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RECI bullish on real estate debt

By BFN News | 12:23 PM | Friday 11 February, 2011

Closed-ended Real Estate Credit Investments Limited said it had invested the net proceeds from its recent capital raising at yields in line with its target return. The company raised €27m in September via a placing and open offer and a bonus issue of preference shares. It said that in the period from September 30 to January 31 it invested €26.2m at a weighted average expected yield of 13.8%, adding to its real estate debt portfolio. RECI said that market conditions currently supported its view that it could invest profitably in dislocated assets. 'The company believes that real estate debt investments, in particular residential and commercial mortgage-backed bonds, should deliver attractive returns and a favourable risk/reward profile. 'The shift towards publicly-traded securities by the company is providing greater transparency of asset prices and more liquidity. 'RECI will continue to manage the SME, European Mortgage and UK Mortgage portfolios with a high degree of diligence. 'The priority remains to identify the right opportunities to sell such assets. At the same time we are closely monitoring any developments that affect asset values, unemployment levels in Portugal and the Euribor rate.' At January 31, the real estate debt portfolio consisted of 85 bonds at a cost of €53.9m and a nominal value of €97.7m. Cash flows from the bond portfolio totalled €1.9m in the December quarter, up from the €0.8m in the previous quarter. Shares were down 0.02p at 1.09p. Story provided by

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