Real Estate Credit Investments Limited · LSE:RECI
Real Estate Credit Investments — Investor Presentation (November 2020)
30 slides from Real Estate Credit Investments's investor presentation, November 2020
Slide 1: Real Estate Credit Investments Limited Company Update
REAL ESTATE CREDIT INVESTMENTS LIMITED Company Update November 2020 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: Investment Opportunity
Investment Opportunity ✓ Attractive returns from low LTV credit exposure to UK and European real estate markets • Weighted Average LTV of 63.4% as at 31 October 2020 ✓ Quarterly dividends delivered consistently since October 2013 • No change to Company dividend policy for the current financial year
Slide 4: Contents
Contents Page Background 2 Investment Opportunity 3 Responding to Covid 5 Portfolio Construction and Approach 8 Portfolio Snapshot 11 Recent Deals, Pipeline and Emerging Opportunities 17 Sectoral Analysis 20 Leverage Review 26 Maintaining a Stable Dividend 27 Summary 28 4
Slide 5: Summary: Responding to COVID-19, Update to November 2020
Summary: Responding to COVID-19, Update to November 2020 At the onset of this crisis, RECI moved quickly to take the following defensive measures to bring it to a robust position today: • An evaluation of each of its positions in light of the likely long term impact of the crisis on operating models
Slide 6: Summary: Cash Management
Summary: Cash Management • RECI entered 2020 (pre-Covid impact) with a substantially senior portfolio, strong counterparties and strong governance control over its investments. • Carefully lowered leverage over March and April, while maintaining sufficient cash resources to ensure that the Company w
Slide 7: Summary: Positioned to Capitalise on Opportunities
Summary: Positioned to Capitalise on Opportunities • Having successfully navigated through the challenges posed by the crisis, RECI is now well positioned to address future market uncertainty, with a strong portfolio profile and modest leverage comprising; – Senior loans and bonds equal to 77% of NA
Slide 8: Summary: Portfolio Construction and Investment Approach
Summary: Portfolio Construction and Investment Approach • RECI’s investment focus is on UK and European real estate credit comprising loans (mainly senior loans) and bonds collateralised by commercial real estate assets. • The investment objective of the Company is to provide Ordinary Shareholders w
Slide 9: Summary: Update on Real Estate and Debt Markets in Europe
Summary: Update on Real Estate and Debt Markets in Europe • Real estate markets in Europe are responding to the immediate implications of the Covid 19 virus (which has mainly impacted occupational markets for assets focused on the retail and leisure sectors) as well as the acceleration of longer ter
Slide 10: 31 October 2020 Snapshot
Capital Cheyne. 31 October 2020 Snapshot 10
Slide 11: Current Position
Current Position • NAV at end of October 2020 was £1.485, up from £1.470 at 31 March 2020 • RECI paid dividends of 3p per quarter, 6p in total, in the first six months of this financial year • NAV per share and portfolio have been stabilised since the 31 March COVID-19 impact 31-Jul-20 31-Aug-20 30-
Slide 12: Portfolio Composition
Portfolio Composition Portfolio by Loan Type1 (Funded Fair Value) • RECI’s investment portfolio was valued at £352.0m as at 31 October 2020. Core • The bilateral loan portfolio of £277.5m comprises 26 loans, Core+ with an average LTV of 66.8%, an average unlevered Value Add / Transitional Bilateral
Slide 13: Portfolio Composition – Bilateral Deals
Portfolio Composition – Bilateral Deals1 26 £277.5m 66.8% 10.7% 1.7 yrs Loans FV of Portfolio WA LTV WA Yield2 WA Life • £277.5m portfolio comprising 26 loans, predominantly senior and mezzanine loans in the UK, France and Portugal • Undrawn loan commitments of £126.8m as at 31 October 2020 Loan Bre
Slide 14: Portfolio Composition – Public Market Bond Portfolio
Portfolio Composition – Public Market Bond Portfolio 30 £74.5m 50.8% 13.4% 3.9 yrs Bonds Fair Value WA LTV WA Yield 1 WA Life • RECI is also invested in listed real estate bonds (mainly CMBS). By Geography • Bonds invested in are typically senior secured (1st lien) credits with conservative LTV coll
Slide 15: Position Analysis – Top 10 by Commitment
Position Analysis – Top 10 by Commitment as at 31 October 2020 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
Slide 16: Repayments
Repayments Timely repayments have continued quarter on quarter, reflecting the strength of the assets and borrowers that RECI lends to and the well capitalised and experienced borrowers: • Between June and October, RECI has received partial repayments of £4.7m on the £20.0m commitment to the London
Slide 17: Recent Deals
Recent Deals Purpose Built Student Deal Description Fully Let London Office Deal Description Co-Living Deal Description Accommodation (“PBSA”) Instrument Senior Loan Instrument Senior Loan Instrument Senior Loan Total RECI Total RECI Total RECI £21.7m £13.3m €9.7m Commitment Commitment Commitment Lo
Slide 18: Pipeline and emerging opportunities
Pipeline and emerging opportunities • RECI paused deployment on its pipeline in March 2020 and has, since Q3, started building a pipeline that reflected the short term stress as well as the emerging long term trends for real estate use and valuations. • Given the further dislocation in the demand an
Slide 19: Portfolio Analysis
Capital Cheyne. Portfolio Analysis 19
Slide 20: COVID-19: Sectoral Analysis Overview
COVID-19: Sectoral Analysis Overview The current crisis has led to an immediate impact on the operational performance of every real estate sector, but is especially pronounced on the most exposed sectors of hospitality and retail. Longer term shifts are likely to be evident in other sectors such as
Slide 21: COVID-19: Sectoral Analysis – Hospitality
COVID-19: Sectoral Analysis Hospitality (Hotels & Leisure) This asset class is facing a long period (likely up to next summer) of severely curtailed occupancy levels. The end to local lockdowns is likely to be followed by a slow resumption of international travel, leaving the sector facing weak dema
Slide 22: COVID-19: Sectoral Analysis – Retail
COVID-19: Sectoral Analysis Retail (18% of GAV) The performance of the retail asset class will depend on the nature of the asset. Secondary shopping centres are likely to continue their decline from structural changes to the industry and tenants who are now under significant strain. RECI’s largest e
Slide 23: COVID-19: Sectoral Analysis – Mixed-Use
COVID-19: Sectoral Analysis Mixed-Use (18% 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 (58% LTV) to a large e
Slide 24: COVID-19: Sectoral Analysis – Student Accommodation
COVID-19: Sectoral Analysis Student Accommodation (10% of GAV) Letting performance has been strong in regards to RECI’s Student housing positions, with very close to 100% occupancy achieved. Letting data shows that whilst overseas student leases were significantly down on 2019/20 academic year, lett
Slide 25: COVID-19: Sectoral Analysis – Housebuilders
COVID-19: Sectoral Analysis Housebuilders (8% of GAV) The company’s exposure to UK housebuilders are secured by both the assets and operations of the builder. Exposure is to the mid-market (and affordable) sector with average selling prices below £600,000 per home. Main Positions 1. A mezzanine loan
Slide 26: Leverage Review
Leverage Review Recourse Leverage (Repurchase Agreements) RECI has maintained its financing relationships throughout 2020. Financing rates rose in the months following the initial Covid impact. While rates remain higher than pre-Covid, there has been some decrease in recent months, so we expect the
Slide 27: Continuing to deliver an attractive and stable dividend
Continuing to deliver and attractive and stable dividend RECI’s dividend policy: it is the intention of the Company to pay a stable quarterly dividend. • The Company announced its first interim dividends of 3p in August, and has already paid two 3p dividends since the 31 March 2020 year end • This r
Slide 28: RECI: Summary
RECI: Summary RECI is well positioned to navigate through this crisis and 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 governance control over its with
Slide 29: 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 30: 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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