By Daniel Lanyon on 27th February 2017
The closed-ended fund has completed the first stage in its plan to raise up to £65m in the near term.
The £158m Real Estate Credit Investments trust has raised more than £25m through a new share placing on the London stock market with plans to raise a further £75m.
Managed by Cheyne Capital, the fund is concentrated portfolio of just 18 loans focused on secured residential and commercial debt in the UK and Western Europe It seeks to exploit opportunities in publicly traded securities and real estate loans.
Last week, the investment trust raised gross proceeds of £25.26m through the issue of 15.55m shares at 162.5p, although this is subject to shareholder approvals at an Extraordinary General Meeting on 22 March.
The company intends to use the net proceeds to invest in debt secured by commercial or residential properties in the UK and Western Europe including secured real estate loans, debentures and securitised tranches of secured real estate debt securities such as residential mortgage backed securities (RMBS) and collateralised mortgage backed securities mortgage backed securities (CMBS).
The initial placing is part of a placing programme enabling the fund to issue up to 65m shares over the next 12 months, subject to shareholder approval.
The fund’s managers say while the impact of Brexit has been noticeable on the real estate markets, the further withdrawal of traditional bank lenders from the sector should continue to improve the risk and return profile of investments the fund is targeting.
Specifically, its focus on debt, secured predominantly by UK and German real estate including some exposure to Holland, France and Ireland).
Its latest factsheet said: “Being in this part of the capital structure, its investments have a natural protection against a drop in the value of the underlying assets. The underlying assets that secure its debt instruments are predominantly in core locations in the UK and Germany as opposed to assets located in secondary or tertiary cities and towns,”