Real Estate Credit Investments (RECI) – a listed portfolio of mortgage-backed securities – has produced a total return (increases in book value plus dividends) of 41 per cent in the year to date. And it could continue to deliver such returns, making it a compelling niche property play in an otherwise-moribund market.
The gains come from two sources – bond repayments and mark-to-market gains. In the half-year to 30 September RECI received £16.7m cash from four bonds it held to maturity, and its remaining portfolio was marked up, particularly between July and October, as sentiment towards mortgage-backed securities improved. Manager Shamez Alibhai says the investor base for these specialist bonds is still held back by regulatory uncertainty, but is widening.
