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RECI Q3 Report: Market conditions drive increasing higher margin opportunities

Real Estate Credit Investments Limited (LON:RECI), a listed investment company paying a regular quarterly high dividend, has announced that the Investment Manager’s Q3 Investor Presentation is now available.

An extract from the Summary section of the presentation is set out for investors in the Appendix to this announcement.

Appendix: Q3 Investor Presentation Extract

Key Quarter Updates

•     Portfolio

‒    Total NAV Return for the quarter: -0.6% / Total NAV Return to Q3 2023 : +4.1%

‒    During the quarter, one UK loan fully repaid, realising net proceeds of £9.4m, and providing headroom to invest in new deals at enhanced IRRs

‒    Rotation of market bond portfolio into strong senior loans with attractive returns

•     Cash

–    Cash reserves remain targeted at between 5% to 10% of NAV

–    As at 31 December 2023, cash was £12.1m / 3.7% of NAV

•     Dividend

–    Dividends maintained at 3p per quarter, annualised 9.3% yield, based on share price as at 31 December 2023

–    Dividends predominantly covered by net interest income generated from RECI’s assets. The aim is for dividend cover to totally come from net interest income

•     Opportunities

–    The present macroeconomic backdrop is set to continue through 2024, resulting in further constraints in bank lending and alternative sources of capital. The opportunity to provide senior loans at low risk points, for higher margins, is increasingly evident

–    The Company expects to deploy its currently available cash resources to its near term commitments and towards a compelling emerging opportunity set in senior loans

•     Citywire Investment Trust Awards 2023

–    RECI won the Best Performance award for Specialist Debt at Citywire’s London-listed Investment Companies awards held on 01 November 2023. The performance awards are given to investment companies judged to have delivered the best underlying return in terms of growth in NAV in the three years to 31 August 2023.

Real Estate Credit Investments Limited (LON:RECI) is a closed-end investment company that specialises in European real estate credit markets. Their primary objective is to provide attractive and stable returns to their shareholders, mainly in the form of quarterly dividends, by exposing them to a diversified portfolio of real estate credit investments.

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Dominus and Cheyne Capital complete two senior loans for PBSA developments in the City of London

Dominus and Cheyne Capital have completed two senior loans totalling around £400m to provide development finance for two of Dominus’ PBSA developments in the City of London.

The first facility will support a development in Holborn, situated within close proximity of London universities including LSE, Kings College London and Queen Mary University of London.

Once the project is completed it will also provide a mix of cultural and affordable workspaces for creative businesses, leased free of charge by the Creative Land Trust, also included will be a viaduct connecting Holborn Viaduct and Snow Hill, as well as a free public access roof terrace.

The development will consist of 669 beds, with over 35% allocated as affordable accommodation and 64 rooms as wheelchair accessible.

A second loan will fund a development in the heart of the City of London, situated at 65 Crutched Friars between Aldgate and Tower Hill, which will consist of just under 800 beds, of which 35% will be affordable.

The space will also host the Migration Museum, a three-floor, 30,000 sq ft free to enter space.

The schemes, which have a combined GDV of circa £800m, will be developed and operated by Dominus.

Arron Taggart, head of UK investment at Cheyne Capital, commented: “We are pleased to be partnering with Dominus to deliver two developments in the heart of central London which will not only provide a first-class experience for students, but also stand to deliver benefits to the wider community.”

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Cheyne pumps £400m into City student beds

Dominus has secured two senior loans totalling £400m from Cheyne Capital Management to provide development finance for two purpose-built student accommodation developments in the City of London.

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161 NEW HOMES BUILT ON FORMER PRIMARY SCHOOL

A “pioneering” new housing development of 161 new homes on the site of a former primary school features a mix of affordable, shared ownership, key worker, rental and private residences.

On the grounds of the former Dunmail Primary School, Elderberry Walk in Southmead has been designed by Redcliffe-based AHMM architects.

The development is a partnership between Brighter Places, BBRC Homes from Bristol & Bath Regional Capital, and Cheyne Capital.

Brighter Places chief executive, Anna Klimczak, said: “As an innovative Bristol housing association committed to providing much-needed, energy efficient affordable homes in thriving communities we are proud of what we have achieved at Elderberry Walk.

“The high quality, well-designed homes are set in an environment conscious development that showcases what can be delivered with determination and creative thinking.”

On a recent visit to Elderberry Walk, Bristol mayor Marvin Rees said: “We are immensely proud to see the pioneering new housing development at Elderberry Walk open to the public, after this £36m investment in our city, providing much-needed high quality homes for the people of Bristol.

“These 161 new homes, including 77 new affordable homes, add to the 12,534 new homes built in our city since 2016.

“As our city, and country, continues to grapple with the sharp end of the housing crisis, innovative projects such as this which blend practical solutions, sustainability and creativity are becoming increasingly essential.

“This thriving new community, with new homes for keyworkers, can be another great example of the better Bristol that we are building together.”

BBRC Homes chief executive, Ed Rowberry, added: “BBRC Homes is delighted to have played its part in enabling this exemplar of sustainable regeneration and partnership working.

“By matching long term capital with local need, we are continuing to build on our specialism of providing much needed intermediate housing tenures for key workers and local people.”

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Dominvs and Cheyne Capital complete loans for £800 million London PBSA projects

UK: Dominvs, a real estate platform with assets under management of more than £1 billion, and real estate financing firm Cheyne Capital have completed two senior loans worth approximately £400 million to provide development finance for two PBSA developments in the City of London.

The first facility will support a development in Holborn, close to universities such as London School of Economics [LSE], King’s College London and Queen Mary University of London.

Once completed, the project will feature workspaces for creative businesses that will be leased for free by the Creative Land Trust. A viaduct connecting Holborn Viaduct and Snow Hill, as well as a free public access roof terrace, will also be provided.

The 669-bed development will allocate 35 per cent for affordable accommodation, while 64 rooms will be marked as wheelchair accessible.

The second loan will fund a project in the heart of the City of London, at 65 Crutched Friars between Aldgate and Tower Hill. The development will consist of just under 800 beds, 35 per cent of which will be allocated to affordable accommdation.

The space will also feature the Migration Museum,  a three-floor, 30,000 sq ft, free-to-enter space.

Dominvs will develop and operate the schemes, which have a combined gross development value [GDV] of roughly £800 million.

Arron Taggart, head of UK investment at Cheyne Capital, said: “We are pleased to be partnering with Dominvs to deliver two developments in the heart of central London which will not only provide a first-class experience for students, but also stand to deliver benefits to the wider community.”

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RECI – Strong balance sheet to target highly accretive real estate opportunities

Real Estate Credit Investments Limited LON:RECI, a listed investment company paying a regular quarterly high dividend, has announced that its Investment Manager’s monthly Fact Sheet as at 31 January 2024 is now available.

–      As at 31 January 2024, the Company was invested in a diversified portfolio of 34 investments with a valuation of £307.1m.

–      The Company reported a MTM uplift on its Market Bond Portfolio of 0.3p for January 2024.

–      Cheyne released its latest Company Update on Monday 5 February 2024.

–      RECI continues to use its cash to invest in its existing commitments in highly accretive wider opportunities in senior mortgage lending.

–      Cash Balance as at 31 January 2024 was £22.7m.

Real Estate Credit Investments Limited (LON:RECI) is a closed-end investment company that specialises in European real estate credit markets. Their primary objective is to provide attractive and stable returns to their shareholders, mainly in the form of quarterly dividends, by exposing them to a diversified portfolio of real estate credit investments.

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Cheyne provides £143m debt funding to Riverstone

Cheyne Capital Real Estate has provided a £143m development loan to over-65s London accommodation developer and operator, Riverstone, for its latest residence on The Bishops Avenue, Hampstead Heath.

The facility marks the third loan from Cheyne to Riverstone, alongside those given for the Fulham Riverside scheme in 2021, and the Riverstone Kensington development in 2022.

The Bishops Avenue scheme will consist of 93 apartments in addition to amenities such as a concierge, chauffeur service, spa treatment rooms, cinema, restaurant, bar and recovery/physiotherapy suite.

Filippo Alessandria, real estate desk at Cheyne Capital said: “We are very pleased to continue supporting Riverstone with their development… following the success of the Fulham and Kensington residences.

“We particularly celebrate Riverstone’s focus on sustainability, and we look forward to seeing the entirely fossil fuel-free development on The Bishops Avenue come to life.”

John Clark, CFO at Riverstone added: “The demand for new and innovative later living options continues to grow across London, and we are very pleased to be further strengthening our relationship with Cheyne Capital, who share our vision to deliver exceptional residences in prime London locations.

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Seemingly insurmountable problems can have solutions if the ambition is there

And there’s a lot of ambition in evidence of architects addressing key challenges in the January issue of the AJ, writes Emily Booth

It may be freezing where you are, and our suitably austere January cover star (pictured, thank you, Child Graddon Lewis!) isn’t an obviously heartwarming choice. But dig a little deeper and the backstory to this residential-led, mixed-use scheme for Westminster City Council in North Paddington uncovers an estate regeneration project with a difference.

The Harrow Road scheme was changed mid-construction, by a freshly elected Labour council, from being 50 per cent earmarked for private sale (and only 17 homes for social rent) to 100 per cent affordable rent (increased to 77 social homes). On top of that, the project also switched to being powered by 100 per cent renewables (it was originally going to be mixed-mode) through a communal air source heat pump serving the entire scheme, with supplementary PVs.

As the AJ’s Fran Williams explores in her excellent article, the shift presented technical issues, and some design implications are evident – for example where second bathrooms have been removed or stripped back. But, overall, the flats are generously sized, with good views, too. There’s no doubt that relationships will have been key here, with teamwork to the fore.

The Harrow Road scheme is a positive example of two massive challenges facing local communities – the housing and climate crises – being actively addressed at a local level with an engaged public sector client, nimble architect and political will. Of course, it isn’t easy to effect changes such as these. But this project shows that seemingly insurmountable problems can have solutions if the ambition is there.

Indeed, there’s a lot of ambition addressing key challenges in this issue of the AJ. For another example, the first residents have moved into a £24 million build-to-rent scheme in Manchester’s Northern Quarter, designed by local practice Tim Groom Architects. The investment for this ‘modern mill’ came from London-based Cheyne Capital’s Impact Real Estate Fund, set up to tackle the UK’s shortage of affordable housing.

And, while the path to genuine circular construction can be a very bumpy one, take inspiration from a mixed-use project which sees the retrofit and conversion of a historic barrel-loading hall at a former Berlin brewery. Architects Die Zusammenarbeiter (‘The Collaborators’) and their colleagues have gone to extraordinary lengths to reuse materials – it’s a fascinating case study.

None of this is easy. But, as David Green, director of Belsize Architects (and a former Bank of England economist) writes in a letter to the AJ this month: don’t underestimate the desire to ‘get things sorted out’ in 2024.

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Tim Groom unwraps mill-inspired housing in Manchester

The first residents have moved into this £24 million build-to-rent scheme on the edge of Manchester’s Northern Quarter designed by local practice Tim Groom Architects.

The 144 apartment 12-storey project in Oldham Road has been developed by Mulbury City for funder and ‘long-term custodians’ of the building, Cheyne Capital.

The investment funds came from London-based Cheyne Capital’s Impact Real Estate Fund, set up to tackle the UK’s shortage of affordable housing. Around a third of the homes are earmarked for local key workers, such as nurses and teachers, at discounted rents.

The 11,690m² stepped scheme on the ‘long and thin’ plot houses a mix of one-, two- and three-bedroom apartments.

The practice describes the scheme as a modern ‘mill’ building.

Clad in brick, the exterior of the Poplin development – named after the fabric used to make coats on the site during the Second World War – was inspired by the warehouse arches in the surrounding New Cross area and neighbouring Ancoats Conservation Area.

Contractor GMI Construction Group took 24 months to complete the project.

Project data

Location 2 Addington St/Oldham Road, New Cross, Manchester

Local authority Manchester City Council

Type of project Residential

Client Mulbury City for Cheyne Capital

Architect Tim Groom Architects

Interior designer YOUTH

Landscape architect Layer

Planning consultant Deloitte

Structural engineer Ridge

M&E consultant Ameon

Quantity surveyor RLB

Principal designer Rawlings CDM

Lighting consultant Artin

Main contractor GMI Construction Group

Funding Cheyne Capital

Tender date November 2020

Start on site date June 2021

Completion date June 2023

Contract duration 24 months

Gross internal floor area 11,690m²

Form of contractt Design and Build

Annual CO2 emissions 1,836 kg/CO²/m²

Total cost £24 million

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Sale of £80m Mabgate Yard BTR completed by HBD

Developer HBD (Henry Boot) announces the sale of its £80m GDV Mabgate Yard Build to Rent development in Leeds. Cheyne Impact Real Estate have been selected to bring the scheme forward.

HBD secured planning permission for Mabgate Yard in September 2023. The Build to Rent scheme will deliver 310 new apartments alongside amenities including co-working spaces, creative areas and new green space.

Since acquiring the site in December 2020, HBD has provided space for several local charities, including Zarach and MAP Charity, which transformed the building with a 26 ft mural during a workshop for children between 11 and 16 years old.

“Mabgate Yard is a fantastic scheme located in one of Leeds’ most unique neighbourhoods. Following extensive community consultations, we were keen to ensure that the development would be both high quality and have a significant affordable element and identified Cheyne Capital to bring it forward, focusing on delivering social value into an up-and-coming area like Mabgate.

“The development occupies a key strategic gateway site between St James’ Hospital and Leeds city centre and has real potential to create a thriving community in one of the city’s most popular emerging neighbourhoods. As a long-term investor in the city and the wider region, it was important to HBD that we entrust the site to the right buyer with aligned interests. We look forward to seeing Mabgate Yard take shape in Cheyne’s very capable hands.”

Ed Hutchinson, Managing Director (MD), HBD

Cheyne Impact Real Estate launched in 2014 to tackle housing challenges in the UK through tailoring its housing investment strategy for each location and community, with an aim to address the specific local needs.

“We are looking forward to delivering Leeds City Council’s vision through Mabgate Yard. Mabgate is an exciting emerging neighbourhood, full of character, historic buildings and a strong independent creative community. It is undergoing vast regeneration, is on the doorstop of Leeds city centre and offers excellent connectivity into Leeds and surrounding areas. Mabgate Yard will be a best-in-class Build to Rent scheme of up to 310 apartments, providing a significant amount of well-designed amenity space, landscaped gardens, enhanced public realm and ground floor commercial offerings.

“In keeping with our investment philosophy, we will create a high-quality residential scheme to complement the local requirements of this emerging area, adding to our growing portfolio of impact-led and community-centric investments. Mabgate Yard provides an opportunity to deliver a bespoke solution to create the heart of a thriving neighbourhood in an emerging area. We intend to harness the local knowledge of the experienced team we are working alongside, to create a well-considered development for the local community.”

Ehtizaz Chaudhry, Cheyne Impact Real Estate

This latest deal follows the launch of Poplin last year, the alternative asset manager’s impact Build to Rent scheme in Manchester, where 35% of homes are voluntarily reserved for local key workers at discounted rents and all rental increases are capped. Poplin is currently ranked number one out of 55 places to live in Manchester on tenant review platform Homeviews.

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HBD forward-sells £80m Mabgate Yard

Cheyne Impact Real Estate will take the 300-strong Leeds apartment project on following the deal with Henry Boot Group’s development arm.

Cheyne Capital set up its impact real estate fund in 2014. The Leeds deal follows the launch of its Poplin BTR scheme in Manchester last year, where 35% of homes are voluntarily reserved for local key workers at discounted rents and all rental increases are capped.

The Manchester funding deal was agreed in 2021 with Mulbury, and the project delivered by GMI.

HBD secured planning permission for Mabgate Yard in September 2023, with amenities to include co-working and creative spaces and new green space.

Since acquiring the site in December 2020, HBD has provided space for several local charities, including Zarach and MAP Charity, which transformed the building with a 26 ft mural during a workshop for children between 11 and 16 years old.

Ed Hutchinson, managing director at HBD, said: “Following extensive community consultations, we were keen to ensure that the development would be both high quality and have a significant affordable element and identified Cheyne Capital to bring it forward, focusing on delivering social value into an up-and-coming area like Mabgate.

“The development occupies a key strategic gateway site between St James’ Hospital and Leeds City Centre and has real potential to create a thriving community in one of the city’s most popular emerging neighbourhoods.

“As a long-term investor in the city and the wider region, it was important to HBD that we entrust the site to the right buyer with aligned interests. We look forward to seeing Mabgate Yard take shape in Cheyne’s very capable hands.”

Ehtizaz Chaudhry of Cheyne Impact Real Estate, said: “Mabgate Yard will be a best-in-class build-to-rent scheme of up to 310 apartments, providing a significant amount of well-designed amenity space, landscaped gardens, enhanced public realm and ground floor commercial offerings.

“In keeping with our investment philosophy, we will create a high-quality residential scheme to complement the local requirements of this emerging area, adding to our growing portfolio of impact-led and community-centric investments.”

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Countryside Partnerships and L&Q sold 45 resi units in London to Cheyne (GB)

The Acton Gardens joint-venture partnership between Countryside Partnerships (part of Vistry Group) and L&Q has sold 45 residential units at the 3,463-home regeneration of the former South Acton estate in West London to Cheyne Impact Real Estate.

Countryside Partnerships and L&Q have sold Block B2 at Phase 8.2 of the project to Cheyne Impact Real Estate. Block B2 comprises 45 residential units at one of London’s largest regeneration sites, amounting to 2,979m2 in a mix of one and two-bedroom apartments and maisonettes, including accessible units.

Designed by architects Stitch, Phase 8.2 will enhance connections across the development, linking the new Acton Gardens Community Centre at the heart of the neighbourhood with Avenue Road to the north.

Acton Gardens is a 210,436m2 comprehensive redevelopment of the former South Acton estate in west London – a €936m investment creating 3,463 new mixed-tenure homes. The development delivers 50% affordable housing and more social rent homes than previously existed on the estate before the project commenced. 

Adele Sanderson, Cheyne Impact Real Estate, commented: “Cheyne’s mission is to make high quality and attractively situated rental homes available to those who cannot typically afford them. Countryside Partnerships and L&Q have developed the scheme to a very high standard, and we are excited to be able to offer these homes for a better rental experience, as well as to contribute to the stunning Acton Gardens regeneration by offering a further tenure type that caters to local key workers. Creating this affordable rental tenure for key workers at Acton Gardens demonstrates that the thesis we have already proven in other UK cities can be achieved in London also.”

Daniel King, Managing Director of Vistry Group West London, said: “We are proud to have partnered with Cheyne Impact Real Estate to further improve the range of tenure options available at Acton Gardens through this transaction. The 45 new rental homes will complement the 50% affordable housing and private homes that we are delivering at the regeneration, all of which are being built tenure blind, with Cheyne’s professionally managed offering providing a high-quality rental option. The discounted rent available for key workers and capped rental increases was a crucial element of this partnership, and will further improve the inclusivity and equity of Acton Gardens.”

Darren Parker, Director of Development and Regeneration at L&Q commented: “We are very proud of our track record at Acton Gardens and the work we have put in together with our partners Vistry/Countryside and LB Ealing for the past ten years. Acton Gardens is a truly inclusive, successful community, diverse and open to all and the addition of these new key worker homes will complete this picture. We are therefore very happy to welcome Cheyne Impact Real Estate on board in this partnership and delighted to welcome the new residents to the local community at Acton Gardens.” 

Shaan Makwana, Associate Partner, BTR, Carter Jonas, added: “This transaction demonstrates the appetite for collaboration between impact investors and sustainable, high-quality house builders. Acton Gardens is a prime example of Countryside’s ability to place-make and quickly establish new communities within regeneration schemes. Our team is experiencing heightened investment activity within the living sector and a continuous flow of new entrants and strategies into the market. Real Estate impact investors in the UK play a crucial role in fostering positive change by channelling investment towards sustainable and socially responsible projects. Their commitment to creating lasting impact sets a commendable standard for our industry. The stability and long-term income streams associated with living sector projects continue to compel investors in such an economically dynamic environment.”

Countryside Partnerships and L&Q were advised by Carter Jonas.

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Cheyne Impact Real Estate purchases 45 residential units at Acton Gardens

Cheyne Impact Real Estate has bought 45 residential units from joint venture partners Countryside Partnerships and L&Q at Acton Gardens.

Countryside and L&Q, who are delivering the regeneration of the former South Acton estate in West London in partnership with Ealing Council, have sold Block B2 at phase 8.2 of the project to Cheyne.

The block, which offers a mix of one and two-bedroom apartments and maisonettes, was designed by architects Stitch.

Adele Sanderson, from Cheyne Impact Real Estate, said: “Cheyne’s mission is to make high quality and attractively situated rental homes available to those who cannot typically afford them. Countryside Partnerships and L&Q have developed the scheme to a very high standard, and we are excited to be able to offer these homes for a better rental experience, as well as to contribute to the stunning Acton Gardens regeneration by offering a further tenure type that caters to local key workers. Creating this affordable rental tenure for key workers at Acton Gardens demonstrates that the thesis we have already proven in other UK cities can be achieved in London also.”

Daniel King, managing director of Vistry Group West London, added: “We are proud to have partnered with Cheyne Impact Real Estate to further improve the range of tenure options available at Acton Gardens through this transaction. The 45 new rental homes will complement the 50% affordable housing and private homes that we are delivering at the regeneration, all of which is being built tenure blind, with Cheyne’s professionally managed offering providing a high-quality rental option. The discounted rent available for key workers and capped rental increases was a crucial element of this partnership, and will further improve the inclusivity and equity of Acton Gardens.”

Darren Parker, director of development and regeneration at L&Q, said: “We are very proud of our track record at Acton Gardens and the work we have put in together with our partners Vistry/Countryside and LB Ealing for the past 10 years. Acton Gardens is a truly inclusive, successful community, diverse and open to all and the addition of these new key worker homes will complete this picture. We are therefore very happy to welcome Cheyne Impact Real Estate on board in this partnership and delighted to welcome the new residents to the local community at Acton Gardens.”

Shaan Makwana, associate partner, BTR, at Carter Jonas, which advised the joint venture partners on the sale, said: “This transaction demonstrates the appetite for collaboration between impact investors and sustainable, high-quality house builders. Acton Gardens is a prime example of Countryside’s ability to place-make and quickly establish new communities within regeneration schemes.

“Our team is experiencing heightened investment activity within the living sector and a continuous flow of new entrants and strategies into the market. Real estate impact investors in the UK play a crucial role in fostering positive change by channelling investment towards sustainable and socially responsible projects. Their commitment to creating lasting impact sets a commendable standard for our industry. The stability and long-term income streams associated with living sector projects continue to compel investors in such an economically dynamic environment.”

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Cheyne Impact Real Estate acquires homes at Acton Gardens

Cheyne Impact Real Estate has acquired 45 residential units at Acton Gardens from the joint venture between Countryside Partnerships (part of Vistry Group) and L&Q, a mixed-tenure developer in partnership with Ealing Council.

“We are very proud of our track record at Acton Gardens and the work we have put in together with our partners Vistry/Countryside and LB Ealing for the past ten years. Acton Gardens is a truly inclusive, successful community, diverse and open to all and the addition of these new key worker homes will complete this picture. We are therefore very happy to welcome Cheyne Impact on board in this partnership and delighted to welcome the new residents to the local community at Acton Gardens.”

Darren Parker, Director of Development and Regeneration, L&Q

Advised by national property consultancy Carter Jonas, Countryside Partnerships and L&Q have sold Block B2 at Phase 8.2 of the project to Cheyne Impact Real Estate. Block B2 comprises 45 units – a mix of one- and two-bedroom apartments and maisonettes including accessible units – amounting to 32,067 sq ft.

“This transaction demonstrates the appetite for collaboration between impact investors and sustainable, high-quality house builders. Acton Gardens is a prime example of Countryside’s ability to place-make and quickly establish new communities within regeneration schemes. 

“Our team is experiencing heightened investment activity within the living sector and a continuous flow of new entrants and strategies into the market. Real Estate impact investors in the UK play a crucial role in fostering positive change by channelling investment towards sustainable and socially responsible projects. Their commitment to creating lasting impact sets a commendable standard for our industry. The stability and long-term income streams associated with living sector projects continue to compel investors in such an economically dynamic environment.”

Shaan Makwana, Associate Partner, BTR, Carter Jonas

Cheyne Impact Real Estate will continue its strategy of delivering additionality and inclusivity at Acton Gardens. The company will provide a professionally managed rental offering to a mix of private and key worker tenants on a tenure blind basis.

Introducing a new affordable tenure type at this phase of Acton Gardens, key workers will benefit from discounted rent, which is calculated to be affordable and sustainable based on their net disposable income. Other residents living in Block B2 will also benefit from capped rental increases.

“Cheyne’s mission is to make high quality and attractively situated rental homes available to those who cannot typically afford them. Countryside Partnerships and L&Q have developed the scheme to a very high standard, and we are excited to be able to offer these homes for a better rental experience, as well as to contribute to the stunning Acton Gardens regeneration by offering a further tenure type that caters to local key workers. Creating this affordable rental tenure for key workers at Acton Gardens demonstrates that the thesis we have already proven in other UK cities can be achieved in London also.”

Adele Sanderson, Cheyne Impact Real Estate

Designed by architects Stitch, Phase 8.2 will enhance connections across the Acton Gardens development, linking the new Community Centre at the heart of the neighbourhood with Avenue Road to the north.

Acton Gardens is a 52-acre comprehensive redevelopment of the former South Acton estate in west London – a £800m investment creating 3,463 new mixed-tenure homes. The development delivers 50% affordable housing and more social rent homes than previously existed on the estate before the project started.  

“We are proud to have partnered with Cheyne Impact Real Estate to further improve the range of tenure options available at Acton Gardens through this transaction. The 45 new rental homes will complement the 50% affordable housing and private homes that we are delivering at the regeneration, all of which is being built tenure blind, with Cheyne’s professionally managed offering providing a high-quality rental option. The discounted rent available for key workers and capped rental increases was a crucial element of this partnership and will further improve the inclusivity and equity of Acton Gardens.” 

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RECI Releases November Fact Sheet: Insights into European Real Estate Credit Markets

Real Estate Credit Investments Limited (LON:RECI), a closed-end investment company focused on European real estate credit markets, has launched its monthly Fact Sheet for November 2023. The Fact Sheet, which can be viewed on the company's website company, provides an overview of RECI's investment portfolio as of November 30, 2023.

At the end of November 2023, RECI had a diversified portfolio comprising 35 investments valued at £322.6 million. The company continues to identify and capitalize on lucrative opportunities in senior mortgage lending, ensuring profitable returns for its shareholders.

However, the collapse of Signa and the subsequent disruption in the German real estate and banking market has led RECI to reassess the recovery valuation of one of its legacy mezzanine positions exposed to an asset in Berlin. As a result, the company has conservatively marked down the asset, resulting in a small loss of 1.1 pence per share to the Net Asset Value (NAV). Importantly, this loss is reported but not realized.

Despite this minor setback, RECI maintains a healthy cash balance of £16.9 million at the end of November. Additionally, the company has declared a dividend of 3.0 pence per share to be paid on January 5, 2024, providing shareholders with a steady income stream.

The full breakdown of changes in NAV per share can be seen in the table below:

– October NAV: 148.4p

– Interest income: 1.0p

– Asset valuations: (1.1)p

– Rate exchange rate: 0.1p

– Expenses: (0.3)p

– November NAV: 148.1p

RECI remains committed to its mission of providing attractive and stable returns to its shareholders through its experience in the European real estate credit markets. With a well-diversified investment portfolio and continued strategic initiatives, the company appears poised to continue its success in the coming months.

Frequent questions

What is RECI?

Real Estate Credit Investments Limited (LON:RECI) is a closed-end investment company specializing in the European real estate credit markets.

What is the objective of RECI?

RECI's main objective is to provide attractive and stable returns to its shareholders through a diversified portfolio of real estate credit investments.

How is RECI providing returns to shareholders?

RECI primarily generates returns to shareholders in the form of quarterly dividends.

What happened to RECI's inherited mezzanine position?

Due to the collapse of Signa and the disruption in the German real estate and banking market, RECI has conservatively marked down its legacy mezzanine position, resulting in a small reported loss.

When will the dividend be paid?

The declared dividend of 3.0 pence per share will be paid on January 5, 2024.

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NHS Staff Celebrate New Homes At Elderberry Walk

Local NHS workers are rejoicing as they settle into Elderberry Walk, a Southmead based development delivering 161 new homes in Bristol. The collaborative effort involving BBRC Homes, Cheyne Social Property Impact Fund, Brighter Places Housing Association, and Bristol City Council aims to provide affordable housing for locals and key workers.

BBRC Homes has secured 61 properties on a long lease, including 21 with a 10 per cent discount for key workers, 27 for long term market rent, and 13 Rent to Buy homes. The completion of the final 24 one and two bed flats, now available for key workers and open market rent, marks a milestone in the project.

For key worker flats, prioritisation is based on local connections, family ties in Bristol, and income thresholds, targeting low to middle income earners. The six two bed flats for open market rent generated immense interest, with 54 applications within the first 36 hours, and 90 per cent now occupied.

Ed Rowberry, CEO of BBRC Homes, praises Elderberry Walk as a groundbreaking scheme addressing the city’s housing crisis. The development received accolades, winning ‘Best large scheme in planning’ at the National Housing Awards and earning recognition from the World Economic Forum.

Ajeesh Abraham, a care assistant at Southmead Hospital and one of the new tenants, expresses joy over the convenient location that allows walking to work. Medeah Ankrah, a health care assistant, appreciates the proximity to her workplace and the inviting atmosphere of the estate.

Elderberry Walk, initiated in 2017 and set to complete by the end of 2023, emphasizes sustainability with an EPC B rating for all units and promotes healthy living through cycle routes, green spaces, and food production opportunities. The development offers six home types to foster a diverse community.

In light of the persistent housing challenges in the UK, particularly in the South West, where median house prices are 10 times median salaries, Elderberry Walk stands out as a vital solution addressing the growing need for affordable and quality housing in Bristol.

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Real Estate Credit Investments: Resilience of the NAV (LON:RECI)

Real Estate Credit Investments Ltd (LON:RECI) is the topic of conversation when Hardman and Co’s Analyst Mark Thomas caught up with DirectorsTalk for an exclusive interview.

Q1: Your recent report on Real Estate Credit Investments sits behind a disclaimer, what can you tell us about that?

A1: It is just the standard disclaimer that many investment companies have. In essence, for regulatory reasons, there are some countries (like the US) where the report should not be read. It is not a simple asset class, and the report should only be looked at by professional/qualified investors.

Q2: Your recent report was called ‘Portfolio management to optimise risk/reward’, what can you tell us about it?

A2: In previous notes, we have reviewed why we believe the fund has procedures and practices in place that limit downside losses to help ensure the resilience of the NAV.

In this note, we explore further how portfolio management helps optimise risk/reward with a dynamic approach to bond portfolio allocation, leverage, top 10 concentrations, geographical sectors, and duration.

Their portfolio is not a static, long-duration, totally illiquid book. The key message that we believe investors should take away is that they are an actively managed portfolio where Cheyne’s footprint and average loan life of just 1.5 years allows them to rapidly take advantage of opportunities as they arise.

It is a balanced management with, for example, the overall level, and mix, of leverage reflecting Cheyne’s view of the risk/reward at any time.

In terms of what this brings to investors, we highlight that Company’s NAV performance was recognised in the recent Citywire award.

Q3: So, tell us a bit more about what has changed in the asset mix of portfolio?

A3: Since 2016, the book has been migrating towards an all-senior loan book. The move to senior debt has involved not only a shift from mezzanine and other loans but also, in 2023, a re-allocation away from bonds.

The chart in our report shows how this has progressed through the year with the gross value of bonds just over a tenth of that at the start of the year. The advantages of being senior debt include being repaid earlier in the event of customer difficulties, and retaining absolute governance, covenants and control from its bilateral singular lending relationships. The Cheyne-controlled weighted average LTV on total portfolio by commitment value is around 60%. These three factors mean that the loss in the event of default is reduced.

Our note also examines how Cheyne has changed the sector, geographical, and duration mix, as well as how the top exposures have changed over time.

Q4: And leverage in portfolio has changed too, what has happened there?

A4: The fund has used different types of leverage for different assets, with the market bond portfolio significantly funded by REPOS and the use of asset-specific finance with some loans.

There has been a sharp reduction in overall leverage throughout 2023, from 36.2% NAV in January to 20.9% in October. They have chosen to reduce leverage during more uncertain times, bearing in mind the pressure from the rise in cost of funds (balance sheet leverage average cost up 2.7% on January 2023). Lower leverage in uncertain times is not a one-off and has been seen before (end-2018 balance sheet leverage 38.1% NAV reduced to 21.6% end-2020).

Secondly, the mix has changed with the increasing prevalence of asset-specific finance, which, typically, is longer term but whose cost has increased less than short-term REPOS.

Q5: What was the award it recently won?

A5: Real Estate Credit Investments won the best performance award for Specialist Debt at Citywire’s London-listed Investment Companies awards in November 2023. The award is given to the investment companies judged to have delivered the best underlying return, in terms of growth in NAV, in the three years to 31 August 2023.

Q6: And the risks?

A6: The risks of a recession are clear to see, with higher interest rates, lower disposable income, falling property prices (both residential and commercial, compounded by distressed sellers of assets), rising social tensions, governments facing large fiscal deficits and central banks’ inflationary pressures.