Real Estate Credit Investments (RECI) delivered a positive financial performance in the year ended 31 March 2014 with GBP8.1 million of profits.
The company increased its dividend target to seven per cent of the placing price as outlined six months ago, reflecting confidence in RECI's balanced portfolio strategy and its ability to continue delivering strong returns.
Tom Chandos, chairman of RECI says: “The past financial year has seen continuing good returns from RECI's investment portfolio allied to clear progress in developing the scale and cost effectiveness of the Company. The successful fund raising in November 2013 has increased capacity for new investment in real estate loans and bonds and contributed towards the significant reduction in costs as a percentage of net asset value. New loans have been committed to give double digit expected returns and there continues to be a promising pipeline of new loan opportunities.”
With the GBP50 million raised, before expenses, in November’s equity placing and RECI’s relationship with Investment Manager Cheyne Capital (the manager), the company has been successful in substantially investing the new capital raised into real estate loans.
The loan portfolio has increased from GBP20.0m at 31 March 2013 to GBP51.0m at 31 March 2014. During the financial year, the company made six new loans and since year-end has completed a further two loans. The manager’s new loan origination pipeline is strong and RECI has the opportunity to continue to commit funds from the capital raise to upcoming new loans.
RECI’s bond portfolio made a strong contribution to the company’s financial performance, with a total gross return during the period of 11 per cent. The company recorded mark-to-market profit on the bond portfolio, in excess of operating income, of GBP1.0 million in the year, including GBP0.5 million in the half-year ended 31 March 2014.
The overall portfolio strategy led to an increase in NAV per share in the financial year end to GBP1.54 as at 31 March 2014, up from GBP1.50 one year previously.