. This took its total property loan commitments to £129m. Its loan-to-value ratio also declined to 67 per cent from 71.5 per cent the previous year.
The bond portfolio comprised 24 bonds, 10 fewer than a year earlier. These returned £4.6m, up from £2.2m the previous year. This was primarily due to fair value gains, as interest income almost halved to £2.6m.
REAL ESTATE CREDIT INVESTMENTS (RECI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 163p | MARKET VALUE: | £144m | |
| TOUCH: | 163-166p | 12-MONTH HIGH: | 174p | LOW: 140p |
| DIVIDEND YIELD: | 6.8% | PE RATIO: | 14 | |
| DISCOUNT TO NAV: | 0% | NET CASH: | £159m | |
| INVESTMENT PROPERTIES: | £25m# | |||
| Year to 31 Mar | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 150 | 19.0 | 48 | 7.4 |
| 2014 | 154 | 11.3 | 15 | 10.7 |
| 2015 | 162 | 17.3 | 19 | 10.8 |
| 2016 | 163 | 12.0 | 12 | 10.8* |
| 2017 | 163 | 12.5 | 12 | 11.1 |
| % change | - | +4 | - | +3 |
Ex-div: 29 Jun Payment: 21 Jul *Excludes special dividend of 0.8p a share #Excludes £41.9m of preference shares | ||||
