Real Estate Credit Investments Limited (LON:RECI) has announced that it has declared a fourth interim dividend of 3.0 pence per Ordinary Share for the year ended 31 March 2025. The dividend is to be paid on 25 July 2025 to Ordinary Shareholders on the register at the close of business on 04 July 2025. The ex-dividend date is 03 July 2025.
Annual Report and Accounts 2025
Consistent attractive dividends from credit exposure to UK and Western European real estate credit markets
Real Estate Credit Investments is a specialist investor in the United Kingdom and Western European real estate credit markets with a focus on fundamental credit and value.
OVERVIEW AS AT 31 MARCH 2025
Overview and Highlights
What We Offer
Defensive credit exposure to UK and Western European real estate credit markets
| • | Stable and uninterrupted dividends delivered consistently since October 2013 |
Granular portfolio with detailed disclosure
| • | 21 positions |
| • | Diverse portfolio across sectors and geography |
Attractive and stable income in a changing interest rate environment
| • | Consistent portfolio yield of 9%+ offering a buffer to risk-free rates |
| • | A high-yielding portfolio, combined with a short weighted average life, ensures minimal exposure to yield widening and the ability to redeploy at higher rates quickly |
Access to Cheyne’s established real estate investment team and substantial origination pipeline
Key Figures
Net Assets £318.4m (31 March 2024: £326.4m)
NAV per Share £1.43 (31 March 2024: £1.45)
Total Assets £391.7m (31 March 2024: £352.3m)
Net Profit £22.8m (for the year ended 31 March 2024: £21.9m profit)
RECI Offers:
| • | Focus on senior secured credit, with defensive Loan-to-Values (“LTVs”) |
| • | Strong governance control over its loan book |
| • | Large, experienced, well capitalised borrowers |
| • | Conservative and diversified leverage profile |
| • | Dividend stability without compromising risk |
| • | Management from Cheyne’s Real Estate team |
Total NAV Return 7.7% (31 March 2024: 7.0%)
Dividend Yield 9.8% (31 March 2024: 10.4%)
Share Price £1.22 (31 March 2024: £1.15)
Dividends 12.0 pence (31 March 2024: 12.0 pence)
Investment Portfolio Composition
RECI’s investment portfolio, a diversified book of 21 positions in real estate bonds and loans, was valued at £369.5 million including accrued interest, as at 31 March 2025, up from £329.4 million as at 31 March 2024. The portfolio had a weighted average levered yield of 11.4% and an average LTV ratio of 66.0% as at 31 March 2025.
Portfolio by Geography
by % of Total Committed Capital including PIKCountry
| Country | Allocation March 2025 % | Change since March 2024 % |
| United Kingdom | 65.5 | 7.7 |
| France | 24.5 | (1.9) |
| Spain | 4.6 | (1.3) |
| Italy | 2.5 | (1.5) |
| Germany | 2.9 | 0.0 |
| Finland | 0.0 | (4.1) |
| Ireland | 0.0 | (1.9) |
Share Price vs NAV per Share
Performance (Pence)
| NAV and Share Price | As at31 March 2025 | Total NAV Return1 | |
| Net Assets | £318.4m | Financial Year Ended 31 March 2025 | 7.7% |
| Shares Outstanding (net of treasury shares) | 221.9m | Prior Financial Year Ended 31 March 2024 | 7.0% |
| NAV (per share) | £1.43 | Last Three Financial Years Ended 31 March 2025 | 22.0% |
| Share Price (per share) | £1.22 | Last Five Financial Years Ended 31 March 2025 | 43.2% |
| Discount | (14.9)% | ||
| Dividend Yield | 9.8% | ||
| Market Capitalisation | £270.7m | ||
1 The Total NAV Return measures the combined effect of any dividends paid, together with the rise or fall in the NAV per share. The Total NAV Return relates to past performance and takes into account both capital returns and dividends paid to Shareholders. Any dividends received by a Shareholder are assumed to have been reinvested in the assets of the Company at its NAV per share on the ex-dividend date. The Total NAV Return is considered an Alternative Performance Measure pursuant to ESMA Guidelines which is unaudited and outside of the scope of IFRS Accounting Standards (“IFRS”).
Investment Objective and Investment Policy
Investment Objective
The Investment Objective of the Company is to provide Shareholders with attractive and stable returns, primarily in the form of quarterly dividends, by exposure to a diversified portfolio of real estate credit investments, predominantly comprising real estate loans and bonds.
Investment Policy
To achieve the Investment Objective, the Company invests and will continue to invest in real estate debt secured by commercial or residential properties in the United Kingdom and Western European countries.
The real estate credit investments may take different forms but are likely to be:
| (i) | real estate loans are typically secured by mortgages over the property or charges over the shares of the property- owning vehicle. Individual Secured Debt investments will have a life profile ranging from six months to five years. Investments in Secured Debt will also be directly or indirectly secured by one or more commercial or residential properties, and shall not exceed a LTV of 85% at the time of investment; |
| (ii) | listed debt securities and securitised tranches of real estate related debt securities, for example, residential mortgage-backed securities and commercial mortgage- backed securities (together “MBS”). For the avoidance of doubt, this does not include equity residual positions in MBS; and |
| (iii) | other direct or indirect opportunities, including equity participations in real estate, save that no more than 20% of the total assets will be invested in positions with an LTV in excess of 85% or in equity positions that are uncollateralised. On certain transactions, the Company may be granted equity positions as part of its loan terms. These positions will come as part of the Company’s overall return on its investments and may or may not provide extra profit to the Company depending on market conditions and the performance of the loan. These positions are deemed collateralised equity positions. |
It is the intention of the Company to continue to pay a stable quarterly dividend with the potential for additional payments if investment returns permit.
Chairman’s Statement
I am pleased to report that for the year ended 31 March 2025, RECI delivered a total net profit of £22.8 million and maintained an unchanged dividend of 3.0 pence per quarter, despite challenging times for the listed investment company sector.
Andreas Tautscher Chairman
The last financial year has been marked by continued geopolitical instability. The war in Ukraine remains unresolved, while the conflict in Gaza has significantly heightened tensions across the Middle East, most recently marked by Israeli and U.S. strikes against Iran, targeting nuclear facilities/infrastructure sites. On the economic front, although inflation has moderated from previous highs, it remains persistent, prompting central banks to adopt a more gradual approach to interest rate cuts.
There is also growing evidence that markets are pricing Government Debt at significantly higher risk premium, take the UK where there have been three interest rate cuts but ten-year gilts have risen from 4.2% to 4.6% since July 2024. The consensus remains that interest rates will reduce, for most economies, over the rest of 2025.
Furthermore, we need to consider the impact of President Trump’s ‘liberation day’ and the shock introduction of significant tariffs on every trading partner of the US. I will not get into a full résumé of the twists and turns but suffice to say we have seen an almost unprecedented level of volatility in equity markets which has also been mirrored in the debt markets, particularly for US government debt. This level of volatility in both government policy and market impact makes it very difficult to give many forward predictions.
The challenges we had seen in the investment company segment of the last year, allied to discount, liquidity and some governance issues, have not abated. The impact of the Trump announcements has not helped although at the time of writing the overall impact in terms of valuations has been netted out, but we are clearly only part way through this process and we might expect further periods of volatility in the markets.
Against this challenging backdrop, the Board and Cheyne have continued to focus on RECI’s core strengths and seek to deliver for our Shareholders. The Company’s shares traded at an average discount to NAV of 15.4% during the financial year ended 31 March 2025. Reflecting market sentiment, the Real Estate Debt Sector traded at an average discount of 20.4% (excluding RECI) over the same 12 months (source: Liberum, company data).
During the financial year, interest and repayments received on the Company’s portfolio has funded new and existing commitments. The Board continues its practice of considering all options when assessing the levels of excess cash to be retained or deployed by the Company from time to time and how any such cash available for deployment should be allocated. Excess cash is regarded as the cash available following recognition of the obligation to ensure sufficient cash resources to pay, inter alia, the Company’s expenses, borrowings, dividends and fund its ongoing contractual loan commitments, from time to time (“Available Cash”).
Mindful of the Company’s prevailing discount and Available Cash, the Board launched a second buyback programme in September 2024 and a successor buyback programme in March 2025.
The Directors and Cheyne remain committed to providing detail and transparency regarding the Company’s portfolio and investment strategy, allowing all investors to focus upon RECI and its merits and opportunities, notwithstanding the challenging broader market environment.
I am pleased to report that RECI won the Best Performance Award as the top performer over three years in the Specialist Debt Category at Citywire’s annual awards ceremony in November 2024.
Reflecting your Board’s and our Investment Manager’s confidence in RECI and its future, the Directors and employees of Cheyne have purchased an aggregate of 213,000 shares in the Company since the start of the financial year on 1 April 2024.
Financial Performance
RECI reported a total net profit for the financial year ended 31 March 2025 of £22.8 million on year end total assets of £391.7 million, compared with a £21.9 million net profit in the year ended 31 March 2024, on year end total assets of £352.3 million.
The NAV as at 31 March 2025 was £1.43 per share (£1.45 per share as at 31 March 2024) which, combined with the 12.0 pence per share of dividends payable in respect of the year ended 31 March 2025, represents an annualised total NAV return for Shareholders of 7.7%.
During the financial year ended 31 March 2025, the Company’s shares traded at an average discount to NAV of 15.4%, (14.7% discount for the year ended 31 March 2024).
Total quarterly dividends declared in respect of the financial year ended 31 March 2025 were an unchanged 12.0 pence per share, returning £26.7 million to our Shareholders.
During the year, RECI had average asset level structured leverage of approximately £34.4 million, at an average borrowing cost of circa 7.9%.
During the financial year to 31 March 2025, the Company funded £139.8 million into existing investments, compared with £95.2 million in the previous financial year. RECI also received cash repayments and interest of £113.6 million in this year, compared with £134.2 million in the year ended 31 March 2024.
Financial Year Review
Despite the challenging real estate and credit markets, the Company’s robust portfolio ensured the NAV remained stable at an average of £1.46 per share during the financial year, notwithstanding the payment to Shareholders of four unchanged dividends, totalling 12.0 pence per share, during the year.
Cheyne maintained the strategy of focusing portfolio exposure upon lower risk senior loans, with 90% of the Company’s positions comprised of senior assets by the financial year end. RECI’s holding of market bonds had reduced to comprising just 1.8% of the portfolio by 31 March 2025. The weighted average life of the whole portfolio was one year for the financial year ended 31 March 2025; and the weighted average LTV of the Company’s portfolio was 66.0% (64.9% at 31 March 2024).
The Board and Cheyne have continued to monitor RECI’s cash resources and repayments and to consider the appropriate level and blend of gearing for the Company. As at 31 March 2025, the Company’s gross balance sheet leverage was £70.9 million (22.3% of NAV); its net effective leverage, including contingent liabilities of £9.3 million (being the partial recourse commitment, representing 25% of asset level borrowings provided to certain asset level structured finance counterparties), was 18.2% of NAV.
The negative market sentiment during our last financial year inevitably impacted RECI’s share price and saw material discount widening across the investment funds sector generally and the credit and real estate sectors, in particular.
The Company’s initial buyback programme was announced on 31 August 2023, with an aggregate purchase price of all shares purchased of no more than £5.0 million. Pursuant to that programme, a total of 4,095,000 ordinary shares of no par value each (“Ordinary Shares”) were purchased for treasury for an aggregate amount of £5.0 million. The Company announced a successor buyback programme on 28 March 2024, with an aggregate purchase price of all shares purchased of no more than £10.0 million, pursuant to which a total of 3,343,474 Ordinary Shares were purchased for treasury for an aggregate amount of £4.2 million. A further buyback programme was then announced on 27 September 2024 for £10.0 million, which was not utilised.
On 31 March 2025, the Company announced that, having reviewed the current circumstances and assessed the Company’s level and allocation of cash available for deployment, it intends to undertake a further buyback programme which will run to 30 September 2025. The aggregate purchase price of all shares acquired under the programme will be no greater than £10.0 million and 200,000 Ordinary Shares have been repurchased to date.
The Company’s shares closed at 127.5 pence on 20 June 2025 (a discount of approximately 12.4% which would provide a yield of 7.1% on the basis of continuing to pay a quarterly 3.0 pence dividend per share for the rest of the current financial year.
The merits of RECI’s offering and, in particular, the yield at current share price levels, appear to have been overlooked amid the broader volatile market and negative sector background. Your Board continues to believe that RECI provides investors with a highly attractive and sustainable long-term income stream.
RECI is well positioned to deliver this attractive dividend stream alongside a resilient NAV and provide investors with a substantial and liquid company (with total assets of £391.7 million and market capitalisation of £270.7 million as at 31 March 2025) with the potential for the shares to re-rate and the Company to grow over time.
Board Update
In line with the Board’s succession planning and following the appointment of an independent recruitment firm and a comprehensive search process, the Company announced on 8 May 2024 that I had been appointed as an independent non-executive director of the Company. Following Bob Cowdell’s decision to step down in November 2024, I was appointed as Chairman. As noted in my interim statement, I thank Bob for leaving behind a stable ‘ship’ that has weathered the storms in the last few weeks.
I would also like to introduce Mark Thompson who joined us in November 2024 as our latest member of the Board. Mark brings a wealth of knowledge and experience from both his auditing years at KPMG as well as his more recent experience on a number of private and listed investment vehicles.
Environmental, Social and Governance Matters (“ESG”)
Your Board continues to recognise and support the growing focus on ESG considerations and the importance of ethical factors, including climate change, when pursuing the Company’s investment objective and in the selection of service providers and advisers to the Company.
In her role as “ESG Lead”, Colleen McHugh is working closely with Cheyne in developing and implementing RECI’s ESG approach.
Page 28 of the Stakeholder Engagement section and pages 30 to 35 of the Sustainability Report provide further information about the Company’s and the Manager’s approach to ESG matters.
Outlook
While easing inflation will allow central banks to continue reducing interest rates over time, this process is likely to be slower than previously predicted – particularly in the UK, where inflation is still persistent, complicating the Bank of England’s policy decisions. Nonetheless, a gradual shift towards a lower interest rate environment, even if it does not reach the ultra-low levels of recent years, should prove supportive for RECI as it continues to provide investors with a highly attractive and sustainable yield. We will need to continue to factor in the potential for further impacts from the US Administration’s policies.
In considering all options when deciding on the appropriate allocation of the Company’s Available Cash resources, the Board is mindful of when opportunities present themselves to achieve attractive repeatable returns from new investments and thereby enhance the “investment case” for RECI. Encouragingly, Cheyne and its new deal pipeline have ensured that RECI already has and will continue to benefit from the opportunities to lend at attractive returns of over 10% to enhance portfolio returns and dividend cover. Scheduled portfolio repayments over the rest of the year will boost available cash to be deployed into new higher yielding opportunities alongside funding the current and potential future buyback programmes.
The Directors believe that RECI remains soundly positioned to continue to deliver an attractive and stable dividend to investors seeking a reliable long-term income stream from a listed and liquid investment company, with a highly regarded specialist Investment Manager.
Andreas Tautscher
Chairman
24 June 2025
