REAL ESTATE CREDIT INVESTMENTS LIMITED Results Presentation February 2018 www.recreditinvest.com Ticker: RECI LN
Company Overview Real Estate Credit Investments (RECI) is a closed-ended investment company which originates and invests in real estate debt secured by commercial or residential properties in Western Europe, focusing primarily in the United Kingdom, France and Germany. The Company’s aim is to deliver a stable quarterly dividend with minimal volatility, through economic and credit cycles through a levered exposure to real estate credit investments. Investments may take different forms but are predominantly in: – Loans : real estate loans (senior and mezzanine) – Bonds : listed real estate debt securities such as Commercial Mortgage Backed Securities (CMBS) bonds. 2
Summary as at 31 December 2017 RECI Cheyne Established Focused Compelling Risk Stable Adjusted Returns Dividend Innovative Expert $6.6 bn £0.03 $2.9bn 57.8% AUM Q3 Dividend of AUM in Real Estate Loan-to-Value Credit Funds 141 7.1% 1 7.3% Employees UK Dividend Yield Total NAV Return Domiciled Established in 2000 Investment Portfolio £238.6m 2 Cheyne Capital (the Investment Manager) is one of the largest and most successful providers of capital to the European real NAV £227.6m estate debt markets. RECI continues to benefit from Cheyne’s NAV per share £1.633 significant expertise and platform in the origination and trading of real estate loans and liquid mortgage backed securities. The Market Cap £234.2m platform’s skill sets include origination, execution, valuation, asset Share Price £1.680 management, risk management and workouts. 1 Based on share price of £1.680 as at 31 December 2017 2 Fair value excluding accrued interest For avoidance of doubt, “Q3” refers to the quarter ended 31 December 2017, to align with the Company’s financial year which e nds 31 March. Information included in this presentation is as of or for the period ended 31 December 2017, unless otherwise indicated. 3 Past performance is not a guide to future results. Actual results and developments may differ materially from those expressed or implied herein.
Q3 Highlights (Quarter ended 31 December 2017) Q3 NAV Total Return of 3p per share (7.3% annualised) • Q3 dividend of £0.03 per share equates to a 7.1% dividend yield (on share price) • Earnings & Dividends NAV per share £1.633 • Originated £26.3 million of new loan commitments over two deals in the quarter, taking total • loan commitments to £196.7m as at 31 December 2017 Originations & Funded £15.5 of existing loan commitments • Investments Invested over £29m across 10 new listed bonds • £238.6m investment portfolio comprised of real estate loans (43.6% of GAV) and bonds • (43.8% of GAV) with a weighted average LTV of 62.6% Portfolio Composition UK, France and Germany focused • Leverage capacity of 40% of NAV • Total actual borrowings of £43.2m (19.0% of NAV) at end of Q3 at a weighted average cost • Financing of 1.51% £7.4m of realisations in Q3 • 2 loans fully repaid – Realisations All realisations achieved or exceeded expected returns • 4 Past performance is not a guide to future results. Actual results and developments may differ materially from those expressed or implied herein.
Earnings and Dividends Reconciliation Gross to Net reconciliation for the quarter ended 31 December 2017 • Absolute £m Per Share % Perf Annualised 1.39 Bond coupon income 0.01 2.7% Loan interest income 2.97 0.02 5.7% Other income (cash etc) 0.05 0.00 0.1% Gross interest income 4.41 0.03 8.4% Finance costs -0.14 -0.00 -0.3% Expenses (inc Management Fee) -0.92 -0.01 -1.8% -1.06 -0.01 -2.0% Fair Value Adjustments (inc realised and 0.49 0.00 0.9% unrealised profit and loss on investments) Net loss/profit 3.84 0.03 7.3% The values for each column may not sum to the total due to rounding differences. Percentage returns based on annualised figures (taking quarter end figures multiplied by four) over the NAV per share as at 30 September 2017. The breakdown is based on estimates which have been internally calculated by Cheyne Capital and which have not been externally verified. Actual returns may be different. This is not a profit forecast. Dividend Coverage • Dividends of 3p per quarter covered by net profits – 5 Past performance is not a guide to future results. Actual results and developments may differ materially from those expressed or implied herein.
Portfolio Composition • RECI’s investment portfolio was valued at £238.6m as at 31 December 2017 • The loan portfolio of £119.1m comprises 19 loans, with an average LTV of 66.1%, an average yield of 10.3% and a weighted average life of 2.4 years • The bond portfolio, valued at £119.5m has the potential for strong defensive returns: Face value as at 31 December 2017 of £124.1m – The portfolio is characterised by a short duration (3.0 years) and high coupon, providing resilience in turbulent – markets • Strong cash balance of £34.8m to invest in transaction pipeline, following receipt of £20.5m from the placing in December 2017. Balance Sheet Portfolio by Investment Strategy Geographic Breakdown (Funded Fair Value) (Funded Fair Value) 31 Dec 2017 30 Sep 2017 Core Updated to Loans £119.1m £109.8m 31 Dec Bonds £119.5m £90.3m Core+ Loans Financing -£43.2m -£31.2m Bonds Value Add / Transitional Cash, Cash Equivs & £34.8m £42.1m Cash held at Brokers Other Assets & -£2.6m -£3.5m Development Liabilities Net Assets £227.6m £207.6m 0% 20% 40% 60% Excludes 1.2% of the portfolio which is Pan- European. 6 Past performance is not a guide to future results. Actual results and developments may differ materially from those expressed or implied herein.
Top 10 Positions by Commitment £164.2m 63.1% 10.6% Total Commitment WA LTV 1 WA Yield 2 Commitment Description LTV Sector Investment Strategy Loan Type 1 London Mixed Use Development £34.8m 45% Mixed-Use Senior Loan Development 2 London Office to Residential £18.2m 39% Residential Senior Loan Value Add / Transitional 3 Regional UK Housebuilder £16.4m 79% Residential Senior Loan Development 4 London Office Building £15.5m 78% Office CMBS Core 5 London Mixed Use Development £15.6m 58% Mixed-Use Mezzanine Loan Development Regional UK Housebuilder* £15.1m 69% Residential Mezzanine Loan Value Add 6 7 Regional UK Housebuilder* £14.4m 88% Residential Mezzanine Loan Value Add 8 UK Logistics* £12.9m 73% Logistics Mezzanine Loan Core+ 9 UK Leisure £11.6m 67% Leisure CMBS Core 10 UK Leisure £9.8m 67% Leisure CMBS Core *These are profit participating loans 1. The Weighted Average Loan to Value has been calculated by reference to the value of the relevant collateral of the relevant bond or loan. 2. WA based on commitment. WA effective yield is based on i) for the bonds the effective yield is based on the current levered yield on the bonds using prices as at 31 December 2017, ii) for the loans the yield stated is the effective accounting yield based on the funded loan balances, which includes interest and fees. 7 Past performance is not a guide to future results. Actual results and developments may differ materially from those expressed or implied herein.
Portfolio Composition - Loans 19 £119.1m 66.1% 10.3% 2.4 yrs WA Life Loans FV of Portfolio WA LTV WA Yield 1 £119.1m portfolio comprising 19 loans, predominantly senior and mezzanine loans • 98% of loans secured by assets located in the UK and Germany • £26.3m of new commitments in the quarter over two new deals, taking total loan commitments to £196.7m as at 31 • December 2017 Asset Class Breakdown Geographical Breakdown By LTV 2 35% UK 30% Residential 25% Germany 20% 15% Mixed-Use Netherlands 10% 5% Ireland Office 0% 0% - 50% 50% - 60% 60% - 70% 70% - 80% 80% - 100% 0% 20% 40% 60% 80% 100% Hotel UK Breakdown Loan Type Breakdown Student Accommodation Central 3.8% Mezzanine Loan London Logistics 37.4% Greater 40.0% Senior Loan London Retail 54.2% 58.9% Regional Special Situations 0% 10% 20% 30% 40% 5.8% 1 Yield stated is the effective accounting yield based on the funded loan balances, which includes interest and fees. Some loans also benefit from equity upside participation, which is only recognised following evidenced delivery, and can result in significant incremental gains in excess of the effective accounting yield. 2 LTV by commitment (see page 15 for 8 definition) Past performance is not a guide to future results. Actual results and developments may differ materially from those expressed or implied herein.
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