Real Estate Credit Investments Limited · LSE:RECI
Real Estate Credit Investments — Investor Presentation (May 2022)
34 slides from Real Estate Credit Investments's investor presentation, May 2022
Slide 1: Q4 Investor Presentation
REAL ESTATE CREDIT INVESTMENTS LIMITED Q4 Investor Presentation May 2022 www.recreditinvest.com Ticker: RECI LN
Slide 2: Background
Background Real Estate Credit Investments (RECI) is a closed-ended investment company which originates and invests in real estate debt secured by commercial real estate in Western Europe, focusing primarily on the United Kingdom, France and Germany. RECI is externally managed by Cheyne Capital’s rea
Slide 3: Contents
Contents Page Background 2 Key Quarter Updates 4 Investment Opportunity 5 Portfolio Snapshot 8 Recent Deals 14 Sectoral Analysis 16 ESG Analysis 22 Repaid Deals 26 Leverage Review 29 Maintaining a Stable Dividend 30 Summary 32 3
Slide 4: Key Quarter Updates
Key Quarter Updates • Portfolio – 12 new deals completed (£172m of commitments) since 31 March 2021, showing strength of opportunity post the initial impact of Covid – No defaults in the portfolio – Successful and favourable completion on the last remaining hotel loan restructuring – Migration of po
Slide 5: Summary: Investment Opportunity
Summary : Investment Opportunity Attractive returns from low LTV credit exposure to UK and European commercial real estate assets • Weighted Average LTV on underlying investments of 62.4% as at 31 March 2022 • Predominantly large, well capitalised, and experienced institutional borrowers Quarter
Slide 6: Summary: Structural Strength - Positioned to Capitalise on Opportunities
Summary: Structural Strength - Positioned to Capitalise on Opportunities • Having successfully navigated through the challenges posed by the COVID-19 pandemic, RECI is well positioned to address future market uncertainty, with a strong portfolio profile and modest leverage comprising, – Senior loans
Slide 7: Summary: Fixed & Floating Rate Bonds
Summary: Fixed & Floating Rate Bonds • RECI’s bond portfolio (including market and self-originated bonds) has approximately 70% of fixed rate bonds and 30% floating rate bonds as at 31 March 2022 • The Levered Yield for the fixed rate bonds is 13.2% • The fixed rate bonds are resilient to interest r
Slide 8: 31 March 2022 Snapshot
REAL ESTATE CREDIT se INVESTMENTS cA PITAL 31 March 2022 Snapshot
Slide 9: Current Position
Current Position • NAV at end of March 2022 was £1.499 • RECI announced an interim dividend for this financial year of 3p in March 2022 • One deal fully repaid in the quarter, with one new commitment made 31-Dec-2021 31-Jan-22 28-Feb-2022 31-Mar-2022 Bilateral Loans & Bonds (Fair Value) £295.4m £295
Slide 10: Portfolio Composition
Portfolio Composition Portfolio by Loan Type1 (Funded Fair Value) • RECI’s investment portfolio was valued at £385.5m as at 31 March 2022 Core • The bilateral loan portfolio of £287.7m comprises 35 loans, Core+ with an average LTV of 65.4%, an average unlevered Value Add / Transitional Bilateral Dea
Slide 11: Portfolio Composition – Bilateral Deals
Portfolio Composition – Bilateral Deals1 35 £287.7m 65.4% 10.0% 1.8 yrs Loans FV of Portfolio WA LTV WA Yield2 WA Life • £287.7m portfolio comprising 35 loans, predominantly senior and mezzanine loans in the UK, France and Spain • Undrawn loan commitments of £181.0m as at 31 March 2022 Loan Breakdow
Slide 12: Portfolio Composition – Public Market Bond Portfolio
Portfolio Composition – Public Market Bond Portfolio 28 £97.8m 53.7% 10.1% 3.9 yrs WA Life Bonds Fair Value WA LTV WA Yield 1 • RECI is also invested in listed real estate bonds (mainly CMBS) By Geography • Bond investments are typically senior secured (1st lien) credits at conservative LTV collater
Slide 13: Position Analysis – Top 10 by Commitment as at 31 March 2022
Position Analysis – Top 10 by Commitment as at 31 March 2022 FV of Funded LTV LTV Investment Description Commitment Loan Type Manager Comment Amount Attach Detach Strategy Luxury retail and apartments in super-prime Paris location. Sponsor has received bids for the asset significantly above the 1 Pa
Slide 14: Recent Deals
Recent Deals Kensington Balto Palmera Purpose Built Student Deal Description Assisted Living Deal Description Housebuilder Deal Description Accommodation (“PBSA”) Instrument Senior Loan Instrument Senior Loan Instrument Senior Loan Total RECI Total RECI Total RECI £20.0m £20.6m £7.1m Commitment Comm
Slide 15: Recent Deals
Recent Deals Sabina FSH Airport Deal Description Residential Deal Description Hotel Deal Description Hotel Instrument Senior Loan Instrument Mezzanine Loan Instrument Senior Loan Total RECI Total RECI Total RECI £22.5m £17.6m £20.4m Commitment Commitment Commitment Location Ibiza, Spain Location Par
Slide 16: Portfolio Analysis
RECI REAL ESTATE CREDIT INVESTMENTS Portfolio Analysis cA PITAL 16
Slide 17: Sectoral Analysis Overview
Sectoral Analysis Overview RECI investment portfolio remains diverse and granular Mixed Use 0% 3% Hotel 2% 4% 4% 21% Office 5% Student Accommodation Healthcare 8% Housebuilder Leisure 16% 11% Residential Co‐Living 12% Retail 13% Logistics Industrial The following pages provide a detailed narrative o
Slide 18: Sectoral Analysis: Mixed-Use
Sectoral Analysis Mixed-Use (21% of GAV*) The majority of RECI’s exposure to mixed-use assets is to value-add and development loans where the sources of value are typically from the delivery of residential units alongside office assets Main Positions 1. A senior loan (50% LTV, comprising of an origi
Slide 19: Sectoral Analysis: Hospitality (Hotels)
Sectoral Analysis Hospitality (Hotels) This asset class has faced a long period of severely curtailed occupancy levels. The likely end to local lockdowns has led to green shoots of recovery in the sector led mostly by the resumption in leisure demand. This leisure demand has been principally driven
Slide 20: Sectoral Analysis: Student Accommodation
Sectoral Analysis Student Accommodation (12% of GAV) Student sector has continued to show resilience during COVID characterised by higher levels of local students offsetting the lower levels of overseas students seen as a result of the last 24 months of disruption. Student market is expecting a retu
Slide 21: Sectoral Analysis: Housebuilders
Sectoral Analysis Housebuilders (8% of GAV) The company’s exposure to French and UK housebuilders is secured by operations of the builder, as well as the assets for UK housebuilders. Exposure is to the mid- market sector with average selling prices below £600,000 per home in the UK and under €260,00
Slide 22: ESG Analysis
RECI REAL ESTATE CREDIT INVESTMENTS ESG Analysis cA PITAL 22
Slide 23: ESG
ESG PHILOSOPHY Cheyne Capital and its Real Estate team are committed to operating its business in a progressively responsible manner, achieved through the incorporation of high standards of governance and investment stewardship. Cheyne aim for the consideration, assessment and integration of environ
Slide 24: ESG – Deal Examples
ESG – Deal Examples Earlsfield, UK The project will be a car-free development and will provide a cycle hub, promoting more cycling in the local area. The subject scheme comprises 109 units (35% of 310) affordable units that will be offered with priority to local people and key workers. The Sponsor i
Slide 25: ESG: Sustainability – Next Steps
ESG Sustainability – Next Steps Specifically in respect of sustainability, this is considered as part of our investment decision making process for Real Estate funds, based upon our Sustainability Risks disclosure (https://www.cheynecapital.com/media/2267/cheyne-manco-esg-policy-may- 2021.pdf.) In r
Slide 26: Repaid Deals
RECI REAL ESTATE CREDIT INVESTMENTS Repaid Deals cA PITAL 26
Slide 27: Repaid Deals
Repaid Deals Office • A senior development loan (50% LTGDV) to an established developer in the Ile-de-France was repaid, £10.5m, in full following a successful sale to an institutional investor 27
Slide 28: Appendix
RECI REAL ESTATE CREDIT INVESTMENTS cA PITAL Appendix 28
Slide 29: Leverage Review
Leverage Review Balance Sheet / Company Recourse Leverage RECI’s current gross leverage is 29% of NAV (against a maximum permitted leverage of 40%). RECI currently utilises its recourse leverage with flexible repurchase agreements (REPO) on its liquid bonds. RECI has maintained its financing relatio
Slide 30: Continuing to deliver an attractive and stable dividend
Continuing to deliver an attractive and stable dividend RECI’s dividend policy: it is the intention of the Company to pay a stable quarterly dividend. Since 2013, this has remained at a fairly constant yield of 7% on the Company’s NAV • The Company announced an interim dividend of 3p in March 2022 •
Slide 31: Earnings and Dividends Reconciliation
Earnings and Dividends Reconciliation • Gross to Net reconciliation for the full year ended 31 March 2022 Absolute £m Per Share % Perf Annualised Int Inc Market Bonds 3.2 0.01 0.90% Int Inc Self Orig Bonds 9.0 0.04 2.60% Int Inc Self Orig Loans 14.8 0.06 4.30% Finance costs -2.0 -0.01 -0.60% Other i
Slide 32: RECI: Summary
RECI: Summary RECI is well positioned to participate in the healthy pipeline of Cheyne investments, and to deliver on its overarching objective to provide ordinary shareholders with attractive and stable returns, primarily in the form of quarterly dividends Focused on senior secured credit, Strong g
Slide 33: Definitions
Definitions • Asset types: – Core – assets that benefit from having long term income – Core + – assets that benefit from having strong current income, but do require some measure of asset management to optimise its income profile and term – Value add / transitional – assets that require asset manage
Slide 34: Important Information
Important Information This document, which has been issued by Cheyne Capital Management (UK) LLP (“CCM”), comprises the written materials/slides for a presentation concerning Real Estate Credit Investments Limited (the “Company”). This presentation does not constitute or form part of any offer or in
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