Real Estate Credit Investments Limited · LSE:RECI
Real Estate Credit Investments — Investor Presentation (October 2021)
31 slides from Real Estate Credit Investments's investor presentation, October 2021
Slide 1: Real Estate Credit Investments Limited Company Update October 2021
REAL ESTATE CREDIT INVESTMENTS LIMITED Company Update October 2021 w ww.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 I nv estment Opportunity 4 Key Quarter Updates 5 Portfolio Snapshot 7 Recent Deals 13 Sectoral Analysis 15 ESG Analysis 21 Lev erage Review 26 Maintaining a Stable Div idend 28 Summary 29 3
Slide 4: Summary: Investment Opportunity
Summary : Investment Opportunity Attractive returns from low LTV credit exposure to UK and European commercial real estate assets • W eighted Average LTV of 65.4% as at 30 September 2021 • Predominantly large, well capitalised, and experienced institutional borrowers Quarterly dividends delivere
Slide 5: Key Quarter Updates
Key Quarter Updates • Portfolio – No defaults in the portfolio. – Successful and favourable completion on the last remaining hotel loan restructuring. – Migration of portfolio to senior lending in keeping with the compelling opportunity set therein – 11 new deals completed (£122m of commitments) sin
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: 30 September 2021 Snapshot
30 September 2021 Snapshot 7
Slide 8: Current Position
Current Position • NAV at end of September 2021 was £1.514. • RECI announced first interim dividend for this financial year of 3p in August 2021. • 2 deals fully repaid in the quarter, 1 deal partially repaid, while 3 new commitments were made in the quarter. 30-Jun-21 31-Jul-21 31-Aug-21 30-Sep-21
Slide 9: Portfolio Composition
Portfolio Composition Portfolio by Loan Type1 (Funded Fair Value) • RECI’s investment portfolio was valued at £376.8m as at 30 September 2021. Core • The bilateral loan portfolio of £298.3m comprises 30 loans, Core+ with an average LTV of 69.0%, an average unlevered Value Add / Transitional yield of
Slide 10: Portfolio Composition – Bilateral Deals
Portfolio Composition – Bilateral Deals1 30 £298.3m 69.0% 10.1% 1.5 yrs Loans FV of Portfolio WA LTV WA Yield 2 WA Life • £298.3m portfolio comprising 30 loans, predominantly senior and mezzanine loans in the UK, France and Portugal • Undrawn loan commitments of £127.6m as at 30 September 2021 Loan
Slide 11: Portfolio Composition – Public Market Bond Portfolio
Portfolio Composition – Public Market Bond Portfolio 31 £78.4m 51.7% 9.9% 3.5 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 12: Position Analysis – Top 10 by Commitment as at 30 September 2021
Position Analysis – Top 10 by Commitment as at 30 September 2021 FV of Funded LTV LTV Investment Description Commitment Loan Type Manager Comment Amount Attach Detach Strategy Lux ury ret ail and apart ment s in super-prime Paris locat ion. Sponsor has receiv ed bids for t he asset significant ly ab
Slide 13: Recent Deals
Recent Deals FSH Brent Cross Airport Purpose Built Student Deal Description Hotel Deal Description Deal Description Hotel Accommodation (“PBSA”) Instrument M ezzanine Loan Instrument Senior Loan Instrument Senior Loan Total RECI Total RECI Total RECI £17.6m £5.7m £20.4m Commitment Commitment Commitm
Slide 14: Recent Deals
Recent Deals Alice Taxi House Colisee Deal Description Hotel Deal Description Co-Living Deal Description Office Instrument Senior Loan Instrument M ezzanine Loan Instrument Senior Loan Total RECI Total RECI Total RECI £18.5m £6.5m £29.3m Commitment Commitment Commitment Location Algarve, Portugal Lo
Slide 15: Portfolio Analysis
heyne. i RECI C ae eee Portfolio Analysis 15
Slide 16: Sectoral Analysis Overview
Sectoral Analysis Overview RECI investment portfolio remains diverse and granular. Mixed Use 1% Office 2% 3% 1% 4% Hotel 4% Student Accommodation 4% 32% Housebuilder 8% Retail Healthcare Leisure 11% Co-Living 15% Serviced Apartments 14% Residential Logistics The following pages provide a detailed na
Slide 17: Sectoral Analysis: Mixed-Use
Sectoral Analysis Mixed-Use (32% 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 orig
Slide 18: Sectoral Analysis: Hospitality (Hotels)
Sectoral Analysis Hospitality (Hotels) This asset class is facing a long period of sev erely curtailed occupancy lev els. The end to local lockdowns is likely to be followed by a slow resumption of international trav el, leav ing the sector facing weak demand for a prolonged period of time. RECI’s e
Slide 19: Sectoral Analysis: Student Accommodation
Sectoral Analysis Student Accommodation (11% of GAV) Letting performance has been positive in regards to RECI’s Student housing positions, with high occupancy levels achieved to date. The student market is late this year with certain courses starting in January and as such we expect to see further l
Slide 20: Sectoral Analysis: Housebuilders
Sectoral Analysis Housebuilders (8% of GAV) The company’s exposure to UK housebuilders is 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. This sector has performed better than envisag
Slide 21: ESG Analysis
Cheyne. NB RECI cyne eee ESG Analysis 21
Slide 22: 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 23: 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 24: ESG
ESG Sustainability 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.) More broadly, Che
Slide 25: Appendix
AY RECT. ne yne INVESTMENTS Appendix 25
Slide 26: 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 27: 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 its first interim dividend of 3p in Augus
Slide 28: Earnings and Dividends Reconciliation
Earnings and Dividends Reconciliation • Gross to Net reconciliation for the half year ended 30 September 2021 Absolute £m Per Share % Perf Annualised Int Inc Market Bonds 1.6 0.01 0.90% Int Inc Self Orig Bonds 4.3 0.02 2.50% Int Inc Self Orig Loans 7.9 0.03 4.60% Finance costs -1.0 0 -0.60% Other in
Slide 29: 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
Slide 30: 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 31: Important Information
Important Information This document, w hich has been issued by Cheyne Capital Management (UK) LLP (“CCM ”), comprises the w ritten materials/slides for a presentation concerning Real Estate Credit Investments Lim ited (the “Company”). This presentation does not constitute or form part of any offer o
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