TIDMRECI TIDMRECP TIDMERII
RNS Number : 0803P
Real Estate Credit Inv. PCC Ltd
14 August 2014
14 August 2014
Real Estate Credit Investments PCC Limited
Interim Management Statement
RECI(1) Highlights
-- From 31 March 2014 to 31 July 2014, RECI's NAV increased from
GBP1.541 per share to GBP1.581 per share(2) .
-- The Board has declared a dividend of 2.7p per share in
respect of RECI Ordinary Shares for the quarter ended 30 June
2014.
Bonds
-- As at 31 July 2014 the value of the bond portfolio was
GBP78.6 million(2) (approximately 49% of gross assets) and nominal
value was GBP96.0 million(2) . The bond portfolio reduced in the
period due to repayments of positions at par ahead of legal final
maturities, and RECI's net sales of bonds in anticipation of new
loan advances.
-- Continued strong performance from the bond portfolio,
recording positive net performance over each month from the start
of the financial year.
Loans
-- Between 1 April and 31 July 2014, GBP23.9 million new loan
commitments were made through 5 loans closing.
-- The funded loan portfolio grew to a value of GBP54.1
million(2) as at 31 July 2014, accounting for approximately 34% of
gross assets.
-- As at 31 July 2014 RECI has undrawn loan commitments of GBP20.0 million(2) .
-- During the period, two loans repaid at levels accretive to
NAV, and another loan generated an in specie distribution of shares
in the borrower.
Cash
-- Cash at 31 July was GBP23.3 million(2) , up from GBP18.3
million as at 31 March. New commitments and loan drawdowns in
excess of GBP20.0 million are anticipated before the end of
September.
RECI Key Financial Data(2) 31 Mar 2014 31 July 2014
--------------------------------------- ------------ -------------
Gross Assets GBP157.0m GBP158.9m
Bonds GBP85.8m GBP78.6m
Loans GBP51.0m GBP54.1m
Net Asset Value per Ordinary Share GBP1.541 GBP1.581
Qtrly Div declared per Ordinary Share 2.7p 2.7p
--------------------------------------- ------------ -------------
(1) Real Estate Credit Investments PCC Limited is a protected
cell company, consisting of a Core and a Cell. RECI refers to the
Company's Core segment. Figures for 31 July 2014 are pro forma, as
the Company will next produce financial statements for the half
year ended 30 September 2014.
(2) Based on 31 July 2014 pro forma figures from monthly fact
sheet. Bonds and loans shown as dirty fair values (including
accrued interest).
This interim management statement relates to the period from 31
March 2014 to 14 August 2014 and has been prepared solely in order
to comply with the requirement (pursuant to the EU Transparency
Directive as implemented by the Disclosure and Transparency Rules)
for an interim management statement to be made by the Company no
earlier than 9 June 2014 and no later than 19 August 2014. Unless
otherwise noted herein, the financial information provided in this
interim management statement (and the asset valuations underlying
that financial information) are as at 31 March 2014 and such
financial information (and underlying valuations) will be stated as
at a more recent date in the Company's forthcoming half year
report. Terms set out in this interim management statement but not
defined are as defined in the Company's most recent prospectus
dated 16 October 2013.
Pro - forma Balance Sheet(3)
Figures for RECI for 31 March 2014 and 31 July 2014 (in GBP
million)
31/03/2014(9) 31/07/2014(9)
------------------------------------------ ------------------------------ -----------------------
Bond Portfolio(4) 85.8 78.6
Loan Portfolio(4) 51.0 54.1
Cash and Cash Equivalents 18.3 23.3
Derivative Assets 1.9 2.9
Other Assets(5) 0.0 0.0
157.0 158.9
Other Liabilities(6) (2.7) (1.6)
Derivative Liabilities (0.5) -
Preference Dividend(7) - (0.3)
Ordinary Dividend(8) - -
Preference Share Liability (41.6) (41.9)
(44.8) (43.8)
Net Assets (estimate) 112.2 115.1
Shares outstanding 72.82 72.82
Net Assets per Ordinary Share (estimate) 1.541 1.581
------------------------------------------ ------------------------------ -----------------------
Pro Forma NAV Assumptions
-----------------------------------------------------------------------------
3. Unaudited figures produced by Cheyne for Investment Portfolio,
Cash and Cash Equivalents and Derivative Assets, otherwise uses
latest public financial statement figures. Figures are estimates,
and actual audited values may be materially different from the numbers
shown.
4. Bond and Loan portfolio values shown include accrued interest.
5. Other Assets excludes accrued interest on the bonds and loans,
but otherwise uses the Other Assets figure shown in the financial
statements for 31 March 2014.
6. Other Liabilities for 31 March 2014 is the figure used in the
financial statements for 31 March 2014. Other liabilities for 31
July 2014 is the figure used in the financial statements for 31
March 2014 but excluding the amount payable for preference shares
repurchased, the figure for 31 July 2014 also includes an estimate
of accrued performance fee to 31 July 2014.
7. Preference Dividend liability accrues over the quarter and is
paid on each quarter end.
8. Ordinary Dividend liability is either ex or cum the dividend
at the valuation date.
9. 31 March 2014 figures use EURGBP FX rates at 31 March 2014 and
31 July 2014 figures use EURGBP FX rates as at 31 July 2014.
-----------------------------------------------------------------------------
Source: Cheyne Capital. Unaudited. The NAV at the next reporting
date may be materially different from the valuations implied
above.
Top 10 Exposures(10) (Bonds and Loans) as at 31 July 2014
Market Value GBP68.6 million
WA Original LTV(11) 64.1%
WA Cheyne Current LTV(11) 66.0%
WA Effective Yield(12) 10.5%
Type Class Collateral Description
=========== ======== =================================================================================
Commercial B Bond secured against government housing portfolio in the UK
Commercial Loan Mezzanine loan secured on a fully let retail park in Essex
Commercial Loan Whole Loan secured against German multi-family properties
Commercial E Portfolio of commercial loans secured by properties in Germany
Commercial A Portfolio of nursing homes operated by Four Seasons Health Care Group
Commercial Loan Mezzanine loan secured against a new operational hotel at King's Cross
Commercial Loan Whole loan secured against German multi-family properties
Commercial A Portfolio of UK commercial loans secured against office and retail properties
Commercial Loan Mezz loan secured against a branded London hotel development in Shoreditch
Commercial Loan Mezz loan secured by residential land & homes under development in South East UK
============= ====== =================================================================================
Source: Cheyne Capital. Unaudited. 10. Based on fair value of
bonds and loans. 11. The Weighted Average Original Loan to Value
has been calculated by reference to the original acquisition value
of the relevant collateral as disclosed at the time of issue of the
relevant bond or loan. The Original LTV is weighted by the market
value of the bonds and loans. The Weighted Average Cheyne Current
LTV has been calculated by Cheyne by reference to the current value
ascribed to the collateral by Cheyne. In determining these values,
Cheyne has undertaken its own internal valuation of the underlying
collateral. Such valuations have not been subject to independent
verification or review. 12. WA effective yield is based on the
effective yield using prices as at 31 July 2014 and is based on
Cheyne's pricing assumptions and actual returns may differ
materially from those expressed or implied herein.
Bond Portfolio Summary (as at 31 July 2014) 31 Mar 31 Jul
-----------------------------------------------------------------------------
Number of bonds 79 78
Dirty Fair Value of Bond Portfolio as at 31 July 2014 85.8m 78.6m
Nominal Face Value of Bond Portfolio as at 31 July 2014 108.3m 96.0m
================================================================= ==========
During the period from 1st April to 31st July, cash spend on
bonds was GBP3.9m, and cash received from bond sales was
GBP11.6m.
Monthly Bond Performance Summary
February March April May June July
-------------- --------- ------ ------ ------ ------ ------
% Fair Value
Change(13) 1.27% 0.73% 1.17% 1.03% 1.12% 1.25%
-------------- --------- ------ ------ ------ ------ ------
WA Purchase
Price(14) 0.887 0.93 - 1.00 - 0.98
-------------- --------- ------ ------ ------ ------ ------
WA Purchase
Yield(14) 4.60% 8.67% - 2.59% - 3.81%
-------------- --------- ------ ------ ------ ------ ------
13. % Fair Value Change is based on MTM P&L for the month.
14. WA Purchase Price and WA Purchase Yield are based on purchases in the period.
Bond Breakdown as at 31 July 2014
Asset Class UK CMBS UK RMBS Euro CMBS Euro RMBS Total (31 Mar)
------------------- -------- -------- ---------- ---------- ---------------
CLASS A 8.6% 1.3% 0.7% 0.3% 10.9% (20.7%)
CLASS B 28.1% 9.0% 2.6% 0.0% 39.7% (33.9%)
CLASS C 2.1% 6.8% 4.9% 0.6% 14.4% (12.8%)
CLASS D 1.5% 4.0% 6.7% 0.6% 12.7% (11.4%)
CLASS E and below 2.6% 9.1% 10.2% 0.4% 22.3% (21.2%)
------------------- -------- -------- ---------- ---------- ---------------
Grand Total 42.8% 30.3% 25.1% 1.9% 100.0%
------------------- -------- -------- ---------- ---------- ---------------
Loan Portfolio Summary (as at 31 July 2014) 31 Mar 31 Jul
Number of loans 9 13
Drawn Dirty Fair Value (GBP millions) 51.1 54.1
Total Loan Commitments (GBP millions) 63.1 74.2
Loans as % of GAV (drawn loan balance) 33.0% 34.0%
Weighted average yield of loan portfolio(15) 12.9% 13.8%
Weighted average LTV of portfolio(16) 64.9% 70.8%
---------------------------------------------- ------------ ---------
15. Weighted average effective yield is based on the effective
yield using prices as at 31 July 2014 and is based on Cheyne's
pricing assumptions and actual returns may differ materially from
those expressed or implied herein.
16. Weighted average LTV has been calculated by Cheyne by
reference to the current value ascribed to the collateral by
Cheyne. In determining these values, Cheyne has undertaken its own
internal valuation of the underlying collateral. Such valuations
have not been subject to independent verification or review.
Outlook
RECI's investment strategy during the period has continued to
focus on selectively growing its loan portfolio while enjoying the
positive trading gains, and hence attractive total returns, from
the more liquid bond portfolio.
The Investment Manager sees significant intrinsic value in the
existing bond portfolio. Some bonds have been repaid ahead of final
maturity and further liquidity for investment in new loans can be
derived from rotating out of lower yielding bonds.
In the increasingly competitive market, the Investment Manager's
strong platform and market position enable the Company to grow its
loan portfolio with assets offering superior risk-adjusted
prospective returns. With five new loans completed since the start
of the financial year, the Company has a number of further whole
and mezzanine loans in negotiation, which it expects to close in
the coming months. The improving sentiment in both the real estate
and lending markets in most European territories is increasing the
number of potential transactions, generating interesting
opportunities for a specialised lender such as RECI.
European Residual Income Investments (ERII)
ERII Cell Position Summary (in EUR million)
-------------------------------------------------------- --------
Number of Positions as at 31 July 2014 4
Residual Income Portfolio Valuation (31 July 2014)(17) EUR3.7m
-------------------------------------------------------- --------
ERII Cell Cash Summary (in EUR million)
----------------------------------------- --------
Cash as at 31 July 2014 EUR0.5m
----------------------------------------- --------
Source: Cheyne Capital. Unaudited. Valuation of the Residual
Income Portfolio may change, possibly materially, on the next
reporting date. The NAV at the next reporting date may be
materially different from the valuation implied above.
17. This figure contains the Residual Income Positions remaining
as at 31 July 2014, but at the pro forma dirty fair value per 30
June 2014.
Overview
During the period the European Mortgage Portfolio (Magellan) was
sold at a level accretive to NAV.
The remaining positions were marked up by EUR1.4 million as at
30 June 2014.
ERII paid a dividend of 3.2c per share on 25(th) July. Following
the successful sale of the Magellan asset, the Cell also processed
a mandatory redemption of capital (effective 25(th) July) returning
EUR7.85 million to shareholders. The Company is therefore not
declaring a dividend for the quarter ended 30 June 2014.
Disclaimer:
This document is issued by Cheyne Capital Management (UK) LLP
("Cheyne Capital"). Cheyne is authorised and regulated by the
Financial Conduct Authority of the United Kingdom (the "FCA").
This document is being issued inside and outside the United
Kingdom by Cheyne only to and/or is directed only at persons who
are professional clients or eligible counterparties for the
purposes of the FCA's Conduct of Business Sourcebook. This document
must not be relied or acted upon by any other persons. Cheyne
Capital neither provides investment advice to, nor receives and
transmits orders from, investors in Real Estate Credit Investments
PCC Limited ("Company") nor does it carry on any other activities
with or for such investors that constitute "MiFID or equivalent
third country business" for the purposes of the FCA Rules.
The information contained herein is intended only for the person
or entity to which it is addressed and may contain confidential
and/or privileged material. Any dissemination or other unauthorised
use of this information by any person or entity is strictly
prohibited. The distribution of this document may be further
restricted by law. No action has been or will be taken by either
Cheyne Capital or the Company, to permit the possession or
distribution of this document in any jurisdiction (other than as
expressly described herein) where action for that purpose may be
required. Accordingly, this document may not be given or used in
any jurisdiction except under circumstances that will result in
compliance with any applicable laws and regulations. Persons to
whom this document is communicated should inform themselves about
and observe any such restrictions.
This document is not intended to constitute, and should not be
construed as, investment advice. Potential investors in the Company
should seek their own independent financial advice. This document
has been provided to you for informational purposes only and may
not be relied upon by you in evaluating the merits of investing in
any securities or interests referred to herein. This document is
not intended as and is not to be taken as an offer or solicitation
with respect to the purchase or sale of any security or interest,
nor does it constitute an offer or solicitation in any
jurisdiction, including those in which such an offer or
solicitation is not authorised or to any person to whom it is
unlawful to make such a solicitation or offer. Any person
subscribing for an investment must be able to bear the risks
involved and must meet the suitability requirements relating to
such investments. Some or all alternative investment programs may
not be suitable for certain investors.
Although the information in this document is believed to be
materially correct, no representation or warranty is given as to
the accuracy of any of the information provided. Certain
information included in this document is based on information
obtained from sources considered to be reliable. We have not
verified any such information and assume no responsibility for the
accuracy or completeness thereof. Any projections or analysis
provided to assist the recipient of this document in evaluating the
matters described herein may be based on subjective assessments and
assumptions and may use one among alternative methodologies that
produce different results. Accordingly, any projections or analysis
are subject to change without prior notification and should not be
viewed as factual and should not be relied upon as an accurate
prediction of future results. Furthermore, to the extent permitted
by law, neither the Company nor Cheyne Capital nor any of their
respective directors, agents, service providers or professional
advisers assumes any liability or responsibility nor owes any duty
of care for any consequences of any person acting or refraining to
act in reliance on the information contained in this document or
for any decision based on it.
Past performance is not a reliable indicator of future
results.
Among the risks we wish to call to the particular attention of
recipients are the following: (1) The Company's investment program
is speculative in nature and entails substantial risks; (2) the
investments of the Company may be subject to sudden and large falls
in price or value and there could be a large loss upon realisation
of a holder's investment, which could equal the total amount
invested; (3) as there is no recognised market for many of the
investments of the Company, it may be difficult or impossible for
the Company to obtain complete and/or reliable information about
the value of such investments or the extent of the risks to which
such investments are exposed; (4) the use of a single investment
manager could mean a lack of diversification and, consequently,
higher risk, and may depend upon the services of key personnel, and
if certain or all of them become unavailable, the Company may
suffer losses; (5) Cheyne Capital will receive performance-based
remuneration; (6) the market price of shares in the Company do not
necessarily reflect its underlying net asset value; and (7) the
price of shares (and the income from them) can go down as well as
up and may be affected by changes in rates of exchange.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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