In previous reports, we have highlighted RECI’s downside resilience. Our key takeaway from the November Investor Day was the scale of RECI’s current opportunities. The key driver to the strong pipeline is the manager having the expertise and scale to access the least competitive sectors of real estate lending. By doing so, it can earn good returns (typically 8%-10% unleveraged) and only see a modest impact from whole-market dynamics. Regular repayments, both contractual and customers refinancing, mean that there is flexibility to take opportunities as they emerge. We sense an increased appetite for development finance.
