Real Estate Credit Investments (RECI) made a profit of GBP0.7m in the quarter ended 30 June 2012, compared with GBP4.5m in the previous quarter, according to the company’s latest interim management statement.
RECI's NAV per share of 119p as at 31 July (15 July: 112p), represents a 6.3% increase over the second half of the month and an increase of 8.2% since the start of the company's financial year (1 April, 2012).
The company recorded a net gain in the bond portfolio of GBP1.4m for the June quarter (being GBP0.8m interest income received and GBP0.6m in mark to market gains) which is reported as GBP3m of operating income (based on the yield of the assets) and a GBP1.6m negative fair value adjustment.
The positive performance, subsequent to the quarter end, in the bond portfolio was a result of both significant early bond repayments and mark to market gains in the portfolio.
The two largest increases come from asset purchases made in the past 12 months.
The Titan 2006-4FS bond has repaid in full earlier than expected, and a bond backed by London commercial property has seen a 50 per cent repayment of principal at par and a significant increase in the market price.
The increase in NAV was also supported by an iTraxx Main short that helped mitigate the effects of the Eurozone crisis.