Using Place-Based Impact Investing as an approach to attract external investment

Local authorities can unlock many benefits by adopting a Place-Based Impact Investing (PBII) approach, as Laura Bridges, director at 31ten Consulting, and Mark Hall, senior programme manager at the Impact Investing Institute, explain.

As the new government prepares its first budget amid significant public finance shortfalls, the public sector remains under pressure to deliver more with less. This challenge is coupled with a renewed focus on driving local economic growth and the potential for fiscal devolution within local government.

To navigate these pressures, innovative investment approaches are emerging like Place-Based Impact Investing (PBII), helping to attract external investment and shape markets to deliver strategic priorities, place-making, and long-term financial sustainability.

Responding to the market: market failure vs market shaping

Market intervention presents tangible opportunities for the public sector to play a strategic role in the economic development of its communities, although balancing market efficiency with avoiding stifling innovation and competition is key.

Traditionally, public sector interventions have focused on addressing market failures where the private sector fails to meet market demand, such as access to finance for underrepresented groups. Historically, government intervention has involved one-way grants or contract payments without expectations of financial returns, which is increasingly unsustainable.

Instead of responding to failures, a market shaping approach recognises that markets can be intentionally influenced and prioritised to achieve specific social, economic, and environmental goals. This approach allows the public sector to strategically steer investment towards opportunities that align with its strategic priorities, fostering resilient and inclusive economies.

31ten took this targeted approach in supporting Camden Council to tackle inequality and strengthen its communities through preparing a business case for the funding, design and structure of a Community Wealth Fund. The £30m Community Wealth Fund is a social impact investment fund to grow a more inclusive economy in the borough, provide different types of investment to local businesses, organisations and people to develop their ideas and grow their impact in Camden, and support those who have struggled to access finance through existing routes.

Mason & Fifth to launch Taxi House in Westbourne Park (GB)

Mason & Fifth has announced the launch of its third and largest site yet, Taxi House, on the Grand Union Canal in Westbourne Park.

Owned by alternative investment manager Cheyne Capital, Taxi House is a mixed-use redevelopment of the former London Taxi Drivers’ Association headquarters. It is the first redevelopment of its kind to achieve a BREEAM Outstanding certification with over 90% of blue and green roofs, meticulous material selection and efficient plant design. As well as its sustainability credentials, the redevelopment has extensive amenity offerings and is located in close proximity to public amenities in the popular West London area.

Works on the site began in 2022 and are due to be completed in June 2025, at which time it will open under the name Mason & Fifth, Westbourne Park. Bookings will be open for long- and short-term stays from January 2025 with a waitlist open from September 2024. The development has been designed by architects Allford Hall Monaghan Morris (AHMM) and interior designers Tigg & Coll, alongside the Mason & Fifth in-house design team and Interior Address.

Mason & Fifth, Westbourne Park will consist of 332 private studios, each furnished with its own kitchen and en-suite bathroom. The property will offer ‘Out & About’ studios without kitchens for those planning on spending more time out than in. Residents and guests will have access to on-site amenities, including a canal-side dining concept, a wellness studio, and a panoramic 10th-floor lounge and terrace with a cinema and listening lounge. Additionally, there will be artist studio spaces for local artists and a pop-up retail space for well-known and emerging brands, as well as local creatives.

David Silver, Co-Founder at Mason & Fifth, said: “We are thrilled to have been selected by Cheyne Capital to operate this ‘jewel-in-the-crown’ project and bring our signature home-away-from-home ethos to Taxi House. It represents a confidence in the brand that we have consciously created, developed and iterated over the last five years. Our centrally located buildings offer complete flexibility and encourage meaningful social connections through intelligent design, all underpinned by our wellness, workspace and F&B proposition to create a complete lifestyle ecosystem and an enhanced living experience. Cheyne Capital’s redevelopment of Taxi House is an outstanding project that has prioritised sustainability and quality, which we are proud to be part of. This will be our third and largest site to date, with schemes in Belsize Park and East London to follow, as we continue to grow our London portfolio and explore opportunities further afield.”

Filippo Alessandria of Cheyne Capital, added: “There continues to be strong demand for high-quality mixed-use schemes with meaningful sustainability credentials and a community-led focus, which are exactly the kind of projects we like to pursue at Cheyne Capital. We are pleased to partner with Mason & Fifth on this flagship asset, which shares our ambition to create a truly diverse space in West London for people to live, work and relax. We are proud to have developed a historic site with industry-leading standards, ensuring it will thrive as a cultural destination that will provide much-needed flexible living solutions to the London market.”

Brent Cross Town

Brent Cross Town is a vast 180-acre (72.8 hectare) mixed-use park town being developed as part of the Brent Cross Cricklewood regeneration programme to create a new community in Barnet, London, UK.

Brent Cross South Limited Partnership (BXS LP), a joint venture between Barnet Council, the local authority of London and the property developer Related Argent (previously Argent Related), is developing the project with an estimated investment of £8bn ($10.1bn).

The construction at Brent Cross Town began in 2020. The project prioritises the creation of a health-promoting environment and commits to a comprehensive strategy for sustainable living.

Location

Brent Cross Town benefits from a prime location in Zone 3 of London’s transport network, close to the M1 motorway and within an hour’s travel from five London airports.

The town will be served by Brent Cross West station and Brent Cross Underground station on the Edgware branch of the Northern Line. Pedestrian and cycling routes are also available throughout Brent Cross Town.

Brent Cross Town details

Brent Cross Town, formerly known as Brent Cross South, is being developed as part of the 141-hectare (370 acres) Brent Cross Cricklewood Regeneration masterplan, which also includes Brent Cross North. Brent Cross North focuses on redeveloping the existing Brent Cross Shopping Centre and its surroundings.

Brent Cross Town will create a new, vibrant community with residential, commercial and recreational spaces. It will feature 50 acres of green areas with parks and playing fields such as Claremont Park and Exploratory Park, 6,700 new homes and a new town centre with more than 50 venues for shopping, dining and entertainment.

It will introduce 150,000ft² (13,935m²) of indoor sports amenities and three million ft² of office space to accommodate more than 25,000 people. Additionally, it will feature eight public squares, community facilities and improved pathways for walking and cycling.

The plan also includes provisions for student housing, the renovation of three local schools and the development of a new school.

Brent Cross Town hosts a temporary 8,000ft², three-storey building Visitor Pavilion, which opened in December 2021. The unique timber structure provides visitors with a glimpse into the living spaces. It will be disassembled once the project is completed.

Brent Cross Town residential buildings details

Brent Cross Town will feature a variety of residential properties, including The Ashbee and The Delamarre, which will offer a selection of studio to three-bedroom homes, ranging from 487ft² to 1,096ft², with views of Claremont Park.

The Ashbee and The Delamarre parkside apartments will together offer 277 new homes with high-quality finishes such as stone& nbsp;countertops, connected living with excellent Wi-Fi and mobile signals, intelligent storage and the latest technology, such as energy-efficient LEDs, underfloor heating and instant boiling water taps. The interior designs of The Ashbee and The Delamarre were influenced by the Arts & Crafts Movement and Victorian mansion blocks respectively.

Several sites within Brent Cross Town have been allocated for residential purposes. Plot 11 will accommodate 352 homes, offering a mix of duplexes and apartments, enhanced by retail outlets and restaurants at street level.

Plots 12 and 202 aim to provide a total of 290 residences, ranging from studio to four-bedroom homes. Plot 12 will consist of two structures arranged in an L shape, and Plot 202 with a U shape, each incorporating a small park with a play area for children.

Plot 13 will house six apartment complexes, inclusive of a community hub, a nursery and 365 homes.

Adjacent to Claremont Park, Plot 14 will deliver 281 residential units, from studios to three-bedroom apartments, alongside ground-floor maisonettes. Plot 15, which also overlooks Claremont Park, is set to comprise approximately 280 homes within four structures.

To the north of the forthcoming high street, Plot 25 consists of three interconnected blocks, providing 660 student bedrooms with commercial units on the ground level.

800 properties will be developed for purchase and lease, including 249 Build-to-Rent (BtR) homes. The construction of BtR homes commenced in October 2022, with availability expected in the summer of 2025.

Audley Group and Senior Living Investment Partners (SLIP) have planned Brent Cross Town’s inaugural retirement village, which is set to feature 150 homes.

Brent Cross Town office buildings

The first three office buildings at Brent Cross Town were launched in January 2021. The buildings are situated around a new main square, adjacent to the entrance of the new Brent Cross West station.

3 Copper Square, a building for educational and office use, will offer 239,000ft² of office  accommodation across 14 storeys, complemented by retail space at street level. The facility is scheduled to open in the third quarter of 2026.

Sheffield Hallam University is set to initiate its inaugural campus beyond Yorkshire on the 3 Copper Square, taking up approximately an area of 110,000ft² over the lower six storeys of the building. The structure will incorporate a cross-laminated timber and concrete framework, exposing timber soffits.

2 Copper Square, a building exclusively for office use, is poised to become the UK’s most extensive full timber construction, providing 138,000ft² of workspace over nine storeys. It includes a shared rooftop terrace and a ground-floor establishment for food and beverages.

4 Brent Cross Town is a hybrid timber office structure that will extend over 247,500ft² and 13 storeys, accommodating office and retail spaces. The building is distinguished by a remarkable lantern-like feature on the rooftop.

Claremont Park and Exploratory Park details

 Exploratory Park is a 0.8 hectare temporary park on the site of Plot 11, opened in August 2020. It is a recreational space in Brent Cross Town for both children and adults, featuring various indoor sports amenities.

Opened in June 2022, Claremont Park was the first permanent park to be delivered among the seven planned parks in Brent Cross Town. The 4.5-acre park incorporates the existing Claremont Way Open Space.

300 trees have been planted to bolster the local ecology. The park is a focal point for children’s activities, including a basketball hoop, and designated zones for scooting and skating. It has provisions for water features, natural trails and a kiosk. It acts as a communal area for social gatherings and is adorned with a mobile art piece called The Maze.

 Sustainability details

The heat network at Brent Cross Town is anticipated to deliver low-carbon heating and hot water throughout its residential, office, retail and commercial areas. The network features the UK’s most substantial heat pump installation, setting a new benchmark for renewable heat standards in the industry.

The town has achieved a 40% reduction in embodied carbon and will utilise 100% renewable energy sources for all its energy requirements. By 2030, Brent Cross Town targets to achieve a net zero carbon status.

Contractors involved

Galldris Group is executing the groundwork and infrastructure for Brent Cross Town with Allies and Morrison crafting the masterplan. Woods Bagot is handling the interior design for the initial phase of residential buildings.

Gillespies is leading the landscape planning and the public realm masterplan. Vattenfall was commissioned to design the heat network, while Waterman Group is the principal consultant on infrastructure and environmental activities. Munnelly Support Services is providing logistics and security.

Maccreanor Lavington, Whittam Cox Architects and Townshend Landscape Architects are involved in design and architectural work across different plots. JJ Rhatigan, Glenn Howells Architects, Fusion Group, Cheyne Capital and others are also playing key roles in the development of various plots.

HTA Design is the designer of Claremont Park, and DnCO created the design for the exhibition space.

Shedkm Architects is responsible for the design of 3 Copper Square, with BAM acting as the main contractor. Hawkins Brown and Studio Egret West designed the Brent Cross Office buildings 2 and 4, respectively.

Michael Grubb Studio is managing the lighting designs, and Buro Happold is the strategic energy and utilities advisor.

Argent, in collaboration with Invesco Real Estate, will develop 800 properties for purchase and lease within the town.

A few other contractors involved in the project are Bennetts Associates, David Morley Architects, dRMM,  Steer, OFR and Gardiner & Theobald.

Landlords pursue McKillen companies over rent claims

Paddy McKillen Jnr’s Press Up empire is in the spotlight again after landlords at two of the hospitality group’s Dublin locations launched High Court actions over claims of unpaid rent.

The Business Post reports that the owners of the buildings playing host to two Press Up restaurants – Angelina’s, on Percy Place in Dublin 4, and Mackenzie’s, on Hanover Quay in Dublin 2 – initiated proceedings against The Workman’s Club Limited, one of the main operating companies in the group.

According to court documents, Ilim Property Fund, an Irish Life-connected investment fund and owner of the Percy Place building, alleges it is owed nearly €119,000 in unpaid rent and other charges as of April 2024. Separately, a company linked to the family office of Amancio Ortega – the Spanish billionaire Zara founder, and owner of the Opus Building on Hanover Quay – is seeking judgment for €203,000 against Workman’s over unpaid rent and other costs.

It comes at a time of upheaval for the group where long-term associates of Paddy McKillen Snr have just been appointed to a number of companies across the group. London-based alternative lender Cheyne Capital is also reportedly poised to take a majority stake in the business.

Touchstone appointed managing agent for Cheyne Impact Real Estate’s latest scheme in Acton Gardens

Cheyne Impact Real Estate and Touchstone have joined forces to deliver inclusive new homes in wider regeneration project.

Touchstone, the residential property management firm, is pleased to announce that they have been appointed as the managing agent for an exciting new development with a community centric approach in the heart of Acton Gardens, following Cheyne Impact Real Estate’s acquisition of the modern apartments. This acquisition is part of an £800m regeneration of the area, from a joint venture between Ealing Council, Countryside Partnerships and UK housing association L&Q.

Touchstone specialises in managing several asset classes, from single-family homes to Build to Rent across a range of tenures. The third-party managing agents have been able to support Cheyne Impact Real Estate in the delivery of their forward-thinking Build to Rent scheme, Lina, with the ambition that it will act as a force for good within Acton Gardens’ existing community, as well as ensuring the project is commercially viable.

As an integral part of the wider regeneration project in West London, these homes will offer customers beautifully designed, high-quality homes with the benefit of a professionally managed rental offering.

Alongside the open market rent properties, a quota of the new homes will offer discounted rent to key workers, adhering to Cheyne Impact Real Estate’s commitment of creating lasting impact by delivering additionality and inclusivity.  Touchstone will play a major role in line with Cheyne Impact Real Estate’s strategy, providing an expert full operational management solution.

The one-bedroom, two-bedroom and maisonette apartments have been designed with an enhanced customer living experience in mind, and are therefore all equipped with a balcony, underfloor heating, delivered fully furnished, pet friendly, and accompanied by a bespoke customer app that will be used for all customer communications.

BNY agrees deal to move into Marlet’s Shipping Office building in Dublin

US financial services giant BNY is to move its Dublin staff into a brand new Liffeyside office in Dublin’s south docklands.

The New York-headquartered firm has agreed to take four floors of the ultra modern eight-storey Shipping Office on Sir John Rogerson’s Quay.

The deal, which follows reports that tech giant Apple is also seeking space for hundreds of staff in the city, will be seen as a much-needed vote of confidence in the capital’s recently moribund commercial property sector.

BNY already operates an extensive operation out of two offices on either side of the Liffey, as well as in Cork and Wexford. The deal with Marlet Property Group will see it move all of its Dublin staff into the Shipping Office, where it will have space for up to 800 people.

Staff were informed of the move – expected to happen in mid-2025 – at a meeting on Thursday afternoon by the firm’s Ireland country manager Paul Kilcullen.

“BNY has signed a lease for four floors of The Shipping Office on Sir John Rogerson’s Quay in Dublin,” said Mr Kilcullen, who also serves as BNY’s CEO of Funds Services Ireland, in a statement.

“Ireland is a key location for BNY, and our high-performing teams in Dublin will come together in one office in a prime location at the heart of the city’s international financial services centre.”

Mr Kilcullen said that the deal would provide the firm with “a state-of-the-art environment that will further elevate the experience for our clients and enhance our culture, foster collaboration, and drive innovation. We expect to move into our new space around mid-2025.”

Built by developer Pat Crean’s Marlet Property Group on the site of a former shipping company office, the building in total is 177,000 sqm. Last July Marlet finalised a €102m refinancing facility with Cheyne Capital Real Estate after it completed the building.

BNY is 30 years in Ireland since opening its first office in 1994 and last year launched its Global Digital R&D Hub in Dublin to drive innovation in data analytics as a way to identify trends to advise BNY clients globally. 

The announcement of the Dublin office move comes in the same week that the 240-year-old financial services company launched an updated brand, changing from BNY Mellon to become BNY.

RECI 10.4% over year is one of the highest dividend yields of UK stocks

Real Estate Credit Investments Ltd (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 2024. The dividend is to be paid on 26 July 2024 to Ordinary Shareholders on the register at the close of business on 5 July 2024. The ex-dividend date is 4 July 2024.

RECI’s 12 pence per share of dividends payable in respect of the year ended 31 March 2024 equates to 10.4% at 31 March 2024.

Real Estate Credit Investments 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.

Real Estate Credit Investments reports annual profit uplift and 10.4% dividend (LON:RECI)

Real Estate Credit Investments Limited (LON:RECI) has announced its Annual Report and Audited Financial Statements for the year ended 31 March 2024.

Outline of the Annual Report

1. Overview and Highlights

• Introduction: Overview of Real Estate Credit Investments Limited (RECI) and its market positioning as a specialist investor in UK and Western European real estate markets.
• Key Figures: Net assets, NAV per share, total assets, net profit, and share price performance as of 31 March 2024.
• Dividend Stability: RECI’s consistent quarterly dividends and its stable income amidst changing interest rate environments.

2. At a Glance

• Investment Strategy: Details about RECI’s approach to investing in real estate debt secured by commercial or residential properties in Western Europe.
• Portfolio Composition: Breakdown of the investment portfolio, including the number of positions, types of assets, geographic distribution, and yield metrics.

3. Chairman’s Statement

• Performance Overview: Commentary on the company’s performance, market conditions, and strategic decisions.
• Future Outlook: Insights on expected market conditions, potential interest rate changes, and the company’s preparedness for future opportunities.

4. KPIs and Financial Highlights

• Key Performance Indicators (KPIs): Detailed financial metrics including NAV per share, share price, discount, leverage, earnings per share, dividends, and total NAV return.
• Financial Performance: Comparative financial performance for the years ending 31 March 2023 and 2024.

5. Business and Strategy Review

• Strategic Framework: Objectives, performance highlights, and strategies to exploit market opportunities and deliver stable dividends.
• Portfolio Management: Overview of investment activities, repayments, dividends paid, and the composition of the investment portfolio.

6. Investment Manager’s Report

• Market Analysis: Macroeconomic backdrop and its implications for real estate assets.
• Investment Strategy: Approach towards senior real estate lending and management of the investment portfolio.
• Performance and Outlook: Insights into the performance of the investment portfolio and future strategy to maintain and enhance returns.

7. Stakeholder Engagement

• Engagement Activities: Overview of how the company engages with its stakeholders, including shareholders, service providers, and the community.
• Diversity and Inclusion: Details on the company’s approach to diversity and inclusion within its governance framework.

8. Sustainability Report

• ESG Integration: Description of how environmental, social, and governance (ESG) considerations are integrated into the company’s investment process.
• Sustainability Initiatives: Examples of sustainable investment projects and their impact.
• Cheyne’s ESG Policies: Details on the investment manager’s ESG policies and partnerships to enhance sustainability.

Build to Rent (BTR) developments: Transforming the UK housing market

The Build to Rent (BTR) sector is rapidly expanding in the UK, introducing innovative solutions to meet the increasing demand for high-quality rental properties, writes Build Warranty

This growth is marked by new schemes and initiatives that aim to enhance the living experience for tenants and streamline property management for investors.

New schemes and innovations in the Build to Rent sector

One of the latest developments in the BTR sector is the launch of the UK’s first Single-Family Housing (SFH) BTR TV advert by Simple Life.

This advert is part of a broader brand awareness campaign designed to highlight the benefits of SFH BTR properties, which combine the privacy and space of a single-family home with the convenience of professionally managed rental services.

This initiative reflects the growing trend towards more flexible and family-friendly rental options, catering to the diverse needs of the modern renter.

In addition, Ascend has launched an industry-first online SFH BTR operational expenditure tool. This innovative tool provides investors with detailed insights into the operating costs associated with managing SFH BTR properties.

By offering a comprehensive view of expenses, the tool helps investors make informed decisions, optimise their investment strategies, and improve overall financial performance.

Enhancing property management

The Build to Rent sector is also witnessing advancements in property management practices.

For example, Touchstone has been appointed as the managing agent for Cheyne Impact Real Estate’s latest scheme in Acton Gardens. This appointment underscores the importance of professional management in ensuring the success of BTR developments.

Touchstone’s expertise in managing large-scale rental properties ensures that tenants receive high-quality services and that properties are maintained to the highest standards.

Furthermore, organisations like BW Build Warranty play a crucial role in the BTR sector by providing comprehensive insurance and warranty services.

BW Build Warranty offers structural warranties and latent defects insurance for new builds, which are essential for safeguarding investments and ensuring the long-term durability of properties.

Their services help reduce risks for developers and investors, fostering confidence and stability within the BTR market.

Government support and regulation

Government policies and regulations are also shaping the growth of the Build to Rent sector.

The upcoming Future Homes Standard, set to be implemented in 2025, will require new homes to produce significantly lower carbon emissions. This regulation is part of the UK’s broader strategy to reach net-zero carbon emissions and improve home energy efficiency.

Such policies not only promote sustainability but also make BTR properties more attractive to environmentally conscious tenants.

The government’s support extends to financial incentives as well.

The Affordable Homes Guarantee Scheme, which has been expanded to £6bn, provides low-cost loans to housing providers. This funding is instrumental in building new affordable homes and upgrading existing properties to modern standards.

By facilitating access to affordable financing, the scheme encourages the development of more Build to Rent properties, helping to alleviate the housing shortage and meet the rising demand for rental housing.

Impact on tenants and communities

The expansion of the BTR sector is significantly impacting tenants and communities.
Build to Rent developments offer a range of amenities and services that enhance the living experience for residents.

These include on-site gyms, communal spaces, and professional management services that ensure properties are well-maintained and secure.

Such features make BTR properties particularly attractive to young professionals and families looking for flexible, high-quality rental options.

Moreover, Build to Rent developments contribute to the regeneration of urban areas.

By providing modern, well-designed rental properties, these developments help revitalise communities and stimulate local economies.

The focus on sustainability and energy efficiency also supports the UK’s environmental goals, promoting a greener and more sustainable future for housing.

For further advice or to obtain a quote, call Build Warranty’s experts at 02039665409 or complete a simple online form: https://buildwarranty.powerappsportals.com/ldi-application/

RECI Chairman pleased with robust NAV, quarterly dividends, future share and growth prospects

Real Estate Credit Investments Limited (LON:RECI) has announced the release of the Company’s Annual Report and Audited Financial Statements for the year ended 31 March 2024.

OVERVIEW

Chairman’s Statement

RECI continues to deliver a robust NAV and attractive quarterly dividends of 3 pence per share.

RECI Chairman Bob Cowdell states: I am pleased to report that for the year ended 31 March 2024, RECI delivered a total net profit of £21.9 million and maintained an unchanged dividend of 3 pence per quarter, despite challenging times for the listed investment company sector.

The last financial year saw the war in Ukraine continuing and the events of 7 October 2023 and Israel’s response in Gaza, have seen heightened tensions in the Middle East. Elsewhere, geopolitical tensions and concerns remain, in a year of record numbers of government elections worldwide.

While the rate of inflation has been reducing from its peak, strong labour markets and energy prices have caused Central Banks to delay in cutting interest rates for longer than was expected. The Bank of Canada and the European Central Bank have recently announced rate reductions and consensus remains that interest rates will reduce over the rest of 2024 and 2025 bringing benefits to households and corporate borrowers. The return to long-term lower interest rates, albeit not to the lows of the last decade, will see income seekers move away from cash and government bonds as they seek higher returns on their investment. A reduction in interest rates should also benefit and allay investor concerns about the credit and real estate markets.

The economic and geopolitical challenges of the last year, combined with discount, liquidity and some governance issues, have seen investor sentiment negatively impacted across the whole listed investment company sector. Concerns over credit and UK equity markets and real estate and private equity valuations have driven significant investor selling, allied to the need to sell investment company shares to provide liquidity to satisfy significant levels of redemptions in investors’ underlying funds. This combination has seen investment companies’ share price discounts widen to near record levels.

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 14.7% during the financial year ended 31 March 2024. Reflecting market sentiment, the Real Estate Debt Sector traded at an average discount of 26.3% (excluding RECI) over the same 12 months1.

During the last financial year, the Company received interest and repayments on its portfolio to fund its existing investment commitments. Since the year end, the Company has received two further repayments totalling £16.7 million. 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 an initial buyback programme in August 2023 and a successor buyback programme in March 2024.

The Directors and Cheyne remain committed to providing detail and transparency regarding the Company’s portfolio and investment strategy, allowing all investors to focus on 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 2023.

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 1.24 million shares in the Company since the start of the financial year on 1 April 2023.

1 Source: Liberum, company data

Financial Performance

RECI reported a total net profit for the financial year ended 31 March 2024 of £21.9 million on year-end total assets of £352.3 million, compared with a £20.6 million net profit in the year ended 31 March 2023, on year-end total assets of £419.0 million.

The NAV as at 31 March 2024 was £1.45 per share (£1.47 per share as at 31 March 2023) which, combined with the 12 pence per share of dividends payable in respect of the year ended 31 March 2024, represents an annualised total return for Shareholders of 7.0%.

During the financial year ended 31 March 2024, the Company’s shares traded at an average discount to NAV of 14.7%, (6.1% discount for the year ended 31 March 2023).

Total quarterly dividends declared in respect of the financial year ended 31 March 2024 were an unchanged 12 pence per share, returning £27.4 million to our Shareholders.

In the course of the last financial year, the Company utilised short-term leverage at an average cost of borrowing of 6.8%, with average gross leverage of £73.9 million or 0.22x NAV. RECI also had asset level structured leverage, totalling £33.9 million at year end, at an average borrowing cost of 7.5%.

When the financial year began on 1 April 2023, RECI had gross balance sheet leverage of £80.4 million (0.24x NAV) and leverage net of cash of £64.0 million (0.19x NAV). As at 31 March 2024, the Company’s gross balance sheet leverage was £23.8 million (0.07x NAV); its leverage net of cash was £1.0 million (0.00x NAV); and its net effective leverage, including contingent liabilities of £3.9 million (being the partial recourse commitment, representing 25% of asset level borrowings provided to certain asset level
structured finance counterparties), was 0.02x NAV.

During the financial year to 31 March 2024, the Company funded £95.2 million into existing investments, compared with £158.6 million in the previous financial year. RECI received cash repayments and interest of £134.2 million in this year, compared with £159.0 million in the year ended 31 March 2023. The Company also received £9.3 million (net of repo financing) via the sale of market bonds in the year.

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 £1.47 per share during the financial year, notwithstanding the payment to Shareholders of four unchanged dividends, totalling 12 pence per share, during the period.

Cheyne maintained the strategy of focusing portfolio exposure upon lower risk senior loans, with 86% of the Company’s positions comprised of senior assets by the financial year end. RECI’s holding of market bonds had reduced to 2.2% of the portfolio by 31 March 2024. The weighted average life of the whole portfolio was 1.4 years for the financial year ended 31 March 2024; and the
weighted average LTV of the Company’s portfolio was 64.9% (59.2% at 31 March 2023), maintaining significant defensive equity headroom.

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, which saw a reduction in gross and net balance sheet leverage over the year to 31 March 2024.

The negative market sentiment during our last financial year inevitably impacted RECI’s share price and saw material discount widening across the investment company sector generally and the credit and real estate sectors, in particular. The Company’s shares traded at an average discount to NAV of 14.7% for the financial year ended 31 March 2024.

On 31 August 2023, the Company announced a share buyback programme (the “Initial Programme”), with a maximum aggregate purchase price of £5.0 million. Pursuant to that programme, a total of 4,095,000 shares were purchased for treasury for an aggregate amount of £5.0 million. Shares were repurchased under the Initial Programme at an average discount to net asset value per share of 16.6%, with the Company’s shares trading at an average discount of 14.2% from 31 August 2023 to 25 March 2024 (the date of the last share repurchase under the Initial Programme).

On 28 March 2024, the Company announced that it intended to undertake a further buyback programme (the “Successor Programme”) which will run to 30 September 2024. The maximum aggregate purchase price of all shares acquired under the Successor Programme will be £10.0 million and 1,812,643 shares have been repurchased to date.

The Company’s shares closed at £1.22 on 18 June 2024 (a discount of 16.38%), which would provide a yield of 9.84% on the basis of continuing to pay a quarterly 3 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 robust NAV and provide investors with a substantial and liquid company (with total assets of £352.3 million and market capitalisation of £262.6 million at 31 March 2024) with the potential for the shares to re-rate and the Company to grow over time.

Board Update

Colleen McHugh was appointed on 15 September 2023 as Chair of the Board’s Management Engagement Committee, succeeding Susie Farnon who remains Chair of the Company’s Audit and Risk Committee.

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 Andreas Tautscher had been appointed as an independent non-executive director of the Company. He will also serve as a member of the Company’s Audit and Risk, Nomination, Remuneration and Management Engagement Committees and will stand for election at the Annual General Meeting to be held in September 2024.

Andreas has over 30 years’ experience in the banking and financial services industry, including as CEO of Deutsche Bank International, and I am looking forward to the Company benefiting from the experience and complementary skills he will bring.

Having joined RECI and become Chair in 2015, in accordance with good governance practice I had agreed with the Board that it would not be appropriate for me to stand for re-election at the September 2024 AGM and that I should retire from the Board at the conclusion of that meeting. Accordingly, led by our senior independent director (“SID”), the Board carried out a process to recruit a successor Chair candidate earlier this year and a candidate was identified to join the Board and succeed me after a suitable handover period. Unfortunately, the candidate has now withdrawn due to a perceived conflict of interest that had arisen.

As announced on 12 June 2024, John Hallam, the SID and Chair of the Remuneration Committee, has advised the Board that reluctantly he wishes to retire from the Board at the September AGM for personal reasons. As a consequence of John stepping down, the Board has requested that I stand for re-election and continue as Chair beyond the September 2024 AGM for the requisite period needed to complete the process to identify a successor as Chair and achieve a smooth and successful handover. As announced, Susie Farnon was appointed as the new SID with immediate effect and will lead the process of recruiting my successor. I would like to record the Board’s appreciation of John’s highly valued contribution to RECI as a non-executive director, SID and committee chair during the course of his tenure.

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 26 of the Stakeholder Engagement section and pages 28 to 33 of the Sustainability Report provide further information about the Company’s and the Investment Manager’s approach to ESG matters.

Outlook

The UK general election will be held on Thursday 4 July, with a change of government widely anticipated. 2024 will also see the greatest ever number of elections around the globe, with eyes focused on the outcome of November’s US elections as potentially being the most destabilising. A resolution to the conflicts in Ukraine and the Middle East appears as challenging as ever.

The reduction of inflation should allow Central Banks to move to reduce interest rates over time, albeit perhaps slower than anticipated. A return to a lower long-term interest rate environment, even if not returning to the recently experienced low levels, should benefit RECI as it continues to provide investors with a highly attractive and sustainable yield.

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 ensure that RECI 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.

Notwithstanding the challenging market and sector background, 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.

Bob Cowdell, Chairman