RECI sees quarterly rise

Investments of the Real Estate Credit Investments trust managed by Cheyne Capital rose 6.3% in value last quarter, according to its first report since a significant amendment to its strategy

Investments of the Real Estate Credit Investments trust rose 6.3% in value last quarter, according to its first report since a significant amendment to its strategy.

Since 30 September, the portfolio’s net asset value per share rose to €1.69, from €1.59, adjusted for a bonus issue of preference shares in September.

The trust posted a €3.1m net profit on €4.5m of cashflows last quarter, compared to net profits of €2.8m in the previous quarter.

Last quarter the trust increased the fair value of its investments by €753m, compared to a €392m write-down in the quarter to 30 June.

RECI has also recently raised about €25m, which manager Shamez Alibhai is using to reposition the fund so that investing in undervalued real estate debt is its primary strategy.

From launch in 2005 to this year, RECI was known as Queen’s Walk Investment, and invested chiefly in subordinated tranches of asset-backed securities globally, including loans made to small and mid-sized businesses.

It is now focusing on pan-European real estate debt instruments, backed by both commercial and residential mortgages, where its managers see attractive value.

“We are optimistic that RECI will reach its target of growing the real estate debt portfolio to 50% of (its) investments by the calendar year end,” the company says.

“Real estate debt investments, in particular residential and commercial mortgage-backed bonds, should deliver investors improved returns and a more favourable risk/reward profile and the company is confident it can find opportunities to invest at yields in excess of 12%.”

Alibhai will make two thirds of new investments in pan-European commercial mortgage-backed securities, and one third in residential mortgage-backed securities.

Tom Chandos, RECI chairman, said: “It is a sign of RECI’s growing strength that it delivered a fifth consecutive quarter of profit, while laying the foundations for future growth with fresh investments in the real estate debt portfolio.”

Since 30 June Alibhai has boosted UK exposure, at the expense of Portuguese equivalents.

RECI added it would continue work identifying securitised mortgages it feels were mis-sold to it. It already had success in requesting those who sold such securitizations to it, to buy them back.

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