# Real Estate Credit Investments (RECI) FY’26 results: High yield, clear path to dividend cover

- Link: https://www.directorstalkinterviews.com/real-estate-credit-investments-reci-fy-26-results-high-yield-clear-path-to-dividend-cover/4121256221
- Published: 2026-07-13T14:28:37+01:00
- Author: Amilia Stone

The key messages from** Real Estate Credit Investments Limited **([LON:RECI](https://www.directorstalkinterviews.com/company/real-estate-credit-investments/reci.l))
_FY’26 results to March_ and _update presentation_ were, firstly, that the dividend
of 3p per quarter has continued to be paid (yield 10.3%). While uncovered in FY’
26, there are clear paths for the cover to be reestablished in due course. In the
meantime, the board appears committed to maintaining the payout at the current level.
Secondly, credit remains very good, with 92% of the portfolio performing and clear
strategies to managing the defaulting assets. Thirdly, while leverage has increased,
it is conservative.

 * **Strategy:** RECI’s manager, Cheyne, has a large real estate lending team, with
   multiple on-the-ground offices bringing it close to borrowers. Its whole-market
   experience means it can identify the optimal risk/reward opportunities at any
   given time, making it only modestly sensitive to macro trends.
 * **Dividend cover:** We see clear paths to reestablishing dividend cover with 
   normalised fair value (losses)/gains – inter alia, FY’26 equity participation
   loan losses should not recur/may reverse. New investments are at higher margins
   and the book’s short duration means higher income can be generated quickly.
 * **Valuation:** In the five years, pre-pandemic, on average, Real Estate Credit
   Investments traded at a premium to NAV. It is now trading at a substantial discount,
   which appears anomalous. RECI is paying an annualised 12p dividend, generating
   a yield of 10.3%, which we expect to be covered by recurring net interest income.
 * **Risks:** Any lender is exposed to credit risks. We believe RECI has appropriate
   policies to reduce the probability of default. Its average LTV is 67.4%, and 
   most loans (inc. all of the top 10) are senior-secured, providing a downside 
   cushion. Some assets are illiquid. In the short term, investor sentiment could
   be an issue.
 * **Investment summary:** Real Estate Credit Investments generates an above-average
   dividend yield from well-managed credit assets. RECI’s strong liquidity, credit
   assessment, close relationships with borrowers and restructuring expertise should
   allow it time to manage problem accounts in more challenging conditions. Borrowers
   have injected further equity into deals. Three buybacks were seen in [March 2026](https://www.londonstockexchange.com/stock/RECI/real-estate-credit-investments-limited/analysis).

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