Real Estate Credit Investments: The rise of private credit

Real Estate Credit Investments Limited
[shareaholic app="share_buttons" id_name="post_below_content"]

One of the key trends in global financing markets has been the rise of private credit. In this report, we consider the implications for Real Estate Credit Investments Ltd (LON:RECI). On the upside, we note i) the disintermediation of banks reconfirms the drivers to its business model, ii) this should be positive for sentiment, and iii) most of RECI’s competitive advantages relative to banks also apply to private credit funds. On the downside, we note i) competition will increase, especially for higher-end loans and staff, although RECI is in a niche position where the biggest funds are unlikely to be active, and ii) credit losses in large private credit funds are likely to adversely affect sentiment.

  • Why private credit is growing: Private credit gives borrowers an alternative and guaranteed source of funding. Investors get an illiquidity (and often intellectual capital) premium, floating rate instruments, and a targeted but diversified portfolio with specialist expertise managing risks. All these factors apply to RECI.
  • Read across: RECI should benefit from positive sentiment to private credit. However, it is in a niche sub-set of direct lending, which currently accounts for just half of private credit outstandings. Its performance will be driven by trust-specific factors rather than whole private credit market macro factors.
  • Valuation: Real Estate Credit Investments traded at premiums to NAV in the five-year, pre-pandemic era. The current discount to NAV is 15%. The dividend has been a consistent 3p per quarter for many years and generates a 9.7% yield. RECI is moving to lower-risk, but higher-margin, exposures, which should improve dividend cover.
  • Risks: Any lender is exposed to credit risks. We believe RECI has appropriate policies to reduce default probability. Positions are illiquid. Its average total commitment to expected value LTV is 65%, and most loans (all of the top 10) are senior-secured, providing a downside cushion.
  • Investment summary: Real Estate Credit Investments generates an above-average dividend yield from well-managed credit assets. Directors and management have demonstrated their confidence in its sustainability through share purchases. Market wide, credit risk is currently above average, but RECI’s strong liquidity and debt restructuring expertise should allow it time to manage problem accounts. To date, £9.1m buybacks have been completed since August 2023. A new £10m programme was announced on 27 September 2024.

Share on:
Find more news, interviews, share price & company profile here for:

Workspaces evolve alongside investor ambitions

The next chapter in real estate investing lies where adaptability meets ambition, as smart buildings and hybrid communities reshape how capital and space converge.

When bricks and mortar take a new turn

A new breed of property managers is transforming how offices, warehouses and retail parks operate, prompting investors to look beyond traditional rental yields and embrace adaptability.

Real Estate Credit Investments portfolio valued at £309.1m in June 2025

As at 30 June 2025, RECI held a diversified portfolio valued at £309.1m, with available cash of £16.6m and net effective leverage of 24.3%. NAV per share rose from 145.6p to 146.6p.

A UK credit specialist rewriting the real estate playbook

A UK property credit trust is quietly redefining the middle path between equity swings and traditional bond ladders.

Anchored amid uncertain credit waves

In a year of market turbulence, one specialist has reinforced its commitment to senior real estate credit, blending stable distributions with tactical buy-backs to navigate uncertain times.

Real Estate Credit Investments delivers 7.7% NAV return, 3p dividend

Real Estate Credit Investments Limited has reported a £22.8 million profit for the year ended 31 March 2025, with a 7.7% total NAV return and a maintained dividend of 12.0 pence per share. The Company continues to deliver stable income through a diversified real estate credit portfolio.

Search

Search