2025
Real Estate Credit Investments Limited
Annual
Report and
Accounts
Annual Report and Accounts 2025
Consistent attractive
dividends from
credit exposure
to UK and Western
European real estate
credit markets
Contents
Overview 02
Overview and Highlights 02
At a Glance 04
About the Company 06
Chairman’s Statement 08
KPIs and Financial Highlights 11
Business and Strategy Review 12
Strategic Framework and Performance Highlights 14
Strategic Report 16
Investment Manager’s Report 22
Stakeholder Engagement 26
Sustainability Report 30
Responsible Investment Highlights 2025 34
Governance 36
Board of Directors 38
Management Team 40
Directors’ Report 42
Remuneration Committee Report 46
Corporate Governance Statement 48
Audit and Risk Committee Report 54
Directors’ Responsibility Statement 58
Financial Statements 60
Independent Auditor’s Report 62
Statement of Comprehensive Income 69
Statement of Financial Position 70
Statement of Changes in Equity 71
Statement of Cash Flows 72
Notes to the Financial Statements 73
Appendix I – AIFM Remuneration Policy (Unaudited) 98
Appendix II – AIFM Leverage (Unaudited) 99
Directors and Advisers 100
Glossary 101
Front cover: Assisted living residence in the United Kingdom
Inside front cover images:
Top: Hotel in France
Middle: Co-living residence in France
Bottom: Hotel in Finland
04
At a Glance
Providing compelling risk-adjusted returns
08
Chairman’s Statement
RECI continued to deliver a robust Net Asset Value (“NAV”)
and attractive quarterly 3.0 pence dividend per share
60
Financial Statements
In this Report
Real Estate Credit Investments LimitedAnnual Report and Accounts 2025 01
Key Figures
Net Assets
£318.4m
(31March 2024: £326.4m)
NAV per Share
£1.43
(31March 2024: £1.45)
Total Assets
£391.7m
(31March 2024: £352.3m)
Net Profit
£22.8m
(for the year ended 31March 2024: £21.9m profit)
Hotel and Spa in the United Kingdom
OVERVIEW
AS AT 31 MARCH 2025
Overview and
Highlights
Hotel in Finland
What We Offer
Defensive credit exposure to UK and Western European
real estate credit markets
• Stable and uninterrupted dividends delivered consistently
since October 2013
Granular portfolio with detailed disclosure • 21 positions
• Diverse portfolio across sectors and geography
Attractive and stable income in a changing
interest rate environment
• Consistent portfolio yield of 9%+ offering a buffer to
risk-free rates
• A high-yielding portfolio, combined with a short weighted
average life, ensures minimal exposure to yield widening
and the ability to redeploy at higher rates quickly
Access to Cheyne’s established real estate investment team and substantial origination pipeline
Annual Report and Accounts 2025Real Estate Credit Investments Limited02
Total NAV Return
7.7%
(31March 2024: 7.0%)
Dividend Yield
9.8%
(31March 2024: 10.4%)
Share Price
£1.22
(31March 2024: £1.15)
Dividends
12.0 pence
(31March 2024: 12.0 pence)
RECI Offers:
Focus on senior secured
credit, with defensive
Loan-to-Values (“LTVs”)
Dividend
stability without
compromising risk
Strong governance
control over its
loan book
Conservative
anddiversified
leverage profile
Management
from Cheyne’s
Real Estate team
Large,
experienced,
well capitalised
borrowers
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 03
OVERVIEW
At a Glance
Providing compelling risk-adjusted returns.
Real Estate Credit Investments Limited (“RECI” or the “Company”) is a closed-ended investment company which originates
and invests in real estate debt secured by commercial or residential properties in Western Europe, focusing primarily on the
United Kingdom, France and Spain.
The Company’s aim is to deliver a stable quarterly dividend with minimal portfolio volatility, across economic and credit cycles,
through a levered exposure to real estate credit investments.
RECI’s investments are predominantly in Self-Originated Loans and Bonds. The Company also holds a small portfolio of Market
Bonds (listed real estate debt securities such as Commercial Mortgage Backed Securities (“CMBS”)).
Investment Portfolio Composition
RECI’s investment portfolio, a diversified book of 21 positions in real estate bonds and loans, was valued at £369.5 million including
accrued interest, as at 31 March 2025, up from £329.4 million as at 31 March 2024. The portfolio had a weighted average
levered yield of 11.4% and an average LTV ratio of 66.0% as at 31 March 2025.
Interest Type
WA Duration
Geography
Sector
Asset Type
Current LTGDV
0-50%
10%
50-65%
30%
65-80%
43%
>80%
17%
Other
6%
Core+
24%
Core
4%
Living Assets
41%
UK
66%
0-1 yr
66%
Fixed
71%
Development
43%
Value Add
23%
Hotel/Leisure
27%
France
24%
1-2 yrs
11%
Mixed Use
20%
Office
10%
Other
2%
Spain
5%
Other
5%
2-3 yrs
21%
3-4 yrs
0%
4+
yrs
2%
Floating
29%
Portfolio by Geography
by % of Total Committed Capital including PIK
Country
Allocation
March 2025
%
Change since
March 2024
%
United Kingdom 65.5 7.7
France
24.5 (1.9)
Spain
4.6 (1.3)
Italy
2.5 (1.5)
Germany
2.9 0.0
Finland 0.0 (4.1)
Ireland 0.0 (1.9)
icons denote Cheyne Real Estate Offices in Berlin, Dublin, London, Madrid and Paris.
Annual Report and Accounts 2025Real Estate Credit Investments Limited04
Share Price vs NAV per Share
100
110
120
130
140
150
160
170
180
190
Mar 25
Feb 25
Jan 25
Dec 24
Nov 24
Oct 24
Sep 24
Aug 24
Jul 24
Jun 24
May 24
Apr 24
Mar 24
Feb 24
Jan 24
Dec 23
Nov 23
Oct 23
Sep 23
Aug 23
Jul 23
Jun 23
May 23
Apr 23
Mar 23
Feb 23
Jan 23
Dec 22
Nov 22
Oct 22
Sep 22
Aug 22
Jul 22
Jun 22
May 22
Apr 22
Mar 22
Feb 22
Jan 22
Dec 21
Nov 21
Oct 21
Sep 21
Aug 21
Jul 21
Jun 21
May 21
Apr 21
Mar 21
Feb 21
Jan 21
Dec 20
Nov 20
Oct 20
Sep 20
Aug 20
Jul 20
Jun 20
May 20
Apr 20
Mar 20
Feb 20
Share Price NAV per SharePerformance (Pence)
NAV and Share Price As at 31 March 2025
Net Assets £318.4m
Shares Outstanding (net of treasury shares) 221.9m
NAV (per share) £1.43
Share Price (per share) £1.22
Discount (14.9)%
Dividend Yield 9.8%
Market Capitalisation £270.7m
Total NAV Return
1
Financial Year Ended 31 March 2025 7.7%
Prior Financial Year Ended 31 March 2024 7.0%
Last Three Financial Years Ended 31 March 2025 22.0%
Last Five Financial Years Ended 31 March 2025 43.2%
1
The Total NAV Return measures the combined effect of any dividends paid, together with
the rise or fall in the NAV per share. The Total NAV Return relates to past performance and
takes into account both capital returns and dividends paid to Shareholders. Any dividends
received by a Shareholder are assumed to have been reinvested in the assets of the
Company at its NAV per share on the ex-dividend date. The Total NAV Return is considered
an Alternative Performance Measure pursuant to ESMA Guidelines which is unaudited
and outside of the scope of IFRS Accounting Standards (“IFRS”).
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 05
OVERVIEW
Real Estate Credit Investments Limited (“RECI” or the
“Company”) is incorporated in Guernsey, governed by the
Companies (Guernsey) Law, 2008 (as amended) (the
“Companies Law”) and regulated as an authorised closed-
ended investment scheme by the Guernsey Financial Services
Commission. The Company will be subject to a continuation
resolution by the Shareholders at the next Annual General
Meeting ("AGM") to be held in September 2025.
The Company invests in real estate debt secured by
commercial or residential properties in the United Kingdom
and Western European countries focusing primarily on those
countries where it sees the changing dynamics in the real
estate debt market offering a sustainable deal flow for the
foreseeable future. The Company has adopted a long-term
strategic approach to investing and focuses on identifying
value in real estate debt. In making these investments, the
Company uses the expertise and knowledge of its Alternative
Investment Fund Manager (“AIFM”), Cheyne Capital
Management (UK) LLP (“Cheyne” or the “Investment Manager”).
The shares are currently listed and traded on the Main
Market of the London Stock Exchange. The shares offer
investors a leveraged exposure to a portfolio of real estate
credit investments and pay a quarterly dividend.
Website and Share Price Information
The Company has a dedicated website, which can be found
at realestatecreditinvestments.com that contains
information, including regulatory announcements, share
price information, financial reports, investment objectives and
strategy, investor contacts, information on the Board and
information on the Alternative Investment Fund Managers
Directive (“AIFMD”).
Investment Objective and Investment Policy
Investment Objective
The Investment Objective of the Company is to provide
Shareholders with attractive and stable returns, primarily in
the form of quarterly dividends, by exposure to a diversified
portfolio of real estate credit investments, predominantly
comprising real estate loans and bonds.
Investment Policy
To achieve the Investment Objective, the Company invests
and will continue to invest in real estate debt secured by
commercial or residential properties in the United Kingdom
and Western European countries.
The Investment Objective of the Company
is to provide Shareholders with attractive
and stable returns, primarily in the form of
quarterly dividends.
About the
Company
Annual Report and Accounts 2025Real Estate Credit Investments Limited06
The real estate credit investments may take different forms
but are likely to be:
(i) secured real estate loans, debentures or any other forms
of debt instruments (together “Secured Debt”). Secured
real estate loans are typically secured by mortgages over
the property or charges over the shares of the property-
owning vehicle. Individual Secured Debt investments
will have a life profile ranging from six months to five
years. Investments in Secured Debt will also be directly
or indirectly secured by one or more commercial or
residential properties, and shall not exceed a LTV of 85%
at the time of investment;
(ii) listed debt securities and securitised tranches of real
estate related debt securities, for example, residential
mortgage-backed securities and commercial mortgage-
backed securities (together “MBS”). For the avoidance
of doubt, this does not include equity residual positions
in MBS; and
(iii) other direct or indirect opportunities, including equity
participations in real estate, save that no more than 20%
of the total assets will be invested in positions with an
LTV in excess of 85% or in equity positions that are
uncollateralised. On certain transactions, the Company
may be granted equity positions as part of its loan terms.
These positions will come as part of the Company’s
overall return on its investments and may or may not
provide extra profit to the Company depending on market
conditions and the performance of the loan. These
positions are deemed collateralised equity positions.
All other equity positions that the Company may invest
in are deemed uncollateralised equity positions.
It is the intention of the
Company to continue
to pay a stable quarterly
dividend with the
potential for additional
payments if investment
returns permit
Luxury residence in Spain
Real Estate Credit Investments Limited 07Annual Report and Accounts 2025
OVERVIEW
The last financial year has been marked by continued
geopolitical instability. The war in Ukraine remains unresolved,
while the conflict in Gaza has significantly heightened
tensions across the Middle East, most recently marked by
Israeli and US strikes against Iran, targeting nuclear facilities/
infrastructure sites. On the economic front, although inflation
has moderated from previous highs, it remains persistent,
prompting central banks to adopt a more gradual approach
to interest rate cuts.
There is also growing evidence that markets are pricing
Government Debt at significantly higher risk premium, take
the UK where there have been three interest rate cuts but
ten-year gilts have risen from 4.2% to 4.6% since July 2024.
The consensus remains that interest rates will reduce, for
most economies, over the rest of 2025.
Furthermore, we need to consider the impact of President
Trump’s ‘liberation day’ and the shock introduction of
significant tariffs on every trading partner of the US. I will not
get into a full résumé of the twists and turns but suffice to
say we have seen an almost unprecedented level of volatility
in equity markets which has also been mirrored in the debt
markets, particularly for US government debt. This level of
volatility in both government policy and market impact
makes it very difficult to give many forward predictions.
The challenges we had seen in the investment company
segment of the last year, allied to discount, liquidity and some
governance issues, have not abated. The impact of the Trump
announcements has not helped although at the time of
writing the overall impact in terms of valuations has been
netted out, but we are clearly only part way through this
process and we might expect further periods of volatility in
the markets.
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 15.4% during the financial
year ended 31 March 2025. Reflecting market sentiment,
the Real Estate Debt Sector traded at an average discount of
20.4% (excluding RECI) over the same 12 months (source:
Liberum, company data).
During the financial year, interest and repayments received
on the Company’s portfolio has funded new and existing
commitments. 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 a second buyback programme in
September 2024 and a successor buyback programme in
March 2025.
The Directors and Cheyne remain committed to providing
detail and transparency regarding the Company’s portfolio
and investment strategy, allowing all investors to focus upon
RECI and its merits and opportunities, notwithstanding the
challenging broader market environment.
I am pleased to report that for
the year ended 31 March 2025,
RECI delivered a total net profit of
£22.8 million and maintained an
unchanged dividend of 3.0 pence
per quarter, despite challenging
times for the listed investment
company sector.
Chairman’s
Statement
Andreas Tautscher
Chairman
Annual Report and Accounts 2025Real Estate Credit Investments Limited08
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 2024.
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 213,000 shares
in the Company since the start of the financial year on 1
April 2024.
Financial Performance
RECI reported a total net profit for the financial year ended
31 March 2025 of £22.8 million on year end total assets of
£391.7 million, compared with a £21.9 million net profit in
the year ended 31 March 2024, on year end total assets of
£352.3 million.
The NAV as at 31 March 2025 was £1.43 per share (£1.45
per share as at 31 March 2024) which, combined with the
12.0 pence per share of dividends payable in respect of the
year ended 31 March 2025, represents an annualised total
NAV return for Shareholders of 7.7%.
During the financial year ended 31 March 2025, the Company’s
shares traded at an average discount to NAV of 15.4%,
(14.7% discount for the year ended 31 March 2024).
Total quarterly dividends declared in respect of the financial
year ended 31 March 2025 were an unchanged 12.0 pence
per share, returning £26.7 million to our Shareholders.
During the year, RECI had average asset level structured
leverage of approximately £34.4 million, at an average
borrowing cost of circa 7.9%.
During the financial year to 31 March 2025, the Company
funded £139.8 million into existing investments, compared
with £95.2 million in the previous financial year. RECI also
received cash repayments and interest of £113.6 million in
this year, compared with £134.2 million in the year ended
31 March 2024.
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 £1.46 per share during the financial
year, notwithstanding the payment to Shareholders of four
unchanged dividends, totalling 12.0 pence per share, during
the year.
Cheyne maintained the strategy of focusing portfolio
exposure upon lower risk senior loans, with 90% of the
Company’s positions comprised of senior assets by the
financial year end. RECI’s holding of market bonds had
reduced to comprising just 1.8% of the portfolio by
31 March 2025. The weighted average life of the whole
portfolio was one year for the financial year ended 31 March
2025; and the weighted average LTV of the Company’s
portfolio was 66.0% (64.9% at 31 March 2024).
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.
As at 31 March 2025, the Company’s gross balance sheet
leverage was £70.9 million (22.3% of NAV); its net effective
leverage, including contingent liabilities of £9.3 million
(being the partial recourse commitment, representing 25%
of asset level borrowings provided to certain asset level
structured finance counterparties), was 18.2% of NAV.
The negative market sentiment during our last financial year
inevitably impacted RECI’s share price and saw material
discount widening across the investment funds sector
generally and the credit and real estate sectors, in particular.
The Company's initial buyback programme was announced
on 31 August 2023, with an aggregate purchase price of all
shares purchased of no more than £5.0 million. Pursuant to
that programme, a total of 4,095,000 ordinary shares of no
par value each ("Ordinary Shares") were purchased for treasury
for an aggregate amount of £5.0 million. The Company
announced a successor buyback programme on 28 March
2024, with an aggregate purchase price of all shares
purchased of no more than £10.0 million, pursuant to which
a total of 3,343,474 Ordinary Shares were purchased for
treasury for an aggregate amount of £4.2 million. A further
buyback programme was then announced on 27 September
2024 for £10.0 million, which was not utilised.
On 31 March 2025, the Company announced that, having
reviewed the current circumstances and assessed the
Company's level and allocation of cash available for
deployment, it intends to undertake a further buyback
programme which will run to 30 September 2025. The
aggregate purchase price of all shares acquired under
the programme will be no greater than £10.0 million and
200,000 Ordinary Shares have been repurchased to date.
The Company’s shares closed at 127.5 pence on 20 June
2025 (a discount of approximately 12.4%), which would
provide a yield of 7.1% on the basis of continuing to pay a
quarterly 3.0 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.
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 09
Chairman's Statement (continued)
RECI is well positioned to deliver this attractive dividend
stream alongside a resilient NAV and provide investors with
a substantial and liquid company (with total assets of £391.7
million and market capitalisation of £270.7 million as at 31
March 2025) with the potential for the shares to re-rate and
the Company to grow over time.
Board Update
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 I had been appointed as an independent
non-executive director of the Company. Following Bob
Cowdell’s decision to step down in November 2024, I was
appointed as Chairman. As noted in my interim statement,
I thank Bob for leaving behind a stable ‘ship’ that has
weathered the storms in the last few weeks.
I would also like to introduce Mark Thompson who joined us
in November 2024 as our latest member of the Board. Mark
brings a wealth of knowledge and experience from both his
auditing years at KPMG as well as his more recent experience
on a number of private and listed investment vehicles.
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 28 of the Stakeholder Engagement section and pages
30 to 35 of the Sustainability Report provide further
information about the Company’s and the Manager’s
approach to ESG matters.
Outlook
While easing inflation will allow central banks to continue
reducing interest rates over time, this process is likely to be
slower than previously predicted – particularly in the UK,
where inflation is still persistent, complicating the Bank of
England’s policy decisions. Nonetheless, a gradual shift
towards a lower interest rate environment, even if it does
not reach the ultra-low levels of recent years, should prove
supportive for RECI as it continues to provide investors with
a highly attractive and sustainable yield. We will need to
continue to factor in the potential for further impacts from
the US Administration’s policies.
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 have
ensured that RECI already has and 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.
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.
Andreas Tautscher
Chairman
24 June 2025
Annual Report and Accounts 2025Real Estate Credit Investments Limited10
KPIs and Financial Highlights
1
1 Alternative Performance Measures are described in Glossary on page 101.
Key Performance Indicators
31 Mar 2025 31 Mar 2024
Balance Sheet
NAV per share £1.43 £1.45
Share price £1.22 £1.15
Discount (14.9)% (20.7)%
Average discount in year
1
(15.4)% (14.7)%
Leverage (% of NAV)
2
22.3% 7.3%
1
Average discount in year is the average of the difference between the share price and the NAV per share divided by NAV per share.
2
Leverage is the recourse financing divided by the net assets.
31 Mar 2025 31 Mar 2024
Profit, Loss and Dividends
Earnings per share 10.2p 9.6p
Dividends per share declared for the year 12.0p 12.0p
Total NAV Return (including dividends) annualised
1
7.7% 7.0%
1
Assumes re-investment of dividends.
Financial Highlights
31 Mar 2025 31 Mar 2024
£m £m
Balance Sheet
Cash, cash equivalents and cash collateral held at/due to brokers 22.2 22.8
Net assets 318.4 326.4
31 Mar 2025 31 Mar 2024
£m £m
Profit and Loss
Operating income 34.2 31.4
Net profit 22.8 21.9
The complete set of the Balance Sheet and Profit and Loss items are presented in the Company’s financial statements.
Further Information
Monthly fact sheets as well as presentations are available on the Company’s website: realestatecreditinvestments.com.
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 11
Hotel and Spa in the United Kingdom
BUSINESS AND STRATEGY REVIEW
Senior real estate lending remains a high conviction theme
Strategic Framework
and Performance
Highlights
Objectives
Performance Highlights
Provide investors with a
diversified portfolio of real
estate credit investments
Deliver a stable
quarterlydividend with
minimal volatility
Exploit opportunities in the
real estate credit market
Position the Company to
grow through opportunities
the Investment Manager
isdelivering
Deal Repayments
andInterest in Year
£113.6m
(for the year ended 31 March 2025)
Dividends
Paid
£26.7m
(for the year ended 31 March 2025)
Investment
Portfolio
£369.5m
(as at 31March 2025)
Annual Report and Accounts 2025Real Estate Credit Investments Limited14
Performance Highlights
Progress in Year Ended 31 March 2025
• RECI’s investment portfolio is a diversified book of
21 positions in real estate loans and bonds.
• Over the course of the last financial year, RECI funded
£139.8 million into existing deals during the year with
two new commitment to deals.
• The investment portfolio stands at £369.5 million as at
31 March 2025 which is spread across 21 positions with
a weighted average levered gross yield of 11.4% and an
average LTV of 66.0%.
• RECI also received cash repayments and interest
of £113.6 million in this year.
• Paid out dividends of 3.0 pence per share each quarter,
12.0 pence over the year.
• A total of £26.7 million in dividends returned to
our Shareholders.
• RECI continues to migrate towards an all-senior loan book.
• Measures to position the Company to achieve its
longer-term aim of growing the Company.
• Protection and maintenance of dividends by
improved returns on the loans and re-investment.
• Continue to optimise funding lines.
Residencial development in the United Kingdom
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 15
BUSINESS AND STRATEGY REVIEW
Investment Objective and Investment Policy
The Investment Objective and Investment Policy are set out on
page 6, along with a further paragraph “About the Company”
explaining in more detail the corporate structure and listing
of the Company’s shares.
RECI is externally managed by Cheyne, a UK investment
manager authorised and regulated by the Financial Conduct
Authority (“FCA”). Cheyne is a limited liability partnership
registered in England and Wales on 8 August 2006 and
is authorised and regulated in the conduct of investment
business in the United Kingdom by the FCA. Cheyne is also
the AIFM of the Company. Cheyne has offices in London,
Berlin, Bermuda, Dubai, Dublin, Madrid, Monaco, Munich,
New York, Paris, Sydney and Zurich.
Current and Future Development
A review of the year and outlook is contained in the Investment
Manager’s Report and also in the Chairman’s Statement.
Performance
A review of performance is contained in the Key Performance
Indicators (“KPIs”) and Financial Highlights section and the
Investment Manager’s Report.
A number of performance measures are considered by the
Board and the Investment Manager in assessing the Company’s
success in achieving its objectives and considering its
progress and performance. The KPIs are shown on page 11.
Duties and Responsibilities
The Board has overall responsibility for optimising the
Company’s performance by directing and supervising the
affairs of the business and meeting the appropriate interests
of Shareholders and relevant stakeholders, while enhancing
the value of the Company and also ensuring the protection
of investors. A summary of the Board’s responsibilities is
as follows:
• statutory obligations and public disclosure;
• strategic matters and financial reporting;
• risk assessment and management including reporting,
compliance, governance, monitoring and control; and
• other matters having a material effect on the Company.
The Board is responsible to the Shareholders for the overall
management and strategy of the Company but has delegated
day-to-day operations to the Investment Manager and
Citco Fund Services (Guernsey) Limited (“Citco” or the
“Administrator”), while reserving the powers of decision
making relating to the determination of the Investment
Policy, corporate structure and the management of the
share capital of the Company.
The Board is further responsible for financial reporting, risk
management and determining the dividend and accounting
policies. While the Investment Manager manages the
portfolio of the Company, the Board retains responsibility
for overseeing the Investment Manager and ensuring the
establishment and ongoing operation of a sound system of
internal control. Any material contracts and those not in the
normal course of business are also subject to approval by
the Board.
The Board is also responsible for its own structure, size
and effectiveness, with the delegation of some duties to
Committees made up of its members. The Board retains
control of the Committees and requires that they report
to the full Board on a regular basis providing their findings
and recommendations. The Nomination Committee
is responsible for considering the size, structure and
composition of the Board; retirements and appointments of
additional and replacement Directors and, as appropriate,
making recommendations to the Board. The Remuneration
Committee determines Directors’ remuneration and sets
the Company’s remuneration policy.
The Board performs a formal and rigorous review of its own
performance and continually scrutinises its independence
and transparency.
The Board’s responsibilities for the Annual Report are set out
in the Directors’ Responsibility Statement. The Board is also
responsible for issuing appropriate semi-annual financial
reports and other price-sensitive public reports.
The Strategic Report describes the business of the Company
and details the principal risks and uncertainties associated
with its activities.
Strategic Report
Annual Report and Accounts 2025Real Estate Credit Investments Limited16
Long-term Viability
The Directors have assessed the prospects of the Company
over a longer period than the 12 months required by the
‘Going Concern’ provision. The Board has chosen a period
of three years which reflects the Company’s three-year
planning horizon. In doing so it notes that the average life of
assets in its portfolio is approximately one year and there
will be a substantial turnover of its investments in the three-
year period.
The Board conducts an annual review, stress testing the
Company’s cash flows arising from the loan and bond
portfolio over a three-year period, including interest received
and proceeds from realisations, short-term finance obligations
of the Company and dividend cover. Further considerations
are the inherent sensitivities within the loan and bond
portfolios and their impact on the cash flows.
The Board has identified a number of principal risks, which
are detailed below. The Board has taken these into account
when considering the long-term viability of the Company.
The Board routinely conducts three-year reviews, stress
testing the performance against a number of adverse
scenarios, such as the fair value write-down of the investments,
or reduced cash flows from the investment portfolio. The fair
value stress test was considered relevant to factor in any
potential events affecting the underlying assets or credit
concerns about the borrowers which potentially could impact
on the fair value. The reduced cash flow stress test was
considered relevant in the event of potential defaults arising
on the loan portfolio and the inability to recover the interest
or principal back in full.
In the current environment the Company has also considered
the future of its Investment Manager when looking at its own
viability, and given the size of the Investment Manager’s
platform away from the Company and the private capital it
manages in numerous other real estate debt funds, of which
the combined total is approximately £5 billion Assets Under
Management (“AUM”), the Investment Manager is expected
to be able to continue to manage the Company for the
foreseeable future.
Further consideration has been given with respect to the
current market environment, including the ongoing economic
impacts of relevant geopolitical and macroeconomic risks:
including increased interest rates, tariffs, heightened inflation,
supply chain disruption, the continuing impact of conflicts
and the effects of climate change and cyber security.
The Investment Manager has prepared sensitivity analyses
including various stress scenarios. An evaluation continues
to be performed for each of the positions in light of these
potential impacts on operating models and valuations and
hence recovery prospects for certain individual positions.
The output of this analysis was used to (i) report fair value
movements, and (ii) update all the cash and income forecasting
for the portfolio. The Investment Manager continues to
perform a granular analysis of the future liquidity profile of the
Company. A detailed cash flow profile of each investment
was completed, incorporating the probability of likely delays
to repayments, other stress tests (and additional cash needs).
Even taking these stress scenarios into account and bearing
in mind the leverage and liquidity of the bond portfolio, the
Company is expected to be able to meet its liabilities over
the three-year period.
A continuation vote is due in September 2025 and although
the three-year plan takes the Company past this date the
Directors have no reason to believe that the continuation
vote will not be passed by Shareholders. If any continuation
resolution is not passed, the Directors are required to put
proposals for the reconstruction or reorganisation of the
Company to the Shareholders for their approval within six
months of the date of the vote.
Risk Management
It is the role of the Board of Directors to review and manage
all risks associated with the Company, mitigating these either
directly or through the delegation of certain responsibilities
to the Audit and Risk Committee and Investment Manager.
Additionally, the Board seeks to identify emerging risks and
responds to them as they evolve.
The Board considers that the following are the principal risks
and uncertainties faced and has identified the mitigating
actions in place to manage them. There are no additional
emerging risks that have been identified.
Long-term Strategic Risk
The Company is subject to the risk that its long-term strategy
and its level of performance fail to meet the expectations
of its Shareholders. The shares may trade at a continuing
discount to NAV and Shareholders may be unable to realise
their investments through the secondary market at NAV per
share. The Board monitors the level of premium or discount
of share price to NAV per share.
The Board monitors investment strategy and performance
on an ongoing basis and regularly reviews the Investment
Objective and Investment Policy in light of prevailing investor
sentiment to ensure the Company remains attractive to its
Shareholders. The Board is committed in promoting the
Company with the long-term aim of its share price trading
at or around NAV and considers all options to achieve this.
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 17
Strategic Report (continued)
This includes consideration, as part of the ongoing cash
allocation policy, of implementing share buybacks to enhance
NAV per share and potentially reduce any discount to NAV.
This may be done when cash resources permit and in the
context of prevailing market conditions and the one-time
potential NAV uplift of a buyback compared with the potential
repeatable long-term benefit of investments in attractive
high yielding opportunities to enhance RECI’s returns.
The Company has the authority to make market purchases of
fully paid shares of up to 14.99% of the shares in issue, and
renewal of this authority will be sought from Shareholders
at the AGM in September 2025 and at each subsequent
AGM, or earlier at an Extraordinary General Meeting if the
Directors consider it appropriate.
As at 31 March 2025 a total of 7.4 million shares have been
purchased for treasury for an aggregate amount of £9.2 million.
A further buyback programme was then announced on
31 March 2025 for £10.0 million, of which £0.2 million has
been utilised by 31 May 2025.
Target Portfolio Returns and Dividend Risk
The Company’s targeted returns are based on estimates and
assumptions that are inherently subject to significant business
and economic uncertainties and contingencies, and the
actual rate of return may be materially lower than the targeted
returns. In addition, the pace of investment may be slower than
expected, or principal may be repaid earlier than anticipated,
causing the return on affected investments to be less than
expected. In addition, if repayments are not promptly
re-invested this may result in cash drag which may lower
portfolio returns. However, as the Company is able to invest
in both bonds and loans, the Investment Manager has the
ability to adjust the asset mix towards bonds.
As a result, the level of dividends and other distributions
to be paid by the Company may fluctuate and there is no
guarantee that any such distributions will be paid.
There may be economic circumstances and wider market
considerations that arise, that mean the Investment Manager
and Board deem it appropriate to maintain higher levels of
cash reserves.
The Investment Manager regularly provides the Board with
reports on pipeline opportunities, which include analysis of
the expected returns available. The Directors also regularly
receive information on the performance of the existing
loans which includes analysis of the likelihood of any early
repayments which may impact returns.
Valuation Risk
The valuation and performance of the Company’s investments
that comprise its portfolio of real estate debt instruments
are the key value drivers for the Company’s NAV and interest
income. Judgements over fair value estimates could significantly
affect these key performance indicators.
The Company categorises its financial assets and liabilities
in accordance with IFRS 9 and establishes fair value utilising
the methodology in accordance with IFRS 13, as set out in
Note 14(d) to the financial statements. Further information
on valuation is detailed in the Audit and Risk Committee
Report on page 55 and Note 2 to the financial statements.
Credit Risk
Credit risk is the risk that a counterparty to a financial
instrument will fail to discharge an obligation or commitment
that it has entered into with the Company.
Market Bond Portfolio – The Company is subject to the risk
that issuers of asset-backed securities in which it invests may
default on their obligations and that certain events may
occur which have an immediate and significant adverse
effect on the value of such instruments. There can be no
assurance that an issuer of an instrument in which the
Company invests will not default or that an event which has
an immediate and significant adverse effect on the value of
such instruments will not occur, and that the Company will
not sustain a loss on the transaction as a result.
The Company seeks to mitigate this risk by monitoring its
portfolio of investments and reviewing the underlying credit
quality of its counterparties on a monthly basis. In addition
to the underlying credit quality of borrowers, the weighted
average life of the market bonds as at 31 March 2025 is two
years, which is an additional mitigant regarding any loss in
value due to changes in borrowers’ circumstances over the
long term.
Bilateral Loan and Bond Portfolio – The Company is subject
to the risk that the underlying borrowers to the loans and
bonds in which it invests may default on their obligations and
that certain events may occur which have an immediate and
significant adverse effect on the value of such instruments.
Any loan and bond may become a defaulted obligation for
a variety of reasons, including non-payment of principal or
interest, as well as covenant violations by the borrower in
respect of the underlying loan and bond documents. In the
event of any default on the Company’s investment in a loan
and bond by the borrower, the Company will bear a risk of
Annual Report and Accounts 2025Real Estate Credit Investments Limited18
loss of principal and accrued interest on the loan and bond,
which could have a material adverse effect on the Company’s
investment. There can be no assurance that a borrower will not
default, that there will not be an issue with the underlying
real estate security or that an event which has an immediate
and significant adverse effect on the value of these loans and
bonds will not occur, and that the Company will not sustain
a loss on the transaction as a result. The Company seeks to
mitigate this risk by performing due diligence and monitoring
its portfolio of investments, reviewing the underlying credit
quality of its borrowers, performance of the underlying asset,
and loan and bond covenant compliance against financial
information received and the performance of the security,
on a quarterly basis.
Market Risk
Market risk is the risk that the fair value and future cash flows
of a financial instrument will fluctuate because of changes in
market factors. Market risk comprises foreign currency risk,
interest rate risk and other price risk.
The Company’s strategy on the management of market risk is
driven by the Company’s Investment Objective as detailed
on page 6 and in Note 1 to the financial statements.
The Company’s market risk is managed on a daily basis by
the Investment Manager in accordance with policies and
procedures detailed in the latest Prospectus and summarised
in the financial statements.
Foreign Currency Risk
Foreign currency risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates. The Company is exposed
to foreign currency risk to the extent that foreign exchange
rates fluctuate in relation to financial instruments that are
denominated in currencies other than British Pounds (“GBP”
or “£”).
The Company manages its foreign exchange risk on a portfolio
basis. The Company may bear a level of foreign currency
risk that could otherwise be hedged where it considers that
bearing such risks is appropriate. The Company manages its
foreign exposure via forward foreign exchange contracts.
Interest Rate Risk
Interest rate risk is the risk that the fair value and future
cash flows of a financial instrument will fluctuate because
of changes in market interest rates.
The Company invests in both direct real estate loans and
floating rate real estate debt securities, which include CMBS.
Real estate loans can have fixed interest coupons and are
therefore potentially exposed to the wider effects of changes
in interest rates. For bonds, the interest rate risk arises from
the effects of fluctuations in the prevailing levels of market
interest rates on the fair value of financial assets and liabilities
and future cash flows. A segment of the portfolio consists of
floating rate debt investments which are exposed to interest
rate risk through changes in interest rates, potentially having
an effect on prepayments and defaults of the underlying
loans of the securitisations.
In addition to the underlying credit quality of borrowers, the
weighted average life of the loans as at 31 March 2025 is one
year, which is an additional mitigant regarding any losses in
value due to changes in borrowers’ circumstances over the
long term.
While retaining the ability to do so, the Company does not
currently enter into hedging arrangements in respect of
interest rate fluctuations.
Liquidity Risk
Liquidity risk is the risk that the Company will encounter
difficulty in meeting obligations associated with financial
liabilities on a timely basis. The Company’s liquidity risk is
managed on a daily basis by the Investment Manager in
accordance with policies and procedures detailed in
Note 14(c) to the financial statements. Where needed, the
Investment Manager will seek to liquidate positions to increase
cash or reduce leverage.
Much of the market for CMBS and real estate loans is relatively
illiquid. In addition, investments that the Company purchases
in privately negotiated (also called “over-the-counter” or “OTC”)
transactions may not be registered under relevant securities
laws or otherwise may not be freely tradable, resulting in
restrictions on their transfer, sale, pledge or other disposition
except in a transaction that is exempt from the registration
requirements of, or is otherwise in accordance with, those
laws. As a result of this illiquidity, the Company’s ability to vary
its portfolio in a timely fashion and to receive a fair price in
response to changes in economic and other conditions
may be limited.
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 19
Strategic Report (continued)
Furthermore, where the Company acquires investments for
which there is no readily available market, the Company’s
ability to deal in any such investment or obtain reliable
information about the value of such investment or risks to
which such investment is exposed may be limited.
For further information on risks, please refer to Note 14 to
the financial statements.
Other Risk Factors
The Board gives consideration to and, together with Cheyne,
monitors other relevant risks, in addition to the ones
highlighted above; this includes a consideration of any
relevant Emerging Risks as they evolve. The Board and Cheyne
regularly measure and evaluate the performance of the
providers. These currently include: geopolitical and
macroeconomic risks sustained higher interest rates and
stubborn inflation pressure, supply chain disruption, the
continuing impact of conflicts around the world; and the
effects of climate change and cyber security. Given the
short weighted average life of the assets, and the continual
replacement of assets in the portfolio from the wider
Investment Manager’s pipeline, such macro risks are worked
through in the life of the assets. Any issues that might
potentially impact the value of the investments, including
impacts to supply chains, are taken into account in the fair
value. An evaluation of each of the Company’s positions in
light of these risks is continually monitored. The performance
of service providers is a relevant risk, as the Company is
dependent on the performance of the service providers.
Hotel and Spa in the United Kingdom
Annual Report and Accounts 2025Real Estate Credit Investments Limited20
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 21
BUSINESS AND STRATEGY REVIEW
Positioning to grow into the accelerating
demand for European real estate credit
I would like to start the commentary on the past year by
acknowledging the immense contribution of both the
Company’s retiring Chairman, Bob Cowdell, and Board
member, John Hallam.
Bob has worked tirelessly with Cheyne, as manager, and the
Company’s advisors through the many challenges in the last
10 years. Firstly, in working to set forward a path to growth,
and then, in navigating the very difficult periods of Brexit,
the COVID Pandemic and also the turbulence of 2022. Each
of those periods required deft skills in navigating the risks
to the Company whilst continual communication with its
investors. Bob leaves RECI on a sound footing , ready to face
the challenges ahead.
I am happy to also welcome Mark Thompson and the new
Chairman, Andreas Tautscher. The team at Cheyne Real
Estate look forward to working with RECI’s Board in
furtherance of our service to investors.
Macroeconomic backdrop
and implications for real assets
Tariffs, growth, taxes, policy chaos, inflation (or disinflation)
and uncertainty. All of these factors have been magnified
since the election of a new US president in January 2025.
As investment managers seeking the most defensive and
highest return investments for our investors, we do need to
frame the continued changes in so many variables and their
implications over the short and longer terms.
To unpick the recent changes since January this year, the
following are clear to us:
1. Tariffs imposed by the Trump administration are highly
inflationary on the US consumer and are an impediment
to growth in the US (mainly)
2. More importantly, the chaotic and ill-conceived policies
of this US administration may well have very long-term
implications for global capital allocation and the movement
of the global skilled workforce
3. Europe, and the rest of the free world, are responding
rapidly in various ways to counter the effect of these
policies on their economics and security
4. The implications of all of these on the US are not the
same for the rest of the world
Investment
Manager’s Report
Supporting the Company’s
key objectives through
a challenging period
Ravi Stickney
Portfolio Manager
Managing Partner and CIO,
Cheyne Real Estate
Annual Report and Accounts 2025Real Estate Credit Investments Limited22
We see the following as just some of the factors that are
relevant for European real estate:
1. US tariffs are expected to be disinflationary on input
prices to European real estate (both for construction
and operations). This is due to the redirection of supply
away from the US markets to the rest of the world
2. Whilst the US is seeing rising inflation expectations,
the Eurozone, in particular, is experiencing the reverse.
Consequently, the rate cut expectations are pronounced
in the Eurozone, with expectations of benchmark rates
falling below 2.0% by end of 2026
3. The change in the flow of the global skilled workforce is
perhaps anecdotally captured by the following headlines:
(a) US applications for UK citizenship have hit a record high
with a 12% increase from the previous quarter (FT 23 May
2025) and (b) the UK is now the largest destination of
choice for US students and also all international students,
with a significant drop in demand for US universities
(Economist 28 April 2025). These factors are highly
supportive of the demand base for Living assets and,
especially, student housing and higher education
infrastructure assets
4. The Eurozone and the UK present policy stability and
a sharp focus on productivity and growth. The Draghi
report on the future of European competitiveness and
policy changes across the UK and Eurozone point to a
focus on growth, productivity, reduction in unnecessary
regulatory burden and economic security
5. The beginning of a reset in UK and European relations
6. Germany’s recent fiscal stimulus package focused on
boosting investment, infrastructure and energy transition
In the short term, we do expect the heightened uncertainty
unleashed by the US administration to be negative for real
asset investment sentiment and demand.
However, in the longer term, we see the above factors as
being very supportive for key UK and Eurozone real assets.
We also note the beginnings of incremental inward investment
shifts towards the rest of the world and away from the US.
This includes investor appetite for key real assets.
The significant need for debt capital
The long-term shift in policy focus to growth and productivity
necessitates a rapid investment in key real assets from
housing, industrial, offices and also infrastructure (energy,
digital, transport and social). The funding markets for real
assets in Europe and the UK remain lagging vs the large,
dynamic capital markets of the US.
As an example, US focused real estate credit funds raised
over $164 billion in the five years ending 2023 Private
Equity Real Estate (PERE), and of the largest 10 global real
estate debt managers, only one is domiciled in Europe (PDI
Real Estate Debt ranking).
All of this points to the growing need for debt capital
markets to support the creation (and retention) of these
much needed assets.
The debt capital markets for real assets in Europe are deeply
underserved due to (a) the continued restrictions on banks
from regulatory capital charges and (b) the very high barriers
to entry, into a highly specialised asset class, for nascent and
non-local managers.
Cheyne Real Estate has continually increased its presence
in the European real estate debt markets since inception in
2008. The supportive macro backdrop and growing need have
seen RECI’s manager (Cheyne Real Estate) grow its team,
geographic footprint and business size significantly.
It is our intent that RECI grows to scale into providing for
this immense long-term need.
RECI – Review of the prior year
RECI has navigated another challenging year by its continued
focus on:
• NAV preservation
• Income stability and income growth
• Dividend stability
• Growth
NAV preservation: Benefiting from the move to
senior loans
RECI’s move towards a focus on senior loans (accelerated
post the 2020 pandemic period), continues to give it the
ability to mitigate risks arising from macro or sponsor
challenges. Senior loans give RECI the absolute security,
governance, control and covenants necessary to work with
sponsors to navigate their challenged valuations. This has
been in sharp focus during the difficult post pandemic and
2022 period. It will also continue to provide support in this
period of tariffs and heightened uncertainty.
Challenged Sectors – Offices & Retail
The RECI senior loan book is resilient across its 17 deals. There
have been no additions to the challenged loan investments
from the prior year. The challenged sector, for RECI, remains
its two offices in France that have seen a slow take up post
the pandemic. These French office senior loans make up
10.8% of RECI’s NAV, post fair value losses, which have
increased since 2024. Both senior loans’ collateral are
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 23
Investment Manager’s Report (continued)
located in Paris. Both are to sponsors who have successfully
delivered prime “Grade A”, ESG excellent offices. Both assets
are, however, in secondary locations outside the core central
business district. Of the two, one asset is located in the
weaker eastern district (2.8% of NAV), whilst the other (larger)
asset is in the stronger north west district (8.1% of NAV).
The sponsor in the former asset has defaulted on its loan and
RECI has reduced the fair value of the loan to reflect the
ultimate recovery value that has been assessed by its valuers.
The loan is carried today at 81% of its par balance. The latter
asset continues to be supported by its private equity
sponsor, with further equity injections during the year and
an improving leasing landscape. RECI benefits from the
continued work of Cheyne Real Estate’s large French team
in working towards a recovery on both assets.
RECI’s exposure to retail rests in a single mixed-use asset,
which is currently carried at a valuation that is 38% of its par
balance and represents 0.9% of the Company’s NAV.
Repayments and reinvestment
Other than the challenged assets above, we continue to
see timely repayments on RECI’s loan book. This year has
seen the repayment of seven deals, with gross proceeds of
£113.6 million.
Yields available on new senior loans far exceed those created
prior to late 2022 (due to higher margins and base rates),
RECI has progressed on its path to a higher net income (and
hence dividend profile) via reinvestment into two floating
rate senior loans:
1. A senior loan with LTV of 65% secured by a core London
hotel portfolio
2. A senior loan with LTV of 48% secured by a core hotel in
the French Alps
RECI’s cost of leverage has declined during the year and
has been reflected in the cost of leverage secured on both
these investments. The running yield on these levered
senior loans is in excess of 12% today.
Over the last five years, since 2020, RECI’s loan book has
decreased substantially. This is due to the constraints on
available cash (with justifiable competing cash needs for
share buybacks and, in volatile times, cash retention as a
defensive measure).
A less granular loan book does lead to increased NAV
volatility as any fair value adjustment to the remaining
positions leads to an outsized variation on NAV. A less
granular book also impairs operational efficiency (for
example in cash flow optimisation).
Dividend
Maintaining, and improving upon, the net income of RECI is
key to supporting (and potentially adding to) the dividend
payments to investors. Dividend cover from total returns
for the year amount to 0.81x. The path to full dividend
cover remains (in absence of further capital formation),
the recycling of loan repayments into new investments at
higher returns and a marginally lower cost of financing.
Cheyne Team
The Cheyne Real Estate team today stands at 36 investment
professionals, supported by a captive loan servicing and
asset management team of a further 29 professionals.
The 65-strong team operates out of localised offices in
London, Paris, Madrid and Berlin, providing for a dedicated
long-term origination and management platform present
throughout Europe.
The Year Ahead
The prior year has seen RECI stabilise on its NAV movements
and also on its path to income growth. Whilst our work
towards those objectives has been satisfactory, the key
objective of growth has not been met.
In our view, the growth of RECI remains a key aim for Cheyne
for following reasons:
• RECI should be fully capable of participating in the fast
growing, compelling market for senior lending in Europe
• New loans provide higher risk adjusted returns, driving
higher income without increased risk
• A larger book promotes efficiency in funding and cash
flow management, thus improving further on long-term
stable net income
• A larger, more diverse book presents lower NAV volatility
from any single impaired position
• A larger RECI should provide for increased liquidity and
investability for investors
We remain committed to the management of RECI and to
working with its investors and Board and we look forward to
working on our objectives for the Company, including the
delivery on the growth of the Company.
Annual Report and Accounts 2025Real Estate Credit Investments Limited24
Student accommodation in the United Kingdom
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 25
BUSINESS AND STRATEGY REVIEW
The Board is committed to promoting the long-term
success of the Company whilst conducting business
in a fair, ethical and transparent manner.
Whilst directly applicable only to companies incorporated in
the UK, the Board recognises the intention of the AIC Code
that matters set out in section 172 of the Companies Act
2006 are reported on. The Board strives to understand the
views of the Company’s key stakeholders and to take these
into consideration as part of its discussions and decision-
making process. As an investment company, the Company
does not have any employees and conducts its core activities
through third-party service providers.
Each provider has an established track record and through
regulatory oversight is required to have in place suitable
policies and procedures to ensure they maintain high
standards of business conduct, treat their own stakeholders
fairly, and employ corporate governance best practice.
The Company strongly believes that fostering healthy
and constructive relationships with its broad range of
stakeholders should result in increased Shareholder value
over the long term.
Stakeholder
Engagement
Co-living development in the United Kingdom
Annual Report and Accounts 2025Real Estate Credit Investments Limited26
Why they are important
The Board believes that the maintenance of good relations with Shareholders is important for the long-term prospects of the
Company and seeks engagement with investors.
How the Board engages
The Directors and Cheyne are committed to providing detail and transparency regarding the Company’s portfolio and
investment strategy, allowing all investors to focus upon RECI and its merits and opportunities, notwithstanding the broader
market environment. The Chairman and other Directors are available for discussion about governance and strategy with
major Shareholders and the Chairman ensures communication of Shareholders’ views to the Board. The Board also receives
feedback on the views of Shareholders from Panmure Liberum Limited (the “Corporate Broker”) and the Investment Manager,
and Shareholders are welcome to contact the Chairman or any Director at any time via the Company Secretary.
Key activities during the year
AGM
The Directors believe that the AGM
provides an appropriate forum for
Shareholders to communicate with the
Board and encourages participation.
There is an opportunity for individual
Shareholders to question the Chairmen
of the Board and the Audit and Risk
Committee at the AGM. The Board
assesses the results of AGMs considering
whether the number of votes against or
withheld in respect of resolutions are
such as to require discussion in the
subsequent Annual Report.
Publications
The Company reports to Shareholders
with both monthly fact sheets and
quarterly update presentations, along
with the Annual and interim reports.
These are available on the
Company’s website:
realestatecreditinvestments.com
In accordance with the EU Packaged
Retail and Insurance-based Investment
Products Directive on 1 January 2018,
a Key Information Document is available
on the Company’s website.
Events
Throughout the last financial year,
the Investment Manager continued to
provide a detailed and comprehensive
review of RECI’s portfolio as part of
our programme of enhanced investor
communication. A number of online
events and meetings were held to
maintain a regular dialogue with
our Shareholders and potential new
investors. In addition, the Board
continues to work with its service
providers to enhance the Company’s
website and fact sheet.
Investors
Assisted living residence in the United Kingdom
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 27
Stakeholder Engagement (continued)
Why they are important
In carrying out its activities, the Company aims to conduct itself responsibly, ethically and fairly. The Directors recognise the
importance of environmental, social and governance factors, including climate change, when pursuing the Company’s Investment
Objective and in the selection of the service providers and advisers the Company works with. The Board is alive to the magnitude
of the evolving ESG landscape. It has determined that ESG considerations, and their communication, must be fundamental
to all its operations and has consequently nominated an ESG lead to co-ordinate and drive internal discussion. The Board, in
conjunction with the Investment Manager, continues to closely monitor upcoming regulation and any developments in this area.
How the Board engages
The Board’s ESG Lead, Colleen McHugh works closely with Cheyne in monitoring RECI’s approach towards developing and
implementing ESG. Pages 30 to 35 of the Sustainability Report provide further information about the Company’s and the
Investment Manager’s approach to ESG matters.
Key activities during the year
The Investment Manager engages on an ongoing basis with an external Real Estate ESG specialist consultant to assist with
developing its framework and provide assurance on a comprehensive scorecard-based approach using a borrower questionnaire
and ESG data templates for each deal. The questions in Cheyne’s borrower questionnaire have been grouped and weighted to
enable a proprietary 0-5 scoring against the following Target Characteristics:
• E1 Commitment to Environmental Risk Monitoring
• E2 Contribution to Positive Environmental Action
• S1 Supporting Social Wellbeing
Qualifying Investments must achieve a score of 3 or higher on at least one of the Target Characteristics.
The ultimate aim is to align the Investment Manager’s principles with industry recognised benchmark standards to identify
a minimum ESG standard needed across RECI’s portfolio. The move to a more qualitative system has significantly helped the
Investment Manager identify and understand ESG-based risks in its portfolio more easily, and not only assist with lowering risk
and increasing quality, but also helped collate and measure the data required to track progress in what is a fast-moving but
increasingly important area of focus. The Investment Manager has now fully embedded the ESG framework within its investment
process, which includes regular training for the Real Estate team and wider Cheyne employees.
The Investment Manager has also appointed a leading Real Estate asset-level focused sustainability consultant to develop its
Decarbonisation Strategy. Every proposed transaction across RECI’s portfolio is now subject to a Carbon Risk Real Estate Monitor
(“CRREM”) alignment assessment. An asset is considered CRREM-aligned if its current or projected operational carbon and
energy use intensity are in line with the targets set by CRREM for a particular building type, location and time horizon. These
targets are based on global climate goals to limit warming to 1.5°C or 2°C, and becoming CRREM-aligned means the asset
avoids ‘stranding’ by maintaining acceptable levels of carbon intensity as regulations and market expectations tighten over time.
Additionally, the Company has decided to purchase carbon offsets for all flights that may be required by the Directors and the
Investment Manager, thereby facilitating a carbon neutral position, as pertains to travel. The Company recognises that this action
is the first step in an evolving climate strategy, that should encompass carbon removal as well as carbon offsets.
To further reduce its carbon footprint, Shareholder communications are electronic only for Shareholders on the share register.
Accordingly, the Company’s website is now the default method of communication for Shareholder publications. Currently
approximately 72% of the Company’s Shareholder register receive documents and other communications electronically.
Community and Environment
Annual Report and Accounts 2025Real Estate Credit Investments Limited28
Why they are important
Effective relationships with service providers help the Company achieve its objectives, including its investment objectives, and
to operate in an efficient and compliant manner.
Commercial service providers: Investment Manager, Administration agent, Corporate broker, Legal advisers, Auditor and Key
service providers are retained, providing continuity of service and familiarity with the objectives of the Company.
The Audit and Risk Committee receives information from the Company’s service providers with the majority of information being
directly sourced from the Company Secretary, Administrator, the Investment Manager and the external auditor.
How the Board engages
The Management Engagement Committee meets at least once a year for the purpose of evaluating the performance of the
Company’s service providers, the review of service agreements and service level statements and the level and method of their
remuneration. The Audit and Risk Committee considers the nature, scope and results of the auditor’s work and reviews its
performance annually prior to providing a recommendation to the Board on the reappointment or removal of the auditor.
Key activities during the year
The Board has detailed and constructive discussions with major service providers regarding service provision and fees. Details
of the responsibilities of the Investment Manager, Investment Advisor, MUFG Corporate Markets (Guernsey) Limited (Registrar),
and Aztec Financial Services (Guernsey) Limited (Company Secretary) can be found on page 100. Other service providers include
our corporate broker, lenders, auditors, counsel and other advisors.
Service Providers
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 29
Sustainability Report
BUSINESS AND STRATEGY REVIEW
RECI’s Approach to Sustainability
RECI aims to operate in a responsible and sustainable manner
over the long term. The Company prioritises continuous
enhancement of ESG credentials across the portfolio, and
its success is aligned with the delivery of positive outcomes
for all its stakeholders, not least the communities in which
the buildings that it finances, live, work and enjoy.
The Company’s main activities are carried out by Cheyne, the
Investment Manager, and as such the Company adopts the
Investment Manager’s policy and approach to sustainability
and integrating ESG principles.
The Investment Manager was one of the initial signatories to
the Standards Board for Alternative Investments (formerly
known as the Hedge Fund Standards Board) and is a
signatory to the United Nations-supported Principles for
Responsible Investment (“UN PRI”).
Several standards and codes have received prominence as
metrics for investment managers. These include, for example,
the UN PRI, the Task Force on Climate-related Financial
Disclosures (“TCFD”), the Financial Reporting Council’s
Stewardship Code, and the FCA’s Sustainability Disclosure
Requirements (“SDR”). As of 15 December 2023, the Financial
Stability Board (“FSB”) requested the IFRS take over from,
and be responsible for, the monitoring of climate-related
disclosures from the TCFD.
The UK government has started the process of how to
endorse the IFRS Sustainability Disclosure Standards
for use in the UK. This reporting framework will be known
as the UK Sustainability Reporting Standards and is not
expected to be effective until January 2026 at the earliest.
The Investment Manager’s Stewardship Committee provides
firmwide oversight over its processes, seeking to ensure
compliance with existing Responsible Investment and ESG
policies and procedures, and creates a direct communication
channel for all ideas and concerns around ESG. In addition,
the ESG Implementation Forum acts as a conduit for the
streamlining of various initiatives across investment lines
and ensures that it continuously improves its ESG standards.
Cheyne’s Partnership with Evora Global
ESG considerations have formed
a key part of Cheyne’s approach to
investments in real estate for many
years. In February 2022, Cheyne
partnered with Evora, widely recognised as one of the leading
sustainability consultancy specialists to the real estate industry,
to formalise its approach to the incorporation of sustainability
considerations into the investment process.
The ongoing partnership with a leading external specialist is
expected to enable Cheyne to remain at the forefront of the
rapidly evolving ESG agenda and provide an independent
checkpoint to challenge their ESG investment process and
ensure robustness.
Cheyne’s Partnership with
Carbon.Climate.Certified
This new partnership, established in September 2024,
represents the evolution of Cheyne’s approach to ESG as
it relates to their real estate portfolios.
Cheyne has appointed Carbon.Climate.Certified (“CCC”) to
prepare a CRREM alignment assessment for every proposed
transaction. A CRREM aligned asset has an emissions and
energy intensity profile aligned with the Paris climate goals
of limiting global temperature rise to 2° C, with ambition
towards 1.5° C. For standing assets, this is the current profile,
for development assets, the projected profile to have
once operational.
CCC will work to establish the scope for the net zero pathway,
determine targets, deliverable requirements and create an
action plan for net zero alignment and staged gateway
reporting. Cheyne will evaluate the assessment, together
with the borrower, to consider viability of achieving CRREM
alignment. While not all our investments will be CRREM
aligned, we require all our borrowers to commit to the
CRREM alignment assessment process.
Annual Report and Accounts 2025Real Estate Credit Investments Limited30
Cheyne Real Estate Core ESG Principles
VALUE ENHANCING
ACTIVELY ENGAGEDRISK REDUCING
Cheyne believes that an overarching focus on
ESG considerations is entirely aligned with our
investment goals.
• Sustainability credentials directly support
real estate valuations
• Sustainable, energy efficient buildings are
more valuable to asset owners by:
– Supporting higher rents, lower vacancies
and lower operating costs
– Supporting exit valuations.
ESG considerations in our investments are not merely
a passive analysis but rather the opportunity to effect
positive change.
• Cheyne is a key stakeholder in our investments,
frequently the sole lender to a real estate asset
• This provides the ability to directly engage with all
new sponsors to help drive the ESG agenda directly
and seek to address any deficiencies and opportunities
to improve sustainability credentials of the asset
• This is particularly relevant in development, value add
and transitional financing, which represents a core
focus for Cheyne.
Incorporating Sustainability into the Investment Process
Due Diligence
RECI is primarily invested in real estate loans and other
real estate-based debt investments. Key factors taken into
consideration, where appropriate and possible, are best-in-
class environmental, design and construction standards,
a focus on Building Research Establishment Environmental
Assessment Method (“BREEAM”) ratings, governance
rights and engagement with sponsors. Sustainability risks
are considered during the Investment Manager’s initial due
diligence in respect of an investment opportunity, including
as part of the external valuations of the real estate being
financed (such valuations typically consider any environmental
and/or social risks) and early engagement with potential
borrowers or issuers through a data gathering exercise.
The Investment Manager’s analysts also compile reports using
data gathered from their own due diligence and external
reports, environmental performance indicators (including
BREEAM ratings and Energy Performance Certificates)
and investigations (including through the use of forensic
accountants and other third-party consultants). This information
is included in the investment committee memorandum, which
is considered by the Investment Manager’s investment
committee prior to an investment being made.
Decision-Making Process
Sustainability risks are considered as part of the investment
decision-making process for RECI. In particular, the following
sustainability risks are typically considered, both in respect of
the real estate being financed and/or the relevant borrower
or issuer:
• Environmental: power generation (including its
sustainability), construction standards, water capture,
energy efficiency, land use and ecology and pollution.
• Social: affordable housing provisions, community
interaction and health and safety conditions.
• Governance: management experience and knowledge and
anti-money laundering, corruption, and bribery practice.
Documentation
The Investment Manager seeks to ensure that borrowers are
formally required to adhere to its ESG processes, as well as
applicable ESG laws and regulations, as a condition to
lending. ESG considerations are therefore an integral part of
RECI’s loan documentation. All borrowers are expected to
comprehensively complete ESG data requests in a timely
manner, including the ESG questionnaire and carbon emissions
data and/or energy use data. In addition, the Investment
Manager expects its borrowers to commit to a CRREM
alignment evaluation, and engage in a discussion on viability
of achieving CRREM alignment.
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 31
Sustainability Report (continued)
Ongoing Management
Sustainability risks also form part of the ongoing monitoring
of RECI’s investments, with regular reports and ongoing
engagement from borrowers and issuers incorporating
information related to sustainability risks provided to the
Investment Manager. Where appropriate, the investment team
will assist borrowers and issuers in addressing ESG-related
issues and support its borrowers’ and issuers’ efforts to
report externally and internally on their ESG approach and
performance in relation to material sustainability risks.
Exit
ESG considerations are already having an impact on
underlying real estate values and whilst clear data-driven
evidence is in its infancy, the Investment Manager is
acutely aware that during the life of the loans that RECI is
writing, this will become much clearer. As such this is an
important consideration regarding risk analysis now; hence
the approach above is an integral tool when calculating,
managing and measuring risk.
Business as Usual
Cheyne has taken a staged approach in developing its
ESG strategy, with its philosophy drawing on the following
four drivers:
• The Greater Good
• Value Enhancement/Risk Management
• Regulation
• Investor Expectations
Cheyne has worked with Evora to prepare customised
ESG questionnaires for each of the real estate asset types
the Cheyne real estate lending funds finance: standing,
refurbishment and development assets, together with a
borrower questionnaire. An ESG data template has also been
prepared (one template for all asset types).
The questionnaires seek to quantify each investment’s
performance against key ESG criteria, utilising a consistent
approach to enable aggregation across the assets within the
relevant Cheyne fund. The score is set at a stringent enough
level to effect a conversation about enhancing the ESG
characteristics if they are not up to Cheyne’s standards.
The questionnaires are used by Cheyne’s analysts to undertake
a broad-based ESG evaluation of a proposed investment
– focusing on both the sponsor and the asset itself.
Standards and Guidance
A range of external guidance and best practice standards
have been used to inform the development of the ESG
questionnaires, including:
• Global Real Estate Sustainability Benchmark (“GRESB”)
• Building Research Establishment Environmental
Assessment Method (“BREEAM”)
• EU Taxonomy
• Sustainable Finance Disclosure Regulations (“SFDR”)
• Minimum Energy Efficiency Standards (“MEES”)
Outlook and Focus Areas 2025 and Beyond
The Company knows that its Shareholders, including the
Directors of the Company, see attention to ESG factors as
critical in its assessment of Cheyne as the Investment
Manager. The Company expects ESG to remain a dominant
theme within the financial services industry going forward;
the course being taken by regulators suggests that its
importance will only increase in years to come; the research
process and the investment judgements the Company makes
will continue to reflect that and to evolve as necessary.
The continuing evolution is demonstrated through the
Investment Manager in completing and implementing its ESG
framework which now forms the basis of an evaluation tool
to influence investment decisions from an ESG perspective
for new projects. The addition of a leading ESG asset level
consultant to capture more defined asset level metrics and
formulate a Decarbonisation Strategy, represents the next
phase of the Investment Manager’s ESG evolution. This
commitment reflects the Investment Manager’s dedication to
environmental stewardship, sustainability, and the wellbeing
of the communities it serves. As part of its involvement
with this project, the Investment Manager will assess the
alignment of its investments with the CRREM framework,
to secure its assets and reduce the risk of stranding.
The Investment Manager firmly believes that adopting this
approach will:
• Enhance the quality of the portfolio and help to
protect value;
• Stay ahead of investor demand to invest in sponsors that
have a plausible and demonstrable ESG strategy;
• Use capital to drive/accelerate change in the Real Estate
arena in regard to ESG; and
• Provide a measurable approach to understanding the
ESG dynamics of our portfolio.
Annual Report and Accounts 2025Real Estate Credit Investments Limited32
Hotel in Finland
These efforts are being fully incorporated into the investment
process and allow the Investment Manager to influence
borrowers and to improve the ESG standards of projects
which they fund.
Looking ahead, one of the main focuses will be on evolving
regulatory requirements. This year the Investment Manager
will produce its second FCA TCFD entity report. Cheyne will
also be producing a publicly available FCA TCFD product
level report for RECI, due to its role as Investment Manager.
In addition, the Investment Manager is monitoring the potential
forthcoming changes to the SFDR. The European Supervisory
Authorities (“ESAs”) have published a joint opinion on this
matter, which suggest turning the SFDR into either a product
categorisation regime and/or a framework that uses
sustainability indicators to grade sustainability products.
The European Commission will take the ESAs’ joint opinion
into consideration as part of its review into SFDR, but it is
under no obligation to make the changes recommended.
There is no firm date for the European Commission’s revision
of the SFDR, but proposals are expected during 2025.
Further details on Cheyne’s ESG policy can be found on its
website: cheynecapital.com/esg-responsible-investment/
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 33
Responsible Investment Highlights 2025
(Unchanged from 2024)
Investment example 1
Taxi House – Co-Living Scheme (United Kingdom)
• The co-living development will
be a car-free development, and
residents will be encouraged
to use sustainable modes of
transport and the scheme will
have dedicated cycle parking
• The Sponsor is dedicated to
deliver as BREEAM Outstanding
utilising a range of green and
sustainable technologies
and measures
• The Sponsor will also ensure
100% of electricity and gas
supplies are from renewable
energy sources
• The Sponsor will strive to
achieve a recycling rate of 90%
and zero waste to landfill.
• The Sponsor will aim to provide
rental levels for studio apartments
which are 10% lower than the
comparable rents in the area
• The scheme will be devoted to
tackling the issue of loneliness
and isolation through communal
spaces and on-site events
• The co-living concept provides
high-quality community-focused
accommodation. Ample amenity
spaces are dedicated for the
residents to socialise and form
a community
• The scheme will provide local
employment opportunities
through apprenticeships and
training at the site.
• Cheyne has a firm grasp
over the governance of
the structure and
continues to oversee
management initiatives
• Cheyne will retain control
rights through its JV
participation and will
therefore ensure the
Sponsorship upholds the
highest quality of due
diligence and governance
in its investments
ENVIRONMENTAL
GOVERNANCE
SOCIAL
Co-living residence in the United Kingdom
Annual Report and Accounts 2025Real Estate Credit Investments Limited34
Investment example 2
Fulton Road – Residential Development (United Kingdom)
• Air source heat pump
technology will provide
heating and hot water
• 50% carbon reduction,
41 photovoltaic panels,
2,037 square metres of new
public planning, 51 new trees
and 2,500 square metres of
biodiverse green roofs
• Biodiversity net gain and
BREEAM Excellent rating.
• The project has helped create
up to 925 construction jobs
and 205 permanent jobs
• Regal will establish on-site
training and construction
academies at its developments
to support and give back
to local communities in an
exclusive relationship with
Building Heroes
• Two new pedestrian raised
table crossings and a new
bus shelter
• New cycle connections and
four new public spaces
including 3,192 square metres
of new play spaces.
• Regal are a strongly governed
business with environmental,
anti-slavery and human
trafficking, modern slavery
and health and safety policies
in place and followed
• They are in the process of
creating their Diversity
and Inclusion policy.
ENVIRONMENTAL
GOVERNANCE
SOCIAL
Residential development in the United Kingdom
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 35
Student accommodation in the United Kingdom
GOVERNANCE
Andreas Tautscher
(Chairman from 1 November 2024)
(Guernsey Resident).
Mr Tautscher is an experienced Financial Services former
executive who now focuses on acting as an Independent
Director on Listed and Private Funds as well as other regulated
businesses. He is currently a Director and Chairman of Audit
Committee for two AIM Listed Boards, a LSE listed Aircraft
Leasing platform as well as a local Bank and Asset Manager.
From 1994 until 2018, Andreas was a senior executive at
Deutsche Bank and was most recently CEO Channel Islands
and Head of Financial Intermediaries for EMEA and LATAM.
He also sat on the UK Regional Governance Board of Deutsche
and the EMEA Wealth Management Exco. He has also served
on Local Government advisory committees and was for six
years a non-executive director on the Virgin Group Board.
Andreas’ first career was in the Oil Industry as a Geologist
before moving to PricewaterhouseCooper CI LLP where he
qualified as a Chartered Accountant in 1994. He has been a
member of the Board since May 2024.
Susie Farnon
(Chair of the Audit and Risk Committee, Chair of the
Nomination Committee from 1 November 2024 and
Senior Independent Director from 12 June 2024)
(Guernsey resident).
Mrs Farnon is a Fellow of the Institute of Chartered Accountants
in England and Wales and qualified as an accountant in 1983.
She is a former Banking and Finance partner of KPMG Channel
Islands from 1990 until 2001 and head of the Channel Island
Audit Practice from 1999. She has served as President of the
Guernsey Society of Chartered and Certified Accountants
and as a member of the States of Guernsey Audit Commission
and as vice-chairman of the Guernsey Financial Services
Commission. Susie is a non-executive director of two investment
companies listed on the London Stock Exchange and was a
board member of the Association of Investment Companies
from 2018 until January 2025.
Board of Directors
Annual Report and Accounts 2025Real Estate Credit Investments Limited38
Colleen McHugh
(Chair of the Management Engagement Committee,
Chair of the Remuneration Committee from 1 November
2024 and ESG Lead)
(Guernsey resident).
Mrs McHugh is an experienced investment professional with
over 25 years in the financial services industry, including roles
in investment management and private banking. She has
worked with publicly listed banks such as HSBC, Barclays, and
Butterfield Bank, primarily within international financial centres.
Her career includes senior investment roles, most recently as
Chief Investment Officer at Wealthify, a UK-regulated digital
adviser within the Aviva PLC group, and previously as Managing
Director of 1818 Venture Capital, a Guernsey-based licensed
asset manager. In addition to her executive experience, Colleen
serves as a non-executive director on the boards of listed
and private investment funds, as well as a Guernsey-licensed
commercial and captive insurance company. Colleen is a
Chartered Wealth Manager and a Fellow of the Chartered
Institute for Securities & Investment (CISI). She holds an
Economics degree from the University of Ireland, Galway,
and an MBA from the University of London. She has also
recently completed the ESG Investing Certificate from the
CFA Institute. She has been a member of the Board since
March 2021.
Mark Thompson
(Independent Director)
(Guernsey resident).
Mr Thompson is a Guernsey resident with over 30 years’
experience in the offshore finance industry. He is a Chartered
Accountant (ICAEW), Chartered Director (IoD) and a former
chairman of the Guernsey Branch of the Institute of
Directors. Mark is a non-executive director of Rocq Capital
Holdings Limited and was formerly the chairman of the
London listed investment company Trian Investors 1 Ltd. Mark
worked for KPMG for 31 years in London, Hong Kong and
Guernsey where his roles included audit partner, head of
audit and senior partner of KPMG in the Channel Islands.
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 39
GOVERNANCE
Ravi Stickney
Head of Cheyne Real Estate/Portfolio Manager
Ravi is Head of the Real Estate Team. He joined Cheyne in 2008
and has 20 years’ experience in the real estate debt markets.
Previously, he was on ING Bank’s proprietary investments
desk (2005 to 2008), with sole responsibility for managing
a €400 million long/short portfolio of European commercial
real estate credits and CMBS. Prior to that, he was at Lehman
Brothers (2002 to 2005), structuring and executing UK and
European CMBS/RMBS and commercial real estate mezzanine
loans. He acted as sole operating adviser on the restructuring
and eventual sale of the first distressed UK CMBS deal, and
he continues to play an active role in the direction of various
distressed European real estate credits. He began his career on
the UK commercial real estate desk at Ernst & Young in 1998.
Andrew Sergeant
Head of Operations,
Real Estate
Andrew has 16 years’ experience with Cheyne, having joined
in 2007. He is responsible for the daily operations of the Real
Estate business including cash management, securitisations,
loan drawdowns, hedging, tax compliance and corporate
governance. Andrew is an approved director in Jersey under
the JFSC and holds several UK directorships. Prior to Cheyne,
Andrew held trading support positions at Deutsche Bank,
JP Morgan, and Citibank. Andrew earned a First Class BA
from the University of Leicester in 2003 and holds the CFA
Certificate in Investment Management (IMC).
Kirran Sky
Deputy Portfolio Manager, Real Estate
Kirran joined Cheyne in 2022 from a subsidiary of Oaktree
Capital where he worked with the flagship Opportunities
Funds since 2016 in Portfolio Management, Origination/UW,
and modelling/systems development. Prior to this he worked
for Apollo Global Management’s European Principal Finance
funds in Portfolio Management, and Nationwide Building
Society’s Management Development Programme in Non-
Performing Loans, and Commercial Credit Risk. Kirran has a
BSc in Mathematics from Loughborough University.
Ashley Martinelli
Portfolio Associate
Ashley joined Cheyne in 2024 as Portfolio Associate with the
Real Estate Team in the London office. Ashley comes from
JP Morgan Chase where she was Audit Senior Associate.
Previously, she completed the Audit graduate program at PwC
Ireland in the Asset and Wealth Management division. Ashley
is a Chartered Accountant and a CFA charter holder. She has
earned a BSc in Business and Economics at the University of
Bologna and an MSc in Finance at UCD’s Michael Smurfit
Graduate Business School.
Management Team
Annual Report and Accounts 2025Real Estate Credit Investments Limited40
Sa’ad Malik
Structured Credit
Sa’ad joined Cheyne in 2016. Prior to
joining Cheyne, he founded Rhino
Investment Management LLP in 2011,
an FCA-authorised boutique investment
and advisory firm, active in the European
commercial real estate market. Among his
responsibilities were strategy, origination,
client management, structuring and
execution. He previously worked for
Lehman Brothers International (Europe)
in 2004, and for Credit Suisse Securities
(Europe) Limited in 2005, when he was
Director in their European Real Estate
Finance & Securitisation area, and had a
central role in building the Titan Europe
CMBS platform. Sa’ad started his career
in 2000 with Commerzbank Securities
in Asset-Backed Finance.
Lydia Boos
Legal Counsel
Lydia is Legal Counsel for the Cheyne
Real Estate Team. Prior to joining Cheyne
in 2018, Lydia was a senior associate at
Bryan Cave Leighton Paisner LLP where
she worked since starting her legal
training in 2008. Lydia joined BCLP’s
real estate finance department upon
qualifying as a solicitor in September
2010. At BCLP, Lydia was responsible for
advising a range of lender and sponsor
clients on real estate focused investment
and development transactions across
a variety of sectors, often including
complex intercreditor structures.
Arron Taggart
Head of UK
Arron has over 25 years’ experience in the
real estate markets. He joined Cheyne
in August 2012 to originate real estate
loans in the UK and Northern Europe.
Prior to Cheyne, Arron was a Property
Specialist and Partner at Clydesdale
Bank responsible for the origination and
execution of real estate loans in London
and the South of England. He was also
responsible for the management of the
loan portfolio and setting regional strategy.
Prior to Clydesdale Bank, he was at
Bank of Scotland and Hitachi Capital.
Raphael Smadja
French Origination
Raphael joined Cheyne in January 2014
and has 20 years’ experience. Prior to
Cheyne, he was an Associate Director
in Real Estate Finance at Deutsche
Pfandbriefbank, responsible for sourcing
and structuring commercial real estate
loans across Europe. Prior to that, he
held positions within the Real Estate
Finance and CMBS space at Moody’s,
UBS and Morgan Stanley.
Daniel Schuldes
European Origination
Daniel has over 18 years’ experience in
the European real estate debt and ABS
markets. He joined Cheyne in 2007 and
specialises in the origination, structuring,
negotiation and execution of German
real estate credit transactions. He was
previously an associate on Credit Suisse’s
asset finance team in London, which was
responsible for originating and structuring
the bank’s European securitisations.
He focused on fundamental analysis of
RMBS collateral.
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 41
GOVERNANCE
General Information
The Company was incorporated in Guernsey on 6 September
2005 with registered number CMP43634.
The “About the Company” section of the Annual Report on
page 6 provides information regarding the structure of the
Company, the investment objective and the listing details
of the shares of the Company.
The Company’s investment management activities are
managed by the Investment Manager, who is also the
Alternative Investment Fund Manager (“AIFM”). The Company
has entered into an Investment Management Agreement
under which the Investment Manager manages its day-to-
day investment operations, subject to supervision by the
Company’s Board of Directors. The Company is an Alternative
Investment Fund (“AIF”) within the meaning of the Alternative
Investment Fund Managers Directive (“AIFMD”) and
accordingly the Investment Manager has been appointed
and registered as the AIFM of the Company.
Principal Activity and Business Review
The principal activity of the Company during the year was
that of an investment company investing in real estate credit
investments. For full details of the Investment Policy of the
Company see page 6.
Results and Dividends
The results for the year and the Company’s financial position
as at year end are shown on pages 69 and 70. Dividends
totalling £26.7 million (31 March 2024: £27.4 million) were
paid on the shares during the year.
A fourth interim dividend for the year ended 31 March 2025
of 3.0 pence per share (31 March 2024: 3.0 pence per share)
was declared by the Directors on 24 June 2025 and is payable
on 25 July 2025. This fourth interim dividend has not been
included as a liability in these financial statements.
The Company purchased 3.3 million (31 March 2024:
4.1 million) shares in the market during the year. The total
amount paid to purchase the shares was £4.2 million (31 March
2024: £5.0 million).
Capital Structure
Details of the authorised, issued and fully paid share capital,
together with details of the movements in the Company’s
issued share capital during the current and prior year, are
shown in Note 13 to the financial statements.
The Company has one class of shares which carry no right
to fixed dividends. Each share carries the right to one vote
at general meetings of the Company.
No person has any special rights of control over the Company’s
share capital.
Board of Directors
The Board appoints all Directors on merit. When the
Nomination Committee considers Board succession planning
and recommends appointments to the Board, it takes into
account a variety of factors. Knowledge, experience, skills,
personal qualities, residency and governance credentials
play an important part.
The Directors of the Company who served during the year
and to the date of this report were:
Andreas Tautscher (appointed 7 May 2024 and Chairman
from 1 November 2024)
Susie Farnon
Colleen McHugh
Mark Thompson (appointed 4 November 2024)
Bob Cowdell (resigned 31 October 2024)
John Hallam (resigned 18 September 2024)
The following summarises the Directors’ directorships in other
public companies listed on the London Stock Exchange:
Director Company Name
Andreas Tautscher Doric Nimrod Air Three Limited
Doris Nimrod Air Two Limited
Susie Farnon Apax Global Alpha Limited
Ruffer Investment Company Limited
Colleen McHugh Ruffer Investment Company Limited
The Directors present their report and the audited
financial statements for the year ended 31 March 2025.
Directors’
Report
Annual Report and Accounts 2025Real Estate Credit Investments Limited42
All Directors are independent of the Investment Manager
and free from any business or other relationship that would
materially interfere with the exercise of their independence.
Mrs Farnon and Mrs McHugh are both on the board of Ruffer
Investment Company Limited but the Company believes that
this does not impact their ability to be considered independent.
With regard to the appointment and replacement of Directors,
the Company is governed by its Articles of Incorporation
(the “Articles”) and the Companies (Guernsey) Law, 2008
(as amended). The Articles themselves may be amended
by special resolution of the Shareholders. The powers of
Directors are described in the Articles and in the financial
statements in the Corporate Governance Statement.
The Directors’ interests in the share capital of the Company
(some of which are held directly or by entities in which the
Directors may have a beneficial interest) as at the publication
date are:
Number of % of
Shares Company
Andreas Tautscher
(Chairman) 17,500 0.01%
Susie Farnon 57,250 0.03%
Colleen McHugh 70,000 0.03%
Mark Thompson 10,000 0.00%
Substantial Interests in Share Capital
Chapter 5 of the Disclosure and Transparency Rules, requires
disclosure of major Shareholder acquisitions or disposals (over
5% of the shares) in the Company (see list below of major
Shareholders). During the year, there were ten notifications
of such transactions (31 March 2024: three notification).
Since 1 April 2025, there were no notifications.
List of major Shareholders as at 31 March 2025:
Name
Total
Shares
Held
%
Shares
Held
Close Brothers Group 23,266,882 10.49%
Hargreaves Lansdown PLC 17,422,571 7.85%
Premier Milton Group 13,255,018 5.97%
Aberdeen plc 12,233,727 5.51%
Waverton Investment Management 11,933,884 5.38%
Canaccord Genuity Group Inc 11,311,278 5.10%
Tilney Smith & Williamson 11,100,879 5.00%
Issued Share Capital
The issued share capital of the Company was 229.3 million
shares, consisted of 221.9 million outstanding shares and
7.4 million treasury shares (31 March 2024: 229.3 million
shares, consisted of 225.2 million outstanding shares and
4.1 million treasury shares).
Directors and Officers Liability Insurance
Directors and Officers liability insurance is in place and was
renewed on 6 July 2024.
Listing Information
The shares are currently listed and traded on the Main Market
of the London Stock Exchange.
Website
The Directors are responsible for the oversight of the website
and delegate to Cheyne responsibility for the maintenance
and integrity of the financial and corporate information
included on it.
The Investment Manager
Having reviewed the performance of the Investment Manager,
the Directors are satisfied that the continued appointment
of the Investment Manager on the terms agreed is in the
best interests of the Shareholders and the Company. The
Company has entered into the Investment Management
Agreement under which the Investment Manager manages its
day-to-day investment operations. Details of the Investment
Management Agreement can be found in Note 17 to the
financial statements.
Auditor
During the year the Audit and Risk Committee conducted a
tender process for the position of external auditor, which,
in-line with best practice, included one “challenger” audit
firm. A request for proposal was sent to suitably qualified
audit firms and a rigorous interview process was conducted
for those firms that tendered. The Board will nominate
PricewaterhouseCoopers CI LLP at the 2025 AGM to be
appointed external auditor and a motion will be proposed to
Shareholders on whether to approve their appointment.
The Audit and Risk Committee reviews the appointment of
the auditor on an annual basis.
Principal Risks and Uncertainties
Principal risks and uncertainties are discussed in the
Strategic Report.
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 43
Directors' Report (continued)
Related Party Transactions
Related party transactions are disclosed in Note 17 to the
financial statements. There have been no material changes
in the related party transactions described in the last
annual report.
Going Concern
The Directors believe it is appropriate to adopt the going
concern basis in preparing the financial statements as, after
due consideration, they consider that the Company has
adequate resources to continue in operational existence for
a period of at least 12 months from the date of signing the
audited financial statements.
Note 2 of the financial statements provides details of the
matters the Directors have taken into account in making
their assessment of going concern.
Continuation Vote
A continuation vote is due in September 2025 and if any
continuation resolution is not passed, the Directors are
required to put proposals for the reconstruction or
reorganisation of the Company to the Shareholders for their
approval within six months of the date of the vote. The
Directors have no reason to believe that the continuation
vote will not be approved by Shareholders and note:
• The previous vote was passed by an overwhelming majority;
• The Company’s performance since then has been
robust; and
• The current general market conditions are much improved
from last year’s market and major investors have been
commenting on the relevance and attractiveness of
RECI’s proposition.
AGM
It is intended that the AGM of the Company will be held at
10:30am on 17 September 2025 and details of the
resolutions to be proposed at the AGM, together with
explanations, will appear in the Notice of Meeting to be
distributed to Shareholders in due course. Members of the
Board will be in attendance at the AGM and will be
available to answer Shareholder questions.
On behalf of the Board on 24 June 2025.
Andreas Tautscher Susie Farnon
Director Director
Annual Report and Accounts 2025Real Estate Credit Investments Limited44
Residential development in the United Kingdom
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 45
GOVERNANCE
As in other areas of corporate governance, the Company
seeks to adhere to the AIC Code of Corporate Governance
and has established a Remuneration Committee. Although
the Company is not incorporated in England and Wales it is
mindful of the regulations that apply to such companies in
the context of remuneration and will seek to make appropriate
disclosures. All Directors are non-executive and are not
eligible for bonuses, pension benefits, share options, long-term
incentive schemes or other benefits, performance related or
otherwise. Directors do not have service contracts and there
is no provision for compensation for loss of office. All Directors
are entitled to be repaid all expenses reasonably incurred
in the performance of their duties and have signed a letter
of appointment setting out the terms of such appointment.
The prime purpose of the Committee is to determine the
Company’s remuneration policy within the limits set by
the Articles of Incorporation which currently state that the
remuneration paid to each Director by way of fees shall not
exceed €160,000 in any financial year. Additionally, they
provide that if any Director performs any special duties, or
renders services, outside of the ordinary duties of a Director,
that Director shall be paid such reasonable additional
remuneration as the Board may determine.
The Committee is authorised by the Board to seek, subject
to a financial limit, such independent advice as it may deem
necessary in the discharge of its responsibilities.
Composition of the Committee
The Committee is chaired by Colleen McHugh and is
composed of all the Directors including the Chairman of the
Company, who was deemed independent at the time of his
appointment. This membership is considered appropriate as,
collectively, its members are believed to have the necessary
experience and knowledge to fairly determine remuneration.
Remuneration Policy
The current policy adopted by the Committee is set out
below and will be tabled at the next AGM for approval by
Shareholders along with this Report.
The Company’s Remuneration Policy is that fees payable to
the Directors should reflect the experience and expertise of
and the responsibilities borne by the Directors and the time
spent on the Company’s affairs and be sufficient to attract,
retain and motivate individuals of high calibre with suitable
skills, experience and knowledge and to ensure that their
remuneration is set at a reasonable level commensurate
with their duties and responsibilities. No element of the
Directors’ remuneration is performance related.
In determining the level of these fees, the Committee obtains
and takes account of reliable, up-to-date information about
remuneration in other companies of comparable scale
and complexity together with general economic conditions.
To help it fulfil its obligations, the Committee shall have
full authority to appoint remuneration consultants and to
commission or purchase any reports, surveys or other
information which it deems necessary.
Implementation of the policy
Remuneration is reviewed every three years, with the last
major review of Board remuneration taking place in 2022.
In the intervening years the Committee reviewed changes
in Guernsey Retail Price Index (“RPIX”) to determine if it was
appropriate to increase the Chairman’s fee and the base fee
for the other directors, to maintain real remuneration levels in
line with inflation. The Remuneration Committee, therefore,
considered that it was timely for a fundamental review of the
remuneration structure with any revisions taking place with
effect from 1 April 2025.
In accordance with the stated policy several factors
were considered:
(a) Given the residence of the Company and the Board
members, Guernsey RPIX, which excludes mortgage and
interest payments is considered to be the relevant inflation
benchmark and in the 12 months to 31 December 2024
this rose by 4%,
(b) Publicly available market research was reviewed,
(c) The current remuneration levels reported by other listed
investment companies, of a similar size and nature, and
(d) The responsibilities of different Board members were
analysed to identify significant changes since the
2022 review.
Remuneration
Committee Report
Annual Report and Accounts 2025Real Estate Credit Investments Limited46
As stated in the policy, and given that all Directors are
non-executive, remuneration decisions are not influenced
by the financial performance of the Company, be that in
terms of share price or net asset value. Accordingly, such
information is not presented here.
The Remuneration Committee concluded that the Chairman’s
and Directors’ fees did not require an increase along the line
of the 4% rise in Guernsey RPIX; rather, half of this, namely
2% (rounded) was competitive. Therefore, the Chairman’s
fee should increase from £91,000 to £93,000, and the base
fee for other Directors should increase from £44,000, as set
in 2024, to £45,000.
The review of other responsibilities and leadership roles
concluded that the following changes were appropriate:
Audit and Risk Committee chair – the additional fee should
increase from £12,500 to £13,500 per annum in light of
further risk responsibilities.
Senior Independent Director – it was determined that
the role of SID warranted a fee of £2,500 per annum, to
acknowledge the additional workload being undertaken.
No changes were made to:
Management Engagement Committee chair – Fee to
remain £2,500 per annum;
ESG lead – Fee to remain £2,500 per annum;
Remuneration Committee chair – Fee to remain £2,500
per annum;
Nomination Committee chair – it was determined that a fee
would no longer be payable for this role.
As a consequence of these recommendations, the following
table sets out the remuneration of Board members for the
financial year ending 31 March 2026 as compared to the
previous year; it should be noted that the additional fees
relate to the roles performed and not to specific individuals
while the table assumes that the named individuals will
discharge the roles indicated throughout the coming year.
Year ending
31 March 2026
GBP
(projected)
Year ended
31 March 2025
GBP
(actual)
Andreas Tautscher (Chairman)
1
93,000 59,111
Susie Farnon (Audit and Risk Committee Chair, Senior Independent Director and Nomination
Committee Chair)
2
61,000 56,500
Colleen McHugh (Remuneration Committee Chair, Management Engagement Committee Chair
and ESG Lead)
3
52,500 49,000
Mark Thompson (Independent Director)
4
45,000 17,973
Bob Cowdell (resigned 31 October 2024) – 53,083
John Hallam (resigned 18 September 2024) – 21,734
1 Andreas Tautscher was appointed chair to succeed Bob Cowdell with effect from 1 November 2024
2 Susie Farnon took over from John Hallam as Senior Independent Director with effect from 12 June 2024 and as Nomination Committee Chair from Bob Cowdell with effect from 1 October 2024
3 Colleen McHugh took over from John Hallam as Remuneration Committee chair with effect from 1 October 2024
4 Mark Thompson was appointed with effect from 4 November 2024
Statement of Shareholder Voting
At the last AGM held on 18 September 2024, a resolution
to approve the Remuneration Committee Report and
Remuneration Policy was passed with 93,717,723 votes
(99.92%) being cast in favour and 78,331 votes (0.08%)
against reflecting the same very high level of approval as
the previous AGM.
Future Reviews
It is anticipated that full reviews will not take place at less
than three yearly intervals but that the Committee will, in
the early part of each year, review the changes in Guernsey
RPIX to determine if it is appropriate to increase the
Chairman’s fee and the base fee for other Directors.
Colleen McHugh
Remuneration Committee Chair
24 June 2025
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 47
GOVERNANCE
Statement of Compliance with
Corporate Governance
The Company is a member of Association of Investment
Companies (the “AIC”) and by complying with the AIC Code
is deemed to comply with both the UK and the GFSC Code
where relevant.
To comply with the UK Listing Regime, the Company
must comply with the requirements of the UK Corporate
Governance Code.
The Board has considered the principles, provisions and
recommendations of the AIC Code and considers that
reporting against these will provide appropriate information
to Shareholders. To ensure ongoing compliance with these
principles the Board reviews a report from the Company
Secretary identifying how the Company is in compliance
and identifying any changes that might be necessary.
The Company has complied with the recommendations of
the AIC Code throughout the accounting period, except as
set out below.
The AIC Code includes provisions relating to:
• the role of the chief executive;
• executive directors’ remuneration; and
• the whistle-blowing policy.
The Board considers some of these provisions are not relevant
to the position of the Company as it is an externally-managed
investment company. The Directors are non-executive and
the Company does not have employees and the Board is
satisfied that any relevant issues that arise can be properly
considered by the Board or by Shareholders at AGMs. The
Remuneration Committee considers matters relating to
Directors’ remuneration. An external assessment of Directors’
remuneration has not been undertaken. The Company’s
Remuneration policy is that fees payable to the Directors
should reflect the experience and expertise of and the
responsibilities borne by the Directors and the time spent
on the Company’s affairs and be sufficient to attract, retain
and motivate Directors of a quality required to run the
Company successfully. Please refer to the Remuneration
Committee Report on pages 46 to 47.
The Board
The Directors’ details are listed in the Directors’ Report, which
set out their range of investment, financial and business skills
and experience.
The Board meets at least four times a year and, in addition,
there is regular contact between the Board, the Investment
Manager and the Company Secretary including an annual
strategy meeting and the Investment Manager due diligence
visits, when the Board attends the offices of the Investment
Manager and meets with senior executives. Further, the
Board requires that it is supplied in a timely manner with
information by the Investment Manager, the Company
Secretary and other advisers in a form and of a quality
appropriate to enable it to discharge its duties.
Duties and Responsibilities
The Board has overall responsibility for optimising the
Company’s performance by directing and supervising the
affairs of the business and meeting the appropriate interests
of Shareholders and relevant stakeholders, while enhancing
the value of the Company and also ensuring the protection
of investors. A summary of the Board’s responsibilities is
as follows:
• statutory obligations and public disclosure;
• strategic matters and financial reporting;
• risk assessment and management including reporting,
compliance, governance, monitoring and control; and
• other matters having a material effect on the Company.
The Board is responsible to Shareholders for the overall
management of the Company. The Board has delegated the
day-to-day operation of the Company to the Investment
Manager, Administrator and the Company Secretary.
The Board reserves the powers of decisions relating to the
determination of the Investment Policy, the approval of
changes in strategy, capital structure, statutory obligations,
public disclosure and the entering into of any material
contracts by the Company.
Corporate
Governance
Statement
Annual Report and Accounts 2025Real Estate Credit Investments Limited48
Management
Scheduled Nomination Audit and Risk Engagement Remuneration
Board Committee Committee Committee Committee
Meetings Meeting Meeting Meeting Meeting
Attendance Attendance Attendance Attendance Attendance
Attendance by:
Andreas Tautscher (Chairman) 4/4 4/4 3/3 1/1 1/1
Susie Farnon 4/4 4/4 3/3 1/1 1/1
Colleen McHugh 4/4 4/4 3/3 1/1 1/1
Mark Thompson
(appointed 4 November 2024) 2/2 1/1 2/2 0/0 1/1
Bob Cowdell
(resigned 31 October 2024) 2/2 2/2 1/1 1/1 0/0
John Hallam
(resigned 18 September 2024) 1/1 0/0 0/0 0/0 0/0
The previous table is an extract of the various Directors’
attendance at Board and Committee meetings for the
financial year compared against those for which they were
eligible to attend.
Additionally, eight ad-hoc meetings and a further two informal
meetings were held during the year which, as they dealt
primarily with administrative and transaction matters, were
attended by those Directors available at the time.
Chairman
The Chairman, Mr Tautscher, is responsible for leadership of
the Board, ensuring its effectiveness on all aspects of its role
and setting its agenda. The Chairman is also responsible
for ensuring that the Directors receive accurate, timely and
clear information. The Chairman is responsible for effective
communication with Shareholders and can be contacted
through the Company Secretary.
Senior Independent Director
Mrs Farnon was appointed as Senior Independent Director
(“SID”) with effect from 12 June 2024. The primary roles are
to support the Chairman and act as an intermediary for the
other non-executive Directors in matters relating to the
Chairman including leading them in the annual performance
evaluation of the Chairman. The SID is also available to
Shareholders who may have any concerns which contact
through the normal channels of the Chairman and
AIFM has failed to resolve or for which such contact is
inappropriate. Mrs Farnon can also be contacted through
the Company Secretary.
Board Independence
For the purposes of assessing compliance with the AIC Code’s
Principles and Provisions, the Board considers whether the
current Directors are independent of the Investment Manager
and free from any business or other relationship that could
materially interfere with the exercise of their independent
judgement. In making this assessment, consideration is also
given to all other factors which might be relevant including
length of service. The Board has concluded that all Directors
remain independent.
Committees of the Board
In accordance with the AIC Code, the Board has established
an Audit and Risk Committee, a Nomination Committee, a
Management Engagement Committee and a Remuneration
Committee, in each case with formally delegated duties
and responsibilities within written terms of reference.
Audit and Risk Committee
The Audit and Risk Committee is chaired by Mrs Farnon,
and its other members are Mr Tautscher, Mrs McHugh and
Mr Thompson. The terms of reference of the Audit and Risk
Committee state that it will meet not less than three times
in each financial year. In the year ended 31 March 2025, the
Audit and Risk Committee met at four informal meetings.
The Audit and Risk Committee Report on pages 54 to 57
sets out the role and activities of this Committee and its
relationship with the external auditor.
Nomination Committee
The Nomination Committee is chaired by Mrs Farnon and
its other members are Mr Tautscher, Mrs McHugh and
Mr Thompson. The members of the Nomination Committee
are and will be independent Directors. The terms of reference
state that the Nomination Committee will meet not less
than once a year; will have responsibility for considering the
size, structure and composition of the Board; retirements
and appointments of additional and replacement Directors;
and that the Nomination Committee will make appropriate
recommendations to the Board.
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 49
Corporate Governance Statement (continued)
The Board appoints all Directors on merit. When the
Nomination Committee considers Board succession planning
and recommends appointments to the Board, it takes into
account a variety of factors. Knowledge, experience, skills,
personal qualities, residency and governance credentials
play an important part. The Board aims to have a balance of
skills, experience, diversity (including gender) and length of
service and knowledge of the industry. The Board undertakes
an evaluation of its performance on an annual basis. The
performance of each Director is considered as part of a formal
review by the Nomination Committee.
The position of Chairman of each Committee will be reviewed
on an annual basis by the Nomination Committee and their
membership and terms of reference are kept under review.
The performance of the Chairman of the Board will be
assessed by the SID through appraisal questionnaires and
discussions with the other Directors.
Management Engagement Committee
The Management Engagement Committee is chaired by
Mrs McHugh, with its other members being Mr Tautscher,
Mrs Farnon and Mr Thompson. The Committee will meet
at least once a year for the purpose of evaluating the
performance of the Company’s service providers, the
review of service agreements and service level statements
and the level and method of their remuneration.
Remuneration Committee
The Remuneration Committee is chaired by Mrs McHugh,
with its other members being Mr Tautscher, Mrs Farnon
and Mr Thompson. The Committee will meet at least once
a year for the purpose of determining Directors’ remuneration
and setting the Company’s remuneration policy.
Director Re-Election, Tenure and Induction
The Nomination Committee has considered the question of
a policy on Board tenure. It is strongly committed to striking
the correct balance between the benefits of continuity and
those that come from the introduction of new perspectives to
the Board. As provided for in the AIC guidelines, and in order
to phase future retirements and appointments, the Board
has not, at this stage, adopted any specific limits to terms,
but expects to refresh the Board at appropriate intervals.
The Board regards all Directors as being independent.
The Board has adopted a policy whereby all Directors will be
proposed for re-election each year and so all other Directors
will be proposed for re-election at the forthcoming AGM.
Details of Directors’ tenure are disclosed on pages 38 to 39.
Internal Controls
The Board has established a continuous process for
identifying, evaluating and managing the significant risks the
Company faces. The Board regularly reviews the process,
which has been in place from the start of the financial year to
the date of approval of this report. The Board is responsible
for the Company’s system of internal control and for reviewing
its effectiveness. Such a system is designed to manage
rather than eliminate the risk of failure to achieve business
objectives, and can only provide reasonable and not
absolute assurance against material misstatement or loss.
In compliance with the Principles and Provisions of the AIC
Code, the Board regularly reviews the effectiveness of the
Company’s system of internal control. The Board’s monitoring
covers all controls, including financial, operational and
compliance controls and risk management. It is based
principally on reviewing reports from the Investment Manager
in order to consider whether all significant risks are identified,
evaluated, managed and controlled and whether any
significant weaknesses are promptly remedied and indicate
a need for more extensive monitoring. To this end, a Risk
Framework is maintained, which identifies the significant
risks faced by the Company together with the controls
intended to manage them and is reviewed at each
scheduled Board meeting. The Board has also performed a
specific assessment considering all significant aspects of
internal control arising during the year covered by this
report. The Audit and Risk Committee assists the Board in
discharging its review responsibilities.
During the course of its review of the system of internal
control, the Board has not identified nor been advised of
any failings or weaknesses which it has determined to
be significant.
While investment management is provided by Cheyne, the
Board is responsible for setting the overall Investment Policy
and monitors the actions of the Investment Manager at
regular Board meetings. Administration services are provided
by Citco. Regular compliance reports from both the
Investment Manager and the Administrator are received by
the Board. In addition, the Administrator makes available its
Global Fund Accounting and Custody Controls Examination,
SOC 1 report to the Board on an annual basis.
Custody of assets is undertaken by the Depositary, The Bank
of New York Mellon (International) Limited.
The Investment Manager has established an internal control
framework and reviews the segregation of duties within this
to ensure that control functions are segregated from the
trading and investing functions. As a part of this framework,
the valuation of financial instruments is overseen by an
internal pricing committee which is supported by resources
which ensure that it is able to function at an appropriate
level of quality and effectiveness.
Annual Report and Accounts 2025Real Estate Credit Investments Limited50
Specifically, the Investment Manager’s pricing committee
is responsible for establishing and monitoring compliance
with valuation policy. Within the trading and investing
functions, the Investment Manager has established policies
and procedures that relate to the approval of all new
transactions, transaction pricing sources and fair value
hierarchy coding within the financial reporting system.
The Directors of the Company clearly define the duties
and responsibilities of their agents and advisers, whose
appointments are made by the Board after due consideration.
The Board monitors the ongoing performance of such
agents and advisers. Each agent and adviser maintains its
own systems of internal control on which it reports to the
Board. The systems are designed to ensure effective and
efficient operation, internal control and compliance with
laws and regulations. In establishing the systems of internal
control, regard is paid to the materiality of relevant risks,
the likelihood of costs being incurred and costs of control.
It follows, therefore, that the systems of internal control can
only provide reasonable but not absolute assurance against
the risk of material misstatement or loss.
The Board has reviewed the need for an internal audit
function and has decided that the systems and procedures
employed by the Administrator and the Investment Manager,
including their own internal controls and procedures, provide
sufficient assurance that a sound system of risk management
and internal control, which safeguards Shareholders’
investment and the Company’s assets, is maintained. An
internal audit function specific to the Company is therefore
considered unnecessary.
Corporate Social Responsibility
The Board keeps under review developments involving
social and environmental issues, and will report on those to
the extent they are considered relevant to the Company’s
operations. The Company’s ESG strategy is outlined on
page 28 of the Stakeholder Engagement section and in the
Sustainability Report on pages 30 to 35.
UK Criminal Finances Act 2017
In respect of the UK Criminal Finances Act 2017 which has
introduced a new Corporate Criminal Offence of “failing
to take reasonable steps to prevent the facilitation of tax
evasion”, the Board confirms that it is committed to zero
tolerance towards the criminal facilitation of tax evasion.
General Data Protection
Regulation (“GDPR”)
The Board confirms that the Company has considered GDPR
and taken measures itself and with its service providers, to
meet the requirements of GDPR and equivalent Guernsey law.
Anti-Bribery and Corruption Policy
The Board has adopted a formal Anti-Bribery and Corruption
Policy. The policy applies to the Company and to each of its
Directors. Furthermore, the policy is shared with each of
the Company’s main service providers.
Whistle-blowing
As the Company has no employees of its own, it does not have
a whistle-blowing policy but in its review of service providers
the Management Engagement Committee ensures that
they do.
Employees and Socially
Responsible Investment
The Company has a management contract with the
Investment Manager. It has no employees and all of its
Directors are non-executive, with day-to-day activities
being carried out by third parties. There are therefore no
disclosures to be made in respect of employees.
The Company’s main activities are carried out by the
Investment Manager who was one of the initial signatories
to the Standards Board for Alternative Investments
(formerly known as the Hedge Fund Standards Board) and
is a signatory to the United Nations supported Principles for
Responsible Investment.
Modern Slavery Act 2015
The Company’s Modern Slavery and Human Trafficking
Statement is available on the Company’s website and is
reviewed by the Board on an annual basis.
Gender Metrics
The Company, in conjunction with the Investment Manager,
strives to achieve a diverse workforce that embraces
individuals of all gender, race, nationality, religion, age and
orientation and to develop a unique workplace to come
together and grow professionally and personally.
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 51
Corporate Governance Statement (continued)
Cheyne is committed to supporting diversity, equality and
inclusion through implementing change and supporting
initiatives, partnerships and programmes across the firm and
the industry, under the oversight of Cheyne’s Diversity, Equity
and Inclusion ("DE&I") Committee. Cheyne is comprised of a
diverse range of employees and is committed to providing
equal employment opportunities to all colleagues and
applicants without regard to gender, race, nationality, religion,
age, orientation or disability. To this end, Cheyne has
implemented reporting tools within its HR system to enable
a more granular measurement of gender and ethnicity,
using the AIMA/Albourne classifications within their DE&I
Questionnaire, that is compliant with data privacy
considerations. The ongoing evolution and monitoring of this
data will allow the Investment Manager to assess how its
DE&I Policy and supporting action plans are working in
practice, while enabling the DE&I Committee to identify areas
for improvement and target its efforts to effect change.
The business case behind the data collection has been
communicated to all employees.
Number of
senior positions
on the Board
Number of % of (CEO, CFO, SID,
Board members Board members Chair)
Male 2 50.0
Not applicable
– see note
1
Female 2 50.0
Minority ethnic
background – –
1 This column is inapplicable as the Company is externally managed and does not have
executive management functions, specifically it does not have a CEO or CFO. The chair
of the Board is male. However, the Company considers that chairing the permanent
sub-committees of the Board are senior roles in an investment company context. The
SID, and the chair of the Audit and Risk Committee, Nomination Committee, Management
Engagement Committee and Remuneration Committee are held by women.
The Board acknowledges the importance of diversity for the
effective functioning of the Board which helps create an
environment for successful and effective decision-making.
The Board currently has equal representation of men and
women. The Company does not currently comply with the
ethnic diversity target set out in the Listing Rules. However,
the Board continues to keep this under review in the context
of planned Board succession opportunities. In view of the
nature, scale and complexity of the Company, the Board
believes a formal diversity policy for the Company is not
necessary at this time. Diversity of the Board is further
considered on at least an annual basis through the Board
evaluation process.
Principal Risks and Uncertainties
The Board has carried out a robust assessment to identify
the emerging and principal risks that could affect the
Company, including those that would threaten its business
model, future performance, solvency or liquidity. It has
adopted a controls-based approach to its risk monitoring
requiring each of the relevant service providers, including the
Investment Manager, to establish the necessary controls to
ensure that all known risks are monitored and controlled in
accordance with agreed procedures. The Directors receive
periodic updates at their Board meetings on key risks and
have adopted their own control review to ensure, where
possible, risks are monitored appropriately.
Each Director is aware of the principal risks and uncertainties
inherent in the Company’s business and understands the
importance of identifying, evaluating and monitoring these
risks. The Board has established a Risk Framework that
enables it to manage these principal risks and uncertainties
within acceptable limits and to meet all of its legal and
regulatory obligations.
The Board considers the process for identifying, evaluating
and managing these principal risks and uncertainties faced
by the Company on an ongoing basis and these principal
risks and uncertainties are reported and discussed at Board
meetings. It ensures that effective controls are in place
to mitigate these risks and that a satisfactory compliance
regime exists to ensure all applicable local and international
laws and regulations are upheld.
The Company’s principal risks are discussed in the Strategic
Report of these financial statements while those specifically
relating to financial reporting are discussed in the Audit and
Risk Committee Report and Note 14 to the financial statements.
Changes in Regulation
The Board monitors and responds to changes in regulation
as it impacts the Company and its policies.
Annual Report and Accounts 2025Real Estate Credit Investments Limited52
Office development in France
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 53
GOVERNANCE
Dear Shareholders,
On the following pages, we present the Audit and Risk
Committee’s report for 2025, setting out the responsibilities
of the Audit and Risk Committee and its key activities during
the year ended 31 March 2025. As in previous years, the
Audit and Risk Committee has reviewed the Company’s
financial reporting, the independence and effectiveness of
the external auditor and the internal control and risk
management systems of the Company’s service providers.
In order to assist the Audit and Risk Committee in discharging
these responsibilities, regular reports are received and
reviewed from the Investment Manager, Administrator and
external auditor.
A member of the Audit and Risk Committee will be available
at each AGM to respond to any Shareholder questions on
the activities of the Audit and Risk Committee.
Membership of the Audit and
Risk Committee
The Audit and Risk Committee is chaired by Mrs Farnon,
and its other members are Mrs McHugh, Mr Tautscher and
Mr Thompson. The FRC Guidance on Audit and Risk
Committees recommends that such a committee should
comprise solely of independent non-executive directors
and, as noted in the Corporate Governance Statement, the
Board has considered the independence of its members
and has concluded that they all remain independent.
The Company Chairman currently serves as a member of the
Audit and Risk Committee. The terms of reference state
that the Audit and Risk Committee will meet not less than
three times in the year and meet the external auditor twice
a year, on which occasions the need to meet without
representatives of either the Investment Manager or the
Administrator being present is considered. The terms of
reference include all matters indicated in the Disclosure
and Transparency Rule 7.1 and the AIC Code.
The Board has taken note of the requirement that at least one
member of the Committee should have recent and relevant
financial experience and is satisfied that the Committee is
properly constituted in that respect with all members being
highly experienced and Mrs Farnon, Mr Tautscher and
Mr Thompson being chartered accountants who have
chaired or sit on other audit committees.
Responsibilities
The Audit and Risk Committee has regard to the AIC Code
and examines the effectiveness of the Company’s internal
control systems, the integrity of the annual and semi-
annual reports and financial statements and ensures that
they are fair, balanced and understandable and provide the
necessary information. It also considers the external
auditor’s remuneration and engagement, as well as the
external auditor’s independence and any non-audit
services provided by them. Other areas of responsibility
include:
• Consideration of the fair value of the Company’s
investments and income generated from the portfolio;
• Consideration of the accounting policies of the Company;
Audit and Risk
Committee Report
Annual Report and Accounts 2025Real Estate Credit Investments Limited54
• Meeting with the external auditor to discuss the proposed
audit plan and reporting;
• Assess the effectiveness of the external auditor and
audit process;
• Consideration of the need for an internal audit function;
• Review of any independent reports in respect of the
Investment Manager, the Administrator or the Depositary;
• Consideration of the risks facing the Company including
the Company’s anti-bribery, corruption and similar
obligations; and
• Monitoring the Company’s procedures for ensuring
compliance with statutory regulations and other
reporting requirements.
In addressing all of the above considerations, the Audit and
Risk Committee seeks the appropriate input from the external
auditor, Investment Manager, Administrator, Company
Secretary and Legal Counsel and makes a recommendation
to the Board of the Company as appropriate.
Meetings
The Audit and Risk Committee normally meets at least three
times annually, including shortly before the Board meets
to consider the Company’s semi-annual and annual
financial reports, and reports to the Board on its
deliberations and recommendations. It also has an annual
planning meeting with the external auditor and other
ad-hoc meetings as considered necessary.
The Audit and Risk Committee operates within clearly
defined terms of reference and provides a forum through
which the Company’s external auditor reports to the Board.
The terms of reference of the Audit and Risk Committee are
available from the Company’s registered office. The Audit
and Risk Committee receives information from the Company’s
service providers with the majority of information being
directly sourced from the Company Secretary, Administrator,
the Investment Manager and the external auditor. The Audit
and Risk Committee considers the nature, scope and results
of the external auditor’s work and reviews their performance
annually prior to providing a recommendation to the Board
on the reappointment or removal of the external auditor.
Significant Issues Considered over
Financial Reporting
The Audit and Risk Committee has determined that the key
risks of misstatement of the Company’s financial statements
relate to the judgements in respect of the fair value of the
Company’s portfolio and income recognition.
Additional information regarding principal risks and
uncertainties is provided in the Strategic Report and in
Note 14 to the financial statements.
The Board considers a report from the Investment Manager at
each Board meeting which sets out a review of the portfolio
and its performance. The report also details earnings forecasts
and asset class analysis. As a result, the Board is able to
interrogate the Investment Manager on the basis of the
assumptions made and the validity of the expected forecasts.
Valuation of Portfolios
The Audit and Risk Committee conducted a detailed review
of each bilateral loan and bond position through discussions
with the AIFM’s relevant individual asset managers challenging
them as appropriate. Such discussions covered aspects
such as:
• Available and recent professional valuations of the
underlying collateral;
• Credit quality of the individual borrower;
• Quality of the underlying collateral;
• Operational and financial performance of the borrower;
• Status of development schedules compared to
original plans;
• Planning or other disputes;
• Comparison between effective and actual yields; and
• Whether or not any value should be ascribed to contingent
fees and potential profit participations provided for in
contractual arrangements.
When considering the bilateral bond investments, the Audit
and Risk Committee considered a number of factors including,
but not restricted to:
• The key valuation judgement whereby the effective yield
calculated is used as proxy for the market yield at the
valuation date;
• Pricing sources;
• The range of valuations determined by the independent
pricing adviser in light of the approaches used and the
weighting applied by the Investment Manager to derive
a fair value point estimate;
• Comparison between effective and actual yields;
• Depth of prices and any disparity between different marks;
• Indicative liquidity;
• Comparison of realised prices with previous valuations; and
• The significance of unobservable inputs used to determine
the fair value of the bond investments and classification
within the fair value hierarchy.
Having conducted this process the Audit and Risk
Committee concluded that any assumptions used were
reasonable and that the valuations were in accordance
with the applicable standards.
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 55
Audit and Risk Committee Report (continued)
During the year, the Chair of the Audit and Risk Committee
and/or other members of the Board attended at least one
of the meetings held between the external auditor and the
Investment Manager in respect of valuations.
Income Recognition
The Audit and Risk Committee and the Board as a whole
considered and challenged the Investment Manager’s
expected realisation or maturity dates and the resultant
expected cash flows. The Committee found that the
assumptions used were reasonable and that whilst it is
possible that the expected realisation dates may change
over time the Committee and the Board are satisfied that the
assumed realisation dates and the Investment Manager’s
methods of calculating income are reasonable and in line
with IFRS Accounting Standards.
As highlighted in the long-term viability section in the
Strategic Report, the Investment Manager performed an
evaluation of each of its positions, taking into account all
relevant geopolitical and macroeconomic risks, on its operating
models and valuations. A detailed cash flow profile of each
investment was completed, incorporating the probability of
likely delays to repayments, other stress tests (and additional
cash needs); these were taken into account in the modelled
expected cash flows for 31 March 2025.
Risk Management
The Company’s risk assessment process and the way in
which significant business risks are managed is a key area
of focus for the Committee. The work of the Audit and
Risk Committee is driven primarily by the Company’s Risk
Framework and the assessment of its principal risks and
uncertainties as set out in the Strategic Report and in Note
14 to the financial statements, and it receives reports from
the Investment Manager on the Company’s risk evaluation
process and reviews changes to significant risks identified.
Internal Audit
The Committee considers at least once a year whether or
not there is a need for an internal audit function. Currently,
the Committee believes that, given the Company has no
employees, the SOC 1 internal control report provided by the
Administrator and the reporting provided by the Investment
Manager are sufficient and has made a recommendation to
the Board to this effect.
External Audit
The current appointed external auditor is Deloitte LLP.
Deloitte LLP has served as RECI's external auditor for 20 years
and under the Mandatory Audit Firm Rotation Rules (UK &
LSE-listed entities), this represents the maximum allowable
audit firm tenure. A tender process has taken place in the
second half of 2024 to appoint a new external auditor. In
accordance with the standard, the tender process was led by
the Audit and Risk Committee and invited three audit firms
to participate. The Audit and Risk Committee considered key
criteria in its decision including audit quality, experience in real
estate and debt audits and valuation, audit approach and fees.
Following a thorough evaluation, PricewaterhouseCoopers
CI LLP was selected as the preferred firm. The Board
approved the Audit and Risk Committee’s recommendation,
and PricewaterhouseCoopers CI LLP will be appointed as
external auditor following the publication of the Annual
Report. The appointment will also be recommended to
Shareholders for approval at the 2025 AGM.
The objectivity of the external auditor is reviewed by the
Committee which also reviews the terms under which the
external auditor may be appointed to perform non-audit
services. Auditor independence is maintained through
limiting non-audit services to audit-related work that falls
within defined categories. All engagements with the external
auditor are subject to pre-approval from the Audit and Risk
Committee and fully disclosed within the Annual Report for
the relevant period. A new lead audit partner is appointed
every five years and the Audit and Risk Committee ensures
the external auditor has appropriate internal mechanisms in
place to ensure its independence.
When evaluating the external auditor, the Committee has
regard to a variety of criteria including industry experience,
independence, reasonableness of audit plan, ability to deliver
constructive criticism, effectiveness of communication with
the Board and the Company’s service providers, quality
control procedures, management of audit process, price
and added value beyond assurance in audit opinion.
In order to maintain auditor independence, Deloitte LLP
ensured the following safeguards were in place:
• review and challenge of key decisions by the Quality Review
Partner and engagement quality review by a member of
the Independent Professional Standard Review Team.
Annual Report and Accounts 2025Real Estate Credit Investments Limited56
The Committee reviews the scope and results of the audit,
its cost effectiveness and the independence and objectivity
of the external auditor, with particular regard to the level of
non-audit fees. During the year, Deloitte charged non-audit
fees of £45,000 for the 30 September 2024 interim review.
Notwithstanding the provisions of such services, the Audit
and Risk Committee considers Deloitte LLP to be independent
of the Company and that the provision of such non-audit
services is not a threat to the objectivity and independence
of the conduct of the audit as appropriate safeguards are
in place.
Annual Report
To fulfil its responsibility regarding the independence of the
auditor, the Audit and Risk Committee considers:
• discussions with or reports from the auditor describing its
arrangements to identify, report and manage any conflicts
of interests in light of the requirements of the Crown
Dependencies’ Audit Rules and Guidance; and
• the extent of non-audit services provided by the auditor and
arrangements for ensuring the independence, objectivity
and robustness and perceptiveness of the external auditor
and their handling of key accounting and audit judgements.
To assess the effectiveness of the external auditor and the
audit process, the Committee reviews:
• the auditor’s fulfilment of the agreed audit plan and
variations from it;
• discussions or reports highlighting the major issues that
arose during the course of the audit;
• feedback from other service providers evaluating the
performance of the audit team;
• arrangements for ensuring independence and
objectivity; and
• robustness of the external auditor in handling key
accounting and audit judgements.
The Audit and Risk Committee was satisfied with the audit
process and Deloitte LLP’s effectiveness and independence
as an auditor having considered the degree of diligence
and professional scepticism demonstrated by them.
The Audit and Risk Committee members have each reviewed
the Annual Report and earlier drafts in detail, comparing its
content with their own knowledge of the Company, reporting
requirements and Shareholders’ expectations. Formal
meetings of the Audit and Risk Committee have also
reviewed reports and explanations from its service providers
about the details and the financial results. The Audit and
Risk Committee has concluded that the Annual Report
taken as a whole is fair balanced and understandable and
that the Board can reasonably and with justification make
the Directors' Responsibility Statement on page 58.
During the year ended 31 March 2025, the external auditor
had three meetings with the Audit and Risk Committee and
met with the Chairman of the Audit and Risk Committee on
other occasions when necessary.
On behalf of the Audit and Risk Committee.
Susie Farnon
Audit and Risk Committee Chair
24 June 2025
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 57
GOVERNANCE
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable
law and regulations.
The Companies (Guernsey) Law, 2008 (as amended) requires
the Directors to prepare financial statements for each
financial year. Under that law, the Directors have elected to
prepare the Company financial statements in accordance
with IFRS Accounting Standards. Under Companies Law,
the Directors must not approve the accounts unless they are
satisfied that they give a true and fair view of the state of
affairs of the Company and of the profit or loss of the
Company for that year. In preparing these financial
statements, International Accounting Standard 1 (“IAS 1”)
requires that Directors:
• properly select and apply accounting policies;
• present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
• provide additional disclosures when compliance with the
specific requirements in IFRS Accounting Standards are
insufficient to enable users to understand the impact of
particular transactions, other events and conditions on the
entity’s financial position and financial performance; and
• make an assessment of the Company’s ability to continue
as a going concern.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any
time the financial position of the Company and enable them
to ensure that the financial statements comply with the
Companies (Guernsey) Law, 2008 (as amended). They are
also responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company’s website. Legislation in Guernsey
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
We confirm that to the best of our knowledge:
(i) The financial statements, prepared in accordance with
IFRS Accounting Standards, give a true and fair view of
the assets, liabilities, financial position and profit or loss
of the Company;
(ii) The Chairman’s Statement, the Strategic Report and the
Investment Manager’s Report include a fair review of
the development and performance of the business and
the position of the Company together with a description
of the principal risks and uncertainties they face; and
(iii) So far as each Director is aware, there is no relevant
audit information of which the Company’s auditor is
unaware, and each Director has taken all the steps that
he/she ought to have taken as a Director in order to make
himself/herself aware of any relevant audit information
and to establish that the Company’s external auditor is
aware of that information. This confirmation is given
and should be interpreted in accordance with the
provisions of section 249 of the Companies (Guernsey)
Law, 2008 (as amended).
Responsibility Statement of the Directors
in Respect of the Annual Report under
the UK Corporate Governance Code
The Directors are responsible for preparing the Annual Report
in accordance with applicable law and regulations. Having
taken advice from the Audit and Risk Committee, the Directors
consider the Annual Report and financial statements, taken
as a whole, is fair, balanced and understandable and that it
provides the information necessary for Shareholders to assess
the Company’s performance, business model and strategy.
By order of the Board.
Andreas Tautscher Susie Farnon
Director Director
24 June 2025
Directors’
Responsibility
Statement
Annual Report and Accounts 2025Real Estate Credit Investments Limited58
Hotel in Finland
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 59
Annual Report and Accounts 2025
Financial
Statements
In this section
Independent Auditor’s Report 62
Statement of Comprehensive Income 69
Statement of Financial Position 70
Statement of Changes in Equity 71
Statement of Cash Flows 72
Notes to the Financial Statements 73
Appendix I – AIFM Remuneration Policy (Unaudited) 98
Appendix II – AIFM Leverage (Unaudited) 99
Directors and Advisers 100
Glossary 101
Office development in France
Report on the audit of the financial statements
1. Opinion
In our opinion the financial statements of Real Estate Credit
Investments Limited (the “Company”):
• give a true and fair view of the state of the Company’s
affairs as at 31 March 2025 and of its profit for the year
then ended;
• have been properly prepared in accordance with IFRS
Accounting Standards as issued by the International
Accounting Standards Board (“IASB”); and
• have been prepared in accordance with the requirements
of the Companies (Guernsey) Law, 2008.
We have audited the financial statements which comprise:
• the statement of comprehensive income;
• the statement of financial position;
• the statement of changes in equity;
• the statement of cash flows; and
• the related Notes 1 to 21.
The financial reporting framework that has been applied in
their preparation is applicable law and IFRS Accounting
Standards as issued by the IASB.
2. Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities under those standards are further
described in the auditor’s responsibilities for the audit of
the financial statements section of our report.
We are independent of the Company in accordance with
the ethical requirements that are relevant to our audit of
the financial statements in the UK, including the Financial
Reporting Council’s (the “FRC’s”) Ethical Standard as applied
to listed public interest entities, and we have fulfilled our
other ethical responsibilities in accordance with these
requirements. The non-audit services provided to the
Company for the year are disclosed in Note 5 to the financial
statements. We confirm that we have not provided any
non-audit services prohibited by the FRC’s Ethical Standard
to the Company.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
3. Summary of our audit approach
Key audit matters The key audit matter that we identified in the current year was:
• Key judgement in the valuation of bilateral loan and bond portfolio.
Within this report, key audit matters are identified as follows:
Newly identified
Increased level of risk
Similar level of risk
Decreased level of risk
Materiality The materiality that we used in the current year was £6.4 million which was determined on the
basis of 2% of the net assets (2024: 2% of net assets).
Scoping Audit work to respond to the risks of material misstatement was performed directly by the
audit engagement team.
Significant changes
in our approach
There have been no significant changes in our approach as compared to the prior year.
Independent Auditor’s Report
to the Members of Real Estate Credit Investments Limited
Annual Report and Accounts 2025Real Estate Credit Investments Limited62
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that
the Directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Company’s
ability to continue to adopt the going concern basis of
accounting included:
• Evaluating the assumptions applied in the Company’s
going concern assessment particularly the considerations
of the current macroeconomic challenges and testing the
mechanical accuracy of the underlying forecasts;
• Performing stress testing on the key assumptions applied
to understand those that could potentially give rise to a
material uncertainty in respect of the use of the going
concern basis;
• Checking consistency of the forecast assumptions applied
in the going concern assessment with other forecasts,
including asset maturity and valuation assumptions;
• Assessing the liquidity position of the Company including
its ability to meet its undrawn commitments by evaluating
the impact of repayment of the Company’s financing
agreements at maturity without renewal and considering
the mitigating actions identified by the Directors as
available responses to liquidity risks;
• Evaluating the recommendation by the Directors and their
assertion of passing the upcoming continuation vote
scheduled in September 2025. We also considered the
current and historical performance of the Company and
the Broker’s discussions with certain Shareholders; and
• Assessing the appropriateness of the going concern
disclosure in the financial statements.
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt
on the Company’s ability to continue as a going concern for
a period of at least twelve months from when the financial
statements are authorised for issue.
In relation to the reporting on how the Company has applied
the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the Directors’
statement in the financial statements about whether the
Directors considered it appropriate to adopt the going concern
basis of accounting.
Our responsibilities and the responsibilities of the Directors
with respect to going concern are described in the relevant
sections of this report.
5. Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the
financial statements of the current period and include the
most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified. These
matters included those which had the greatest effect on
the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit
of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion
on these matters.
5.1 Key judgement in the valuation of bilateral loan and bond portfolio
Key audit matter description The bilateral loan and bond investments of £344.9million (2024: £305.0 million) make up 88%
(2024: 87%) of total assets and are a key value driver for the Company’s Net Asset Value (NAV).
As the Company’s investments are measured at fair value, the discount rate used to calculate the
present value of future cash flows should be the market yield prevailing at the valuation date.
Management has made a judgement that for these instruments that are highly bespoke and are
not adequately comparable to other market positions, the effective yield of investment is
considered an appropriate representative of the current market yield at the valuation date.
This is the key judgement made by management in the valuation of the investment portfolio.
This has contributed to a potential risk of fraud and error associated with the valuation approach
applied particularly around the fixed income investments. This has become of more importance
as a result of the changes in the macroeconomic environment and the movement in market
yield during the year.
This judgement is described as one of the key sources of estimation uncertainty in Notes 3 and
further details are included in Note 14 to the financial statements. This is also described in the
Audit and Risk Committee Report on page 54.
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 63
Independent Auditor’s Report (continued)
5.1 Key judgement in the valuation of bilateral loan and bond portfolio
How the scope of our
audit responded to the
key audit matter
To respond to the key audit matter, we have performed the following audit procedures:
• Obtained an understanding of and tested the relevant controls around the valuation process;
• Challenged management’s use of the bond or loan’s effective yield as a representative of
market yield by assessing the assumptions used, including considering contradictory evidence;
• Analysed the bilateral loans and bonds investment portfolio by comparing the yield of each
fixed interest rate loan or bond with the relevant range of market yields at the valuation date
using third-party data;
• Analysed the yields implicit in loans and bonds issued during the year and compared with
the yields of more seasoned loans to evaluate management’s assertion that the yield of the
Company’s assets is dislocated from the movement in market yields;
• Searched for contradictory evidence by assessing the consistency of management’s
judgements with a number of data points including the realisation of loans and bonds
during the year and the pricing of bonds and loans valued using market comparables; and
• Assessed the financial statements related disclosures to evaluate whether they appropriately
explain judgements made by management, including the associated assumptions, and
highlight the sensitivity to changes in those assumptions.
Key observations We concluded that the judgement applied in arriving at the fair value of the Company’s
self-originated bonds and loans investments is reasonable, and that the resulting valuations
are appropriate. We also concluded that the related disclosures are appropriate.
6. Our application of materiality
6.1 Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the
scope of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Materiality £6.4 million (2024: £6.5 million)
Basis for
determining materiality
2% (2024: 2%) of net assets as at 31 March 2025
Rationale for the
benchmark applied
Net asset value is the most appropriate benchmark as it is considered one of the principal
considerations for members of the Company in assessing financial performance and
represents total shareholders’ interest.
Annual Report and Accounts 2025Real Estate Credit Investments Limited64
£318.4m
NAV
Materiality
Audit and Risk Committee reporting threshold
£6.4m
£0.32m
6.2 Performance materiality
We set performance materiality at a level lower than materiality
to reduce the probability that, in aggregate, uncorrected
and undetected misstatements exceed the materiality for the
financial statements as a whole. Performance materiality
was set at 70% of materiality for the 2025 audit (2024: 70%).
In determining performance materiality, we considered the
following factors:
• our risk assessment, including our assessment of the
Company’s overall control environment, including that of
the administrator; and
• our past experience of the audit, including the nature and
volume of corrected and uncorrected misstatements.
6.3 Error reporting threshold
We agreed with the Audit and Risk Committee that we would
report to the Committee all audit differences in excess of
£318,000 (2024: £326,000), as well as differences below
that threshold that, in our view, warranted reporting on
qualitative grounds. We also report to the Audit and Risk
Committee on disclosure matters that we identified when
assessing the overall presentation of the financial statements.
7. An overview of the scope of our audit
7.1 Scoping
Our audit was scoped by obtaining an understanding of the
Company and its environment, including internal control,
and assessing the risks of material misstatement. Audit
work to respond to the risks of material misstatement was
performed directly by the audit engagement team.
7.2 Our consideration of the control environment
The accounting function for the Company is provided by
a third-party administrator. In performing our audit, we
obtained an understanding of relevant controls at the
administrator that are relevant to the business processes
of the Company. We have tested the relevant controls at
the investment manager level around the key judgement
used in the valuation but we have chosen not to place
reliance on those controls and instead adopted a
substantive approach in performing our audit.
7.3 Our consideration of climate-related risks
In planning our audit, we have considered the potential
impact of climate change on the Company’s business and
its financial statements.
The Company continues to develop its assessment of the
potential impacts of environmental, social and governance
(“ESG”) related risks, including climate change, as outlined
on page 30.
We performed our own qualitative risk assessment of the
potential impact of climate change on the Company’s
account balances and classes of transactions.
We have also read the Annual Report to consider whether the
climate-related disclosures are materially consistent with
the financial statements, and our knowledge obtained in
the audit.
8. Other information
The other information comprises the information included in
the Annual Report other than the financial statements and
our auditor’s report thereon. The Directors are responsible for
the other information contained within the Annual Report.
Our opinion on the financial statements does not cover
the other information and we do not express any form of
assurance conclusion thereon.
Our responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to
be materially misstated.
If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether
this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 65
Independent Auditor’s Report (continued)
9. Responsibilities of directors
As explained more fully in the Directors’ responsibilities
statement, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they
give a true and fair view, and for such internal control as the
directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Company’s ability to continue
as a going concern, disclosing as applicable, matters related
to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate
the Company or to cease operations, or have no realistic
alternative but to do so.
10. Auditor’s responsibilities for the audit
of the financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and
to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with ISAs
(UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions
of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit
of the financial statements is located on the FRC’s website
at: frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
11. Extent to which the audit was considered
capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud.
The extent to which our procedures are capable of
detecting irregularities, including fraud is detailed below.
11.1 Identifying and assessing potential risks related
to irregularities
In identifying and assessing risks of material misstatement in
respect of irregularities, including fraud and non-compliance
with laws and regulations, we considered the following:
• the nature of the industry and sector, control environment
and business performance including the design of the
Company’s remuneration policies, key drivers for the
investment manager and directors’ remuneration, bonus
levels and performance targets;
• the Company’s own assessment of the risks that
irregularities may occur either as a result of fraud or error
that was approved by the Board on 11 June 2025;
• results of our enquiries of management and the audit
and risk committee about their own identification and
assessment of the risks of irregularities, including those
that are specific to the Company’s sector;
• any matters we identified having obtained and reviewed
the Company’s documentation of their policies and
procedures relating to:
– identifying, evaluating and complying with laws and
regulations and whether they were aware of any
instances of non-compliance;
– detecting and responding to the risks of fraud and
whether they have knowledge of any actual, suspected
or alleged fraud;
– the internal controls established to mitigate risks of
fraud or non-compliance with laws and regulations;
• the matters discussed among the audit engagement team
and relevant internal specialists, including tax, valuations
and industry specialists regarding how and where fraud
might occur in the financial statements and any potential
indicators of fraud.
As a result of these procedures, we considered the
opportunities and incentives that may exist within the
organisation for fraud and identified the greatest potential for
fraud in the following areas: key judgement in the valuation of
bilateral loan and bond portfolio. In common with all audits
under ISAs (UK), we are also required to perform specific
procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory
frameworks that the Company operates in, focusing on
provisions of those laws and regulations that had a direct
effect on the determination of material amounts and
disclosures in the financial statements. The key laws and
regulations we considered in this context included the
Companies (Guernsey) Law, 2008, the UK Listing Rules and
relevant tax legislation.
Annual Report and Accounts 2025Real Estate Credit Investments Limited66
In addition, we considered provisions of other laws and
regulations that do not have a direct effect on the financial
statements but compliance with which may be fundamental
to the Company’s ability to operate or to avoid a material
penalty. These included the Company’s regulatory licences
under The Protection of Investors (Bailiwick of Guernsey)
Law, 2020.
11.2 Audit response to risks identified
As a result of performing the above, we identified the key
judgement in the valuation of bilateral loan and bond portfolio
as a key audit matter related to the potential risk of fraud. The
key audit matters section of our report explains the matter
in more detail and also describes the specific procedures
we performed in response to that key audit matter.
In addition to the above, our procedures to respond to risks
identified included the following:
• reviewing the financial statement disclosures and testing
to supporting documentation to assess compliance with
provisions of relevant laws and regulations described as
having a direct effect on the financial statements;
• enquiring of management and the Audit and Risk Committee
concerning actual and potential litigation and claims;
• performing analytical procedures to identify any unusual
or unexpected relationships that may indicate risks of
material misstatement due to fraud;
• reading minutes of meetings of those charged with
governance and reviewing correspondence with
Guernsey Financial Services Commission; and
• in addressing the risk of fraud through management
override of controls, testing the appropriateness of journal
entries and other adjustments; assessing whether the
judgements made in making accounting estimates are
indicative of a potential bias; and evaluating the business
rationale of any significant transactions that are unusual
or outside the normal course of business.
We also communicated relevant identified laws and
regulations and potential fraud risks to all engagement
team members including internal specialists and remained
alert to any indications of fraud or non-compliance with
laws and regulations throughout the audit.
Report on other legal and regulatory requirements
12. Corporate Governance Statement
The Listing Rules require us to review the directors’
statement in relation to going concern, longer-term viability
and that part of the Corporate Governance Statement relating
to the Company’s compliance with the provisions of the UK
Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the
Corporate Governance Statement is materially consistent
with the financial statements and our knowledge obtained
during the audit:
• the Directors’ statement with regards to the appropriateness
of adopting the going concern basis of accounting and
any material uncertainties identified set out on page 44;
• the Directors’ explanation as to its assessment of the
Company’s prospects, the period this assessment covers
and why the period is appropriate set out on page 17;
• the Directors’ statement on fair, balanced and
understandable set out on page 58;
• the Board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks set out
on page 52;
• the section of the Annual Report that describes the review
of effectiveness of risk management and internal control
systems set out on page 50; and
• the section describing the work of the Audit and Risk
Committee set out on pages 54 to 57.
13. Matters on which we are required to
report by exception
13.1 Adequacy of explanations received and
accounting records
Under the Companies (Guernsey) Law, 2008 we are
required to report to you if, in our opinion:
• we have not received all the information and
explanations we require for our audit; or
• proper accounting records have not been kept; or
• the financial statements are not in agreement with the
accounting records.
We have nothing to report in respect of these matters.
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 67
Independent Auditor’s Report (continued)
14. Other matters which we are required
to address
14.1 Auditor tenure
We were appointed by the Company upon inception on
6 September 2005 to audit the financial statements of
the Company for the period ending 31 March 2006 and
subsequent financial periods. Following a competitive
tender process, we were reappointed by the Board of
Directors on 13 June 2018 to audit the financial statements
for the year ending 31 March 2019 and subsequent financial
periods. The period of total uninterrupted engagement
including previous renewals and reappointments of the firm
is 20 years, covering the years ending 31 March 2006 to
31 March 2025.
14.2 Consistency of the audit report with the additional
report to the Audit and Risk Committee
Our audit opinion is consistent with the additional report to
the Audit and Risk Committee we are required to provide in
accordance with ISAs (UK).
15. Use of our report
This report is made solely to the company’s members, as a
body, in accordance with Section 262 of the Companies
(Guernsey) Law, 2008. Our audit work has been undertaken
so that we might state to the Company’s members those
matters we are required to state to them in an auditor’s report
and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone
other than the Company and the Company’s members as a
body, for our audit work, for this report, or for the opinions
we have formed.
As required by the Financial Conduct Authority (“FCA”)
Disclosure Guidance and Transparency Rule (“DTR”) 4.1.14R,
these financial statements will form part of the European
Single Electronic Format (“ESEF”) prepared Annual Financial
Report filed on the National Storage Mechanism of the
UK FCA in accordance with the ESEF Regulatory Technical
Standard (“ESEF RTS”). This auditor’s report provides no
assurance over whether the annual financial report has
been prepared using the single electronic format specified
in the ESEF RTS.
John Clacy, FCA
For and on behalf of Deloitte LLP
Recognised Auditor
St Peter Port, Guernsey
24 June 2025
Annual Report and Accounts 2025Real Estate Credit Investments Limited68
Statement of Comprehensive Income
For the Year Ended 31 March 2025
31 Mar 2025 | 31 Mar 2024 | ||
Note | GBP’000 | GBP’000 | |
Interest income | 6 | ||
Net gains on financial assets and liabilities at fair value through profit or loss | 4 | ||
Net gains on foreign currency translation | |||
Other income | |||
Operating income | |||
Operating expenses | 5 | ( | ( |
Profit before finance costs | |||
Finance costs | 6 | ( | ( |
Net profit | |||
| Earnings per share | |||
Basic and diluted | 8 | ||
Weighted average shares outstanding | Number | Number | |
Basic and diluted | 8 |
There were no items of other comprehensive income in the comparative periods.
The accompanying notes form an integral part of the financial statements.
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 69
31 Mar 2025 | 31 Mar 2024 | ||
Note(s) | GBP’000 | GBP’000 | |
| Non-current assets | |||
Financial assets at fair value through profit or loss | 9,14 | ||
| Current assets | |||
Cash and cash equivalents | 9 | ||
Cash collateral held at broker | 9,16 | ||
Other assets | 9 | ||
Total assets | |||
| Equity and liabilities | |||
| Equity | |||
Reserves | 13 | ||
Total equity | |||
| Current liabilities | |||
Financing agreements | 9,12 | ||
Cash collateral due to broker | 9,16 | ||
Derivative financial liabilities | 9 | ||
Other liabilities | 9,10 | ||
Total liabilities | |||
Total equity and liabilities | |||
Shares outstanding | 13 | ||
Net asset value per share | £ | £ |
The accompanying notes form an integral part of the financial statements.
Signed on behalf of the Board of Directors by:
Andreas Tautscher Susie Farnon
Director Director
24 June 2025
Statement of Financial Position
As at 31 March 2025
Annual Report and Accounts 2025Real Estate Credit Investments Limited70
| Total equity | ||
Note | GBP’000 | |
Balance as at 31 March 2024 | ||
Total comprehensive income | ||
Dividends | 7 | ( |
Treasury shares purchased | 13 | ( |
Balance as at 31 March 2025 |
| Total equity | ||
Note | GBP’000 | |
Balance as at 31 March 2023 | ||
Total comprehensive income | ||
Dividends | 7 | ( |
Treasury shares purchased | 13 | ( |
Balance as at 31 March 2024 |
The accompanying notes form an integral part of the financial statements.
Statement of Changes in Equity
For the Year Ended 31 March 2025
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 71
31 Mar 2025 | 31 Mar 2024 | ||
Note | GBP’000 | GBP’000 | |
Net profit | |||
Purchases of investment portfolio | ( | ( | |
Repayments/sales proceeds on investment portfolio | |||
Net losses on investment portfolio | 4 | ||
Net movement on derivative financial assets and liabilities | |||
Foreign currency gain under financing agreements | 12 | ( | ( |
Interest income | ( | ( | |
Finance costs | 12 | ||
Operating cash flows before movement in working capital | ( | ||
Decrease/(increase) in cash collateral held at broker | ( | ||
Decrease/(increase) in other assets | ( | ||
(Decrease)/increase in cash collateral due to broker | ( | ||
Increase in other liabilities | |||
Movement in working capital | ( | ||
Interest received | |||
Net cash (outflow)/inflow from operating activities | ( | ||
| Financing activities | |||
Dividends paid to Shareholders | 7 | ( | ( |
Payments under financing agreements | 12 | ( | ( |
Proceeds under financing agreements | 12 | ||
Finance costs paid | 12 | ( | ( |
Payments on treasury shares purchased | 13 | ( | ( |
Net cash inflow/(outflow) from financing activities | ( | ||
Net increase in cash and cash equivalents | |||
Cash and cash equivalents at the start of the year | |||
Cash and cash equivalents at the end of the year |
The accompanying notes form an integral part of the financial statements.
Statement of Cash Flows
For the Year Ended 31 March 2025
Annual Report and Accounts 2025Real Estate Credit Investments Limited72
1. General Information
2005 with registered number CMP43634. The Company
commenced its operations on 8 December 2005.
The Company’s shares are currently listed and traded on
the Main Market of the London Stock Exchange.
2. Material Accounting Policies
Notes to the Financial Statements
For the Year Ended 31 March 2025
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 73
Notes to the Financial Statements (continued)
Annual Report and Accounts 2025Real Estate Credit Investments Limited74
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 75
Notes to the Financial Statements (continued)
3. Critical Accounting Judgements and Key Sources
of Estimation Uncertainty
In the process of applying the Company’s accounting
policies (described in Note 2), the Company has determined
that the following judgements and estimates have the
most significant effect on the amounts recognised in the
financial statements:
Critical Accounting Judgements
Classification of Bilateral Loans and Bonds as Financial
Assets at Fair Value Through Profit or Loss
As described on pages 74 to 75, classification and
measurement of financial assets under IFRS 9 are driven
by the entity’s business model for managing financial
assets and the contractual cash flow characteristics of
those financial assets.
In making the judgement regarding Stornoway Finance S.à r.l.,
European Navigator IV (“ENIV”) S.à r.l. and Real Estate Loan
Funding (“RELF”), the Directors have considered the power
the Company has to influence the investment decisions of
the Special Purpose Vehicle (“SPV”) housing the underlying
loans and where the Company holds the majority interest it has
been determined that the contractual cash flow characteristics
for a basic lending arrangement would be met. However,
IFRS 9 also requires an assessment of the business model
within which assets are held. In the case of the Company’s
loan investments the Directors have determined that they
monitor and evaluate business performance, manage risk
and compensate the Investment Manager based on fair
value measures. The business model is therefore not solely
for holding and collecting contractual cash flows to maturity
and requires all loan investments to be measured at fair value
through profit or loss.
The Company’s bond investments are classified and
measured at fair value through profit or loss in accordance
with the above fact pattern.
Were it to be determined that the business model for
managing financial assets and the contractual cash flow
characteristics of those financial assets were not as
described above, these assets would be classified and
measured at amortised cost with provisions made for
expected credit losses and changes to expected credit
losses at each reporting date.
As further described on page 74, the contractual cash flow
characteristics for loan investments are not solely payments
of principal and interest. For the loans held via Stornoway
Finance S.à r.l., ENIV S.à r.l. and RELF, the Company receives
the return for each underlying loan net of expenses and so it
is not considered to be a basic lending arrangement under
the standard. As such, these loan investments are required
to be measured at fair value through profit or loss. The loans
held via ENIV S.à r.l. are listed and considered bonds.
Annual Report and Accounts 2025Real Estate Credit Investments Limited76
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 77
Notes to the Financial Statements (continued)
31 Mar 2025 | 31 Mar 2024 | |
GBP’000 | GBP’000 | |
| Net gains/(losses) | ||
Net gains on market bond portfolio | 1,026 | 1,808 |
Net losses on bilateral loan and bond portfolio | (5,511) | (2,512) |
Net gains/(losses) on equity securities | 3,460 | (5,276) |
Net gains on forward foreign exchange contracts | 4,655 | 6,615 |
Net gains on financial assets and liabilities at fair value through profit or loss | 3,630 | 635 |
Annual Report and Accounts 2025Real Estate Credit Investments Limited78
31 Mar 2025 | 31 Mar 2024 | |
GBP’000 | GBP’000 | |
| Interest income on financial assets at fair value through profit or loss | ||
Real Estate Credit Investments – market bond portfolio | 754 | 1,482 |
Real Estate Credit Investments – bilateral loan and bond portfolio | 28,050 | 28,413 |
28,804 | 29,895 | |
| Interest income on financial assets at amortised cost | ||
Cash and cash equivalents and cash collateral held at broker | 716 | 446 |
Total interest income | 29,520 | 30,341 |
| Finance costs | ||
Cost of financing agreements | (4,782) | (3,514) |
Total finance costs | (4,782) | (3,514) |
7. Dividends
31 Mar 2025 | 31 Mar 2024 | |
GBP’000 | GBP’000 | |
| Share dividends | ||
Fourth dividend for the year ended 31 March 2024/31 March 2023 | 6,702 | 6,880 |
First dividend for the year ended 31 March 2025/31 March 2024 | 6,657 | 6,880 |
Second dividend for the year ended 31 March 2025/31 March 2024 | 6,657 | 6,880 |
Third dividend for the year ended 31 March 2025/31 March 2024 | 6,657 | 6,776 |
Dividends paid to Shareholders | 26,673 | 27,416 |
The total dividends paid during the financial year ended 31 March 2025 amounted to 12.0 pence per share (31 March 2024:
Under Guernsey Law, companies can pay dividends provided they satisfy the solvency test prescribed under the Companies
(Guernsey) Law, 2008 (as amended), which considers whether a company is able to pay its debts when they become due and
whether the value of a company’s assets is greater than its liabilities.
The Directors considered that the Company satisfied the solvency test for all dividends approved.
8. Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
31 Mar 2025 | 31 Mar 2024 | |
Net earnings attributable to shares (GBP’000) | 22,817 | 21,855 |
Weighted average number of shares for the purposes of basic and diluted earnings per share 1 | 222,881,212 | 228,777,629 |
| Earnings per share | ||
Basic and diluted (pence) | 10.2 | 9.6 |
1
The weighted average number of shares takes into account the weighted average effect of changes in treasury shares during the year.
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 79
Notes to the Financial Statements (continued)
31 Mar 2025 | 31 Mar 2024 | |
GBP’000 | GBP’000 | |
| Assets | ||
| Financial assets at fair value through profit or loss: | ||
Real Estate Credit Investments – market bond portfolio | 6,812 | 7,894 |
Real Estate Credit Investments – bilateral loan and bond portfolio | 344,857 | 305,037 |
Real Estate Credit Investments – equity securities | 17,809 | 16,438 |
Financial assets at fair value through profit or loss | 369,478 | 329,369 |
| Financial assets at amortised cost: | ||
Cash and cash equivalents | 19,295 | 18,290 |
Cash collateral held at broker | 2,866 | 4,489 |
Other assets | 72 | 104 |
Total assets | 391,711 | 352,252 |
| Liabilities | ||
| Financial liabilities at fair value through profit or loss: | ||
Financing agreements | 70,850 | 23,790 |
| Derivative financial liabilities: | ||
Forward foreign exchange contracts | 213 | 88 |
| Financial liabilities at amortised cost: | ||
Cash collateral due to broker | – | 14 |
Other liabilities | 2,292 | 1,978 |
Total liabilities | 73,355 | 25,870 |
31 Mar 2025 | 31 Mar 2024 | ||
Note | GBP’000 | GBP’000 | |
Investment management fees payable | 17 | 338 | 317 |
Deal and underwriting expenses payable | 177 1 | – | |
Administration fees payable | 17 | 40 | 38 |
Depositary fees payable | 17 | 20 | 67 |
Other operating payables | 1,717 | 1,556 | |
Total other liabilities | 2,292 | 1,978 |
Annual Report and Accounts 2025Real Estate Credit Investments Limited80
Fair value of loans 1 | Undrawn commitment | Carrying value | |||
| Name | GBP’000 | GBP’000 | GBP’000 | Nature and purpose of the entity | Location |
RELF 2 | |||||
Fulton Road | 30,036 | 2,689 | 15,754 | To invest in Fulton Road real estate United Kingdom | |
Kensington | 15,682 | 236 | 7,947 | To invest in Kensington real estate United Kingdom | |
Sabina | 19,688 | 8,142 | 9,935 | To invest in Sabina real estate | Luxembourg |
| Cheyne | 8,881 | 512 | 8,881 | To invest in Cheyne French | France |
| French Funding | Funding Sub-Fund 3 real estate | ||||
| Sub-Fund 3 | |||||
| Cheyne | 19,781 | – | 19,781 | To invest in Cheyne French | France |
| French Funding | Funding Sub-Fund 8 real estate | ||||
| Sub-Fund 8 |
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 81
Notes to the Financial Statements (continued)
Fair value of loans 1 | Undrawn commitment | Carrying value | |||
| Name | GBP’000 | GBP’000 | GBP’000 | Nature and purpose of the entity | Location |
RELF 2 | |||||
Fulton Road | 15,262 | 17,463 | 7,888 | To invest in Fulton Road real estate | United Kingdom |
Kensington | 17,550 | 236 | 8,035 | To invest in Kensington real estate | United Kingdom |
Lifestory | 12,650 | – | 4,163 | To invest in Lifestory real estate | Luxembourg |
Ruby | 8,194 | 1,560 | 4,167 | To invest in Ruby real estate | Luxembourg |
Sabina | 15,869 | 6,562 | 8,865 | To invest in Sabina real estate | Luxembourg |
| Cheyne | 10,372 | 3,299 | 10,372 | To invest in Cheyne French | France |
| French Funding | Funding Sub-Fund 3 real estate | ||||
| Sub-Fund 3 | |||||
| Cheyne | 24,477 | 5,202 | 24,709 | To invest in Cheyne French | France |
| French Funding | Funding Sub-Fund 8 real estate | ||||
| Sub-Fund 8 |
12. Financing Agreements
The Company engages in repurchase agreements (“repos”) with bank lenders to manage its portfolio efficiently. Securities
financed through these repos are valued at fair market value, with financing costs and advance rates varying according to the
lender’s discretion. Under the terms of a repo agreement, the lender takes custody of the purchased securities and values them
daily to safeguard against the Company’s failure to repurchase. If the market value of the underlying securities falls below the face
value of the repos plus accrued interest, the Company will provide additional collateral. In case of a default on the repurchase
obligation, the lender has the right to liquidate the collateral to satisfy the debt. If the counterparty defaults or declares bankruptcy,
the realisation or retention of the collateral or proceeds may be subject to legal proceedings.
The Company enters into repos with several banks. This financing is collateralised against the Company’s market bond and
self-originated bond portfolio with a fair value totalling £100.2 million (31 March 2024: £39.5 million) and has a weighted average
cost of 7.50% (31 March 2024: 7.73%) per annum. The contractual maturity period for repos is six months for market bond positions.
For self-originated bonds, the maturity period is the earlier of the underlying loan’s maturity or the maturity of any committed
repo facilities.
This short-term financing is shown as a current liability in the Statement of Financial Position whereas the collateralised assets
are shown as non-current. The movement in financing agreements amounting to £46.3 million (31 March 2024: £56.5 million) and
finance costs paid amounting to £4.0 million (31 March 2024: £3.7 million) are shown as financing activities in the Statement of
Cash Flows.
The following table summarises movements in financing agreements as at 31 March 2025 and 31 March 2024.
31 Mar 2025 | 31 Mar 2024 | |
GBP’000 | GBP’000 | |
Balance as at 1 April | 23,790 | 80,441 |
Payments under financing agreements | (192,749) | (295,841) |
Proceeds under financing agreements | 239,269 | 239,681 |
Foreign currency gain | (257) | (326) |
Finance costs | 4,782 | 3,514 |
Finance costs paid | (3,985) | (3,679) |
70,850 | 23,790 |
Annual Report and Accounts 2025Real Estate Credit Investments Limited82
During the financial year ended 31 March 2025, the Company maintained off-balance sheet financing agreements. These facilities
are structured using off-balance sheet entities and are secured against specific loans. This financing does not encumber other
Company assets, except for a limited recourse loss guarantee up to the borrowed amount. As at 31 March 2025, the total off-balance
sheet loans amounted to £31.2 million (31 March 2024: £33.9 million). The partial recourse commitment was £9.3 million (31 March
2024: £3.9 million). No expected loss from this guarantee has been recognised in the financial statements, and no additional
collateralisation was required as at year-end.
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 83
Notes to the Financial Statements (continued)
Forward Foreign | Net | |||
Monetary | Monetary | Exchange | currency | |
Assets | Liabilities | Contracts | exposure | |
Currency | GBP’000 | GBP’000 | GBP’000 | GBP’000 |
GBP | 277,508 | (65,257) | 110,467 | 322,718 |
EUR | 114,196 | (7,885) | (110,680) | (4,369) |
USD | 7 | – | – | 7 |
391,711 | (73,142) | (213) | 318,356 |
Annual Report and Accounts 2025Real Estate Credit Investments Limited84
Forward Foreign | Net | |||
Monetary | Monetary | Exchange | currency | |
Assets | Liabilities | Contracts | exposure | |
Currency | GBP’000 | GBP’000 | GBP’000 | GBP’000 |
GBP | 195,177 | (17,112) | 153,070 | 331,135 |
EUR | 157,069 | (8,670) | (153,158) | (4,759) |
USD | 6 | – | – | 6 |
352,252 | (25,782) | (88) | 326,382 |
31 Mar 2025 | 31 Mar 2024 | |
By 5% | GBP’000 | GBP’000 |
EUR | (218) | (238) |
Total | (218) | (238) |
31 Mar 2025 | 31 Mar 2024 | |
By 10% | GBP’000 | GBP’000 |
EUR | (437) | (476) |
USD | 1 | 1 |
Total | (436) | (475) |
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 85
Notes to the Financial Statements (continued)
| Non-interest | ||||
Fixed | Floating | bearing | Total | |
GBP’000 | GBP’000 | GBP’000 | GBP’000 | |
Financial assets at fair value through profit or loss | 240,375 | 100,323 | 28,780 1 | 369,478 |
Cash and cash equivalents | – | 19,295 | – | 19,295 |
Cash collateral held at broker | – | 2,866 | – | 2,866 |
Other assets | – | – | 72 | 72 |
Financing agreements | – | (69,931) | (919) 2 | (70,850) |
| Derivative financial assets – | ||||
forward foreign exchange contracts | – | – | (213) | (213) |
Other liabilities | – | – | (2,292) | (2,292) |
Total | 240,375 | 52,553 | 25,428 | 318,356 |
Within | One to | Over | ||
one year | five years | five years | Total | |
GBP’000 | GBP’000 | GBP’000 | GBP’000 | |
Financial assets at fair value through profit or loss | 183,567 | 184,244 | 1,667 | 369,478 |
Cash and cash equivalents | 19,295 | – | – | 19,295 |
Cash collateral held at broker | 2,866 | – | – | 2,866 |
Other assets | 72 | – | – | 72 |
Financing agreements | (70,850) | – | – | (70,850) |
| Derivative financial assets – | ||||
forward foreign exchange contracts | (213) | – | – | (213) |
Other liabilities | (2,292) | – | – | (2,292) |
Net assets | 132,445 | 184,244 | 1,667 | 318,356 |
| Non-interest | ||||
Fixed | Floating | bearing | Total | |
GBP’000 | GBP’000 | GBP’000 | GBP’000 | |
Financial assets at fair value through profit or loss | 195,849 | 108,202 | 25,318 1 | 329,369 |
Cash and cash equivalents | – | 18,290 | – | 18,290 |
Cash collateral held at broker | – | 4,489 | – | 4,489 |
Other assets | – | – | 104 | 104 |
Financing agreements | – | (23,668) | (122) 2 | (23,790) |
Cash collateral due to broker | – | (14) | – | (14) |
| Derivative financial liabilities – | ||||
forward foreign exchange contracts | – | – | (88) | (88) |
Other liabilities | – | – | (1,978) | (1,978) |
Total | 195,849 | 107,299 | 23,234 | 326,382 |
Annual Report and Accounts 2025Real Estate Credit Investments Limited86
Within | One to | Over | ||
one year | five years | five years | Total | |
GBP’000 | GBP’000 | GBP’000 | GBP’000 | |
Financial assets at fair value through profit or loss | 105,966 | 223,366 | 37 | 329,369 |
Cash and cash equivalents | 18,290 | – | – | 18,290 |
Cash collateral held at broker | 4,489 | – | – | 4,489 |
Other assets | 104 | – | – | 104 |
Financing agreements | (23,790) | – | – | (23,790) |
Cash collateral due to broker | (14) | – | – | (14) |
| Derivative financial liabilities – | ||||
forward foreign exchange contracts | (88) | – | – | (88) |
Other liabilities | (1,978) | – | – | (1,978) |
Net assets | 102,979 | 223,366 | 37 | 326,382 |
31 Mar 2025 | 31 Mar 2024 | |
GBP’000 | GBP’000 | |
| Instrument | ||
Real Estate Credit Investments – market bond portfolio | 6,812 | 7,894 |
Real Estate Credit Investments – bilateral loan and bond portfolio | 344,857 | 305,037 |
Cash and cash equivalents | 19,295 | 18,290 |
Cash collateral held at broker | 2,866 | 4,489 |
Total | 373,830 | 335,710 |
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 87
Notes to the Financial Statements (continued)
| Value of derivative | Collateral | Collateral | Net (if greater | ||
| liabilities | received | pledged | than zero) | ||
Derivative Type | Counterparty | GBP’000 | GBP’000 | GBP’000 | GBP’000 |
Forward foreign exchange contracts | The Bank of New York Mellon | (213) | – | – | – |
| Value of derivative | Collateral | Collateral | Net (if greater | ||
| liabilities | received | pledged 1 | than zero) | ||
Derivative Type | Counterparty | GBP’000 | GBP’000 | GBP’000 | GBP’000 |
Forward foreign exchange contracts | The Bank of New York Mellon | (88) | – | 88 | – |
Annual Report and Accounts 2025Real Estate Credit Investments Limited88
Less than | 3 months | Greater than | ||
1 month | 1-3 months | to 1 year | 1 year | |
As at 31 March 2025: | GBP’000 | GBP’000 | GBP’000 | GBP’000 |
| Financial liabilities excluding derivatives | ||||
Financing agreements | 51,376 | 18,655 | 819 | – |
Other liabilities | – | 2,292 | – | – |
51,376 | 20,947 | 819 | – |
Less than | 3 months | Greater than | ||
1 month | 1-3 months | to 1 year | 1 year | |
As at 31 March 2024: | GBP’000 | GBP’000 | GBP’000 | GBP’000 |
| Financial liabilities excluding derivatives | ||||
Financing agreements | – | 22,433 | 1,357 | – |
Cash collateral due to broker | – | 14 | – | – |
Other liabilities | – | 1,978 | – | – |
– | 24,425 | 1,357 | – |
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 89
Notes to the Financial Statements (continued)
Level 1 | Level 2 | Level 3 | Total | |
As at 31 March 2025: | GBP’000 | GBP’000 | GBP’000 | GBP’000 |
| Non-current assets | ||||
| Real Estate Credit Investments – | ||||
market bond portfolio | – | 66 | 6,746 | 6,812 |
| Real Estate Credit Investments – | ||||
bilateral loan and bond portfolio | – | – | 344,857 | 344,857 |
Real Estate Credit Investments – equity securities | – | – | 17,809 | 17,809 |
Total non-current assets | – | 66 | 369,412 | 369,478 |
| Current liabilities | ||||
| Real Estate Credit Investments – | ||||
repurchase agreements | – | (70,850) 1 | – | (70,850) |
Forward foreign exchange contracts | – | (213) | – | (213) |
Total current liabilities | – | (71,063) | – | (71,063) |
– | (70,997) | 369,412 | 298,415 |
Level 1 | Level 2 | Level 3 | Total | |
As at 31 March 2024: | GBP’000 | GBP’000 | GBP’000 | GBP’000 |
| Non-current assets | ||||
| Real Estate Credit Investments – | ||||
market bond portfolio | – | 101 | 7,793 | 7,894 |
| Real Estate Credit Investments – | ||||
bilateral loan and bond portfolio | – | – | 305,037 | 305,037 |
Real Estate Credit Investments – equity securities | – | – | 16,438 | 16,438 |
Total non-current assets | – | 101 | 329,268 | 329,369 |
| Current liabilities | ||||
| Real Estate Credit Investments – | ||||
repurchase agreements | – | (23,790) 1 | – | (23,790) |
Forward foreign exchange contracts | – | (88) | – | (88) |
Total current liabilities | – | (23,878) | – | (23,878) |
– | (23,777) | 329,268 | 305,491 |
Annual Report and Accounts 2025Real Estate Credit Investments Limited90
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 91
Notes to the Financial Statements (continued)
Fair value | Valuation | Unobservable | |
As at 31 March 2025: | GBP’000 | technique | input |
Market bond portfolio | 6,746 | Priced via external pricing source | Comparable set used |
| Risk-adjusted discount rate | |||
Bilateral loan and bond portfolio | 344,857 | Discounted cash flow | and sector-based yields |
| Risk-adjusted discount rate | |||
Equity securities | 17,809 | Discounted cash flow | and sector-based yields |
Fair value | Valuation | Unobservable | |
As at 31 March 2024: | GBP’000 | technique | input |
Market bond portfolio | 7,793 | Priced via external pricing source | Comparable set used |
| Risk-adjusted discount rate | |||
Bilateral loan and bond portfolio | 305,037 | Discounted cash flow | and sector-based yields |
| Risk-adjusted discount rate | |||
Equity securities | 16,438 | Discounted cash flow | and sector-based yields |
Level 3 | Level 3 | |
31 Mar 2025 | 31 Mar 2024 | |
GBP’000 | GBP’000 | |
| Financial assets at fair value through profit or loss | ||
Opening balance | 329,268 | 370,979 |
Total losses recognised in the Statement of Comprehensive Income for the year | (1,025) | (6,381) |
Purchases 1 | 139,847 | 95,164 |
Sales | (100,588) | (125,399) |
Increase/(decrease) in interest receivable | 1,910 | (5,095) |
Closing balance | 369,412 | 329,268 |
Unrealised gains/(losses) on investments classified as Level 3 at year end | 187 | (3,267) |
Annual Report and Accounts 2025Real Estate Credit Investments Limited92
15. Segmental Reporting
The Company has adopted IFRS 8 Operating Segments. The standard requires a “management approach”, under which segment
information is presented on the same basis as that used for internal reporting purposes.
Whilst the Investment Manager may make the investment decisions on a day-to-day basis regarding the allocation of funds to
different investments, any changes to the investment strategy or major allocation decisions have to be approved by the Board,
even though they may be proposed by the Investment Manager. The Board retains full responsibility as to the major allocation
decisions made on an ongoing basis and is therefore considered the “Chief Operating Decision Maker” under IFRS 8.
The Company invests in Real Estate Credit Investments. The Real Estate Credit Investments may take different forms but are likely
to be: (i) secured real estate loans; (ii) debentures or any other form of debt instrument, securitised tranches of secured real estate
related debt securities, for example, RMBS and CMBS (together “MBS”); and (iii) equity securities. The real estate debt strategy
focuses on secured residential and commercial debt in the United Kingdom and Western Europe, seeking to exploit opportunities
in publicly traded securities and real estate loans.
The Company has three reportable segments, being the Market Bond Portfolio, Bilateral Loan and Bond Portfolio and
Equity Securities.
For each of the segments, the Board of Directors reviews internal management reports prepared by the Investment Manager on
a quarterly basis. The Investment Manager has managed each of the Market Bond Portfolio, Bilateral Loan and Bond Portfolio
and Equity Securities separately; thus, three reportable segments are displayed in the financial statements.
Information regarding the results of each reportable segment is included below. Performance is measured based on segment
profit/(loss), as included in the internal management reports that are reviewed by the Board of Directors. Segment profit/(loss)
is used to measure performance as management believes that such information is the most relevant in evaluating the results.
| Market | Bilateral Loan and | |||
| Bond Portfolio | Bond Portfolio | Equity Securities | Total | |
| Year ended 31 March 2025: | GBP’000 | GBP’000 | GBP’000 | GBP’000 |
Interest income | 754 | 28,050 | – | 28,804 |
| Net gains/(losses) on financial assets and liabilities | ||||
at fair value through profit or loss | 1,026 | (5,511) | 3,460 | (1,025) |
Reportable segment profit | 1,780 | 22,539 | 3,460 | 27,779 |
Finance costs | (262) | (4,520) | – | (4,782) |
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 93
Notes to the Financial Statements (continued)
| Market | Bilateral Loan and | Equity | ||
| Bond Portfolio | Bond Portfolio | Securities | Total | |
| Year ended 31 March 2024: | GBP’000 | GBP’000 | GBP’000 | GBP’000 |
Interest income | 1,482 | 28,413 | – | 29,895 |
| Net gains/(losses) on financial assets and liabilities | ||||
at fair value through profit or loss | 1,808 | (2,512) | (5,276) | (5,980) |
Reportable segment profit/(loss) | 3,290 | 25,901 | (5,276) | 23,915 |
Finance costs | (989) | (2,525) | – | (3,514) |
| Market Bond | Bilateral Loan and | Equity | ||
| Portfolio | Bond Portfolio | Securities | Total | |
| As at 31 March 2025: | GBP’000 | GBP’000 | GBP’000 | GBP’000 |
Reportable segment assets | 6,812 | 344,857 | 17,809 | 369,478 |
Non-segmental assets | 22,233 | |||
Financing agreements | (4,240) | (66,610) | – | (70,850) |
Non-segmental liabilities | (2,505) | |||
Net assets | 318,356 |
| Market Bond | Bilateral Loan and | Equity | ||
| Portfolio | Bond Portfolio | Securities | Total | |
| As at 31 March 2024: | GBP’000 | GBP’000 | GBP’000 | GBP’000 |
Reportable segment assets | 7,894 | 305,037 | 16,438 | 329,369 |
Non-segmental assets | 22,883 | |||
Financing agreements | (4,733) | (19,057) | – | (23,790) |
Non-segmental liabilities | (2,080) | |||
Net assets | 326,382 |
Information regarding the basis of geographical segments is presented in the Investment Manager’s Report and is based on the
countries of the underlying collateral.
All segment revenues are from external sources. There are no inter-segment transactions between the reportable segments
during the year. Certain income and expenditure is not considered part of the performance of either segment. This includes net
gains/(losses) on forward foreign exchange contracts, net gains/(losses) on foreign currency translation, expenses and interest
on borrowings.
The following table provides a reconciliation between reportable segment profit and net profit.
31 Mar 2025 | 31 Mar 2024 | |
GBP’000 | GBP’000 | |
Reportable segment profit | 27,779 | 23,915 |
Net gains on forward foreign exchange contracts | 4,655 | 6,615 |
Net gains on foreign currency translation | 1,011 | 260 |
Interest income on financial assets at amortised cost | 716 | 446 |
Other income | 37 | 123 |
34,198 | 31,359 | |
Operating expenses | (6,599) | (5,990) |
Finance costs | (4,782) | (3,514) |
Net profit | 22,817 | 21,855 |
Certain assets are not considered to be attributable to either segment. These include cash and cash equivalents, cash collateral
held at broker, derivative financial assets and other assets.
The following table provides a reconciliation between reportable segment assets and total assets.
Annual Report and Accounts 2025Real Estate Credit Investments Limited94
31 Mar 2025 | 31 Mar 2024 | |
GBP’000 | GBP’000 | |
Reportable segment assets | 369,478 | 329,369 |
Cash and cash equivalents | 19,295 | 18,290 |
Cash collateral held at broker | 2,866 | 4,489 |
Other assets | 72 | 104 |
Total assets | 391,711 | 352,252 |
| Market Bond | Bilateral Loan and | Equity | ||
| Portfolio | Bond Portfolio | Securities | Total | |
| Year ended 31 March 2025: | GBP’000 | GBP’000 | GBP’000 | GBP’000 |
| Financial assets at fair value through profit or loss | ||||
Opening fair value | 7,894 | 305,037 | 16,438 | 329,369 |
Transfer | – | 2,312 | (2,312) | – |
Purchases 1 | – | 139,624 | 223 | 139,847 |
Repayments/sales proceeds | (2,073) | (98,515) | – | (100,588) |
(Decrease)/increase in interest receivable | (35) | 1,910 | – | 1,875 |
Realised losses on sales | (58) | (861) | (7) | (926) |
Net movement in unrealised gains/(losses) | 1,084 | (4,650) | 3,467 | (99) |
Closing fair value | 6,812 | 344,857 | 17,809 | 369,478 |
| Market Bond | Bilateral Loan and | Equity | ||
| Portfolio | Bond Portfolio | Securities | Total | |
| Year ended 31 March 2024: | GBP’000 | GBP’000 | GBP’000 | GBP’000 |
| Financial assets at fair value through profit or loss | ||||
Opening fair value | 49,243 | 341,475 | 10,024 | 400,742 |
Transfer | – | (11,651) | 11,651 | – |
Purchases 1 | – | 94,866 | 298 | 95,164 |
Repayments/sales proceeds | (42,942) | (112,046) | (259) | (155,247) |
Decrease in interest receivable | (215) | (5,095) | – | (5,310) |
Realised (losses)/gains on sales | (4,233) | 1,338 | (1) | (2,896) |
Net movement in unrealised gains/(losses) | 6,041 | (3,850) | (5,275) | (3,084) |
Closing fair value | 7,894 | 305,037 | 16,438 | 329,369 |
16. Cash Collateral
The Company manages some of its financial risks through the use of financial derivative instruments and repurchase agreements
which are subject to collateral requirements. The following table provides the cash held by various financial institutions as at
31 March 2025 and 31 March 2024. The cash held by brokers is restricted and is shown as Cash collateral held at/due to broker
in the Statement of Financial Position.
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 95
Notes to the Financial Statements (continued)
31 Mar 2025 | 31 Mar 2024 | |
GBP’000 | GBP’000 | |
| Cash collateral held at broker | ||
JPMorgan Chase Bank, N.A. | 2,866 | 916 |
The Bank of New York Mellon | – | 3,572 |
Deutsche Bank Securities Inc. | – | 1 |
2,866 | 4,489 | |
| Cash collateral due to broker | ||
The Bank of New York Mellon | – | (14) |
– | (14) |
17. Material Agreements and Related Party Transactions
Loan Investments
Previously, many of the Company’s investments in loans were made through a Luxembourg-based entity, Stornoway Finance
S.à r.l., via loan note instruments. Since 2017, the majority of the Company’s investments are now made through Luxembourg-
based entities, ENIV S.à r.l. and RELF, via separate note instruments. This entity has separate compartments for each loan deal
which effectively ringfences each loan deal. Other funds managed by the Investment Manager may invest pari passu in these
compartments.
Investment Manager
The Company is party to an Investment Management Agreement with the Investment Manager, dated 22 February 2017, pursuant
to which the Company has appointed the Investment Manager to manage its assets on a day-to-day basis in accordance with
its investment objectives and policies, subject to the overall supervision and direction of the Board of Directors.
The Company pays the Investment Manager a Management Fee and a Performance Fee.
Annual Report and Accounts 2025Real Estate Credit Investments Limited96
19. Subsequent Events
The Directors declared a dividend of 3.0 pence per share on 24 June 2025.
Since 1 April 2025, RECI has bought back 200,000 shares at 120.0 pence per share.
There have been no other significant events affecting the Company since the year end date that require amendment to or
disclosure in the financial statements.
20. Foreign Exchange Rates Applied to Combined Totals Used in the Preparation of the Financial Statements
The following foreign exchange rates relative to the GBP were used as at the year end date:
31 Mar 2025 | 31 Mar 2024 | |
Currency | GBP | GBP |
EUR | 1.19 | 1.17 |
USD | 1.29 | 1.26 |
21. Approval of the Financial Statements
The Annual Report and audited financial statements of the Company were approved by the Directors on 24 June 2025.
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 97
Appendix I – AIFM Remuneration Policy (Unaudited)
Annual Remuneration Disclosure for the Year to 31 March 2025
Cheyne Capital Management (UK) LLP (“Cheyne”), the Alternative Investment Fund Manager (“AIFM”), has implemented a
Remuneration Policy (“the Policy”) that is applicable to all remuneration matters within the firm, with a particular focus on those
persons who have been identified as having a material impact on the risk profile of the AIF (“Code Staff”). This includes senior
management, risk takers and control functions.
The Policy is in line with Cheyne’s business strategy, objectives, values and long-term interests. As an AIFM, Cheyne’s overall
objective is to achieve attractive and controlled performance and capital growth for all funds under management, including
the AIF and to develop strong long-term relationships with investors. Cheyne’s income is dependent upon the funds for which
it serves as manager or AIFM, and therefore the profit available for distribution under the Policy is dependent upon the performance
of such funds including the AIF. As such, the fulfilment of Cheyne’s objectives is interlinked with the best interests of Cheyne’s
clients, which in turn is in line with the Policy. The Policy promotes effective risk management and does not tolerate breaches
of internal risk guidelines.
Cheyne has a Remuneration Committee (currently the COO and CFO) who report into the Incentivisation Committee (currently
the CEO and President) that oversees the remuneration of individuals, including Code Staff, and approval of the allocation of
profits available for discretionary division among members.
Cheyne was authorised as an AIFM on 22 July 2014. The quantitative disclosures required under Article 22 of AIFMD in accordance
with the European Securities and Markets Authority (“ESMA”) guidance for the year ended 31 March 2025, in respect of remuneration
derived from the AIF, are as follows:
Business Area Number of Code Staff
AIFM Total
Remuneration
(all variable)
Code Staff relevant
to the AIF
Remuneration derived
from the AIF
(all variable)
Deferred
Remuneration
derived from the AIF
Portfolio Management 19 £22,014,889 6 £974,850 £210,481
Senior Management 7 £19,059,489 7 £798,434 £220,129
Total 26 £41,074,378 13 £1,773,284 £430,610
Remuneration Code information is provided as required under the FCA Rules.
Annual Report and Accounts 2025Real Estate Credit Investments Limited98
Appendix II – AIFM Leverage (Unaudited)
For the purposes of this disclosure, leverage is any method
by which a fund’s exposure is increased. A fund’s exposure
may be increased by using derivatives, by reinvesting cash
borrowings, through positions within repurchase or reverse
repurchase agreements, through securities lending or
securities borrowing arrangements, or by any other means
(such increase referred to herein as the “Incremental Exposure”).
The AIFMD prescribes two methodologies for calculating
overall exposure of a fund: the “gross methodology” and
the “commitment methodology”. These methodologies are
briefly summarised below.
The commitment methodology takes account of the hedging
and netting arrangements employed by a fund at any given
time (purchased and sold derivative positions will be netted
where both relate to the same underlying asset). This
calculation of exposure includes all Incremental Exposure as
well as a fund’s own physical holdings, and cash. By contrast,
the gross methodology does not take account of the netting
or hedging arrangements employed by a Company. This
calculation of exposure includes all Incremental Exposure as
well as the Company’s own physical holdings; cash is excluded.
The AIFMD requires that each leverage ratio be expressed
as the ratio between a fund’s total exposure (including any
Incremental Exposure) and its NAV. Using the methodologies
prescribed under the AIFMD and implementing legislation,
the Company has set a maximum level of leverage, taking
into account atypical and volatile market conditions. Leverage
will not exceed the ratio of 5:1 using the commitment
methodology and 5:1 using the gross methodology.
The use of leverage, including borrowings, may increase the
volatility of the Company’s NAV per share and also amplify
any loss in the value of the Company’s assets.
While the use of borrowing should enhance the total return
on the shares where the return on the Company’s underlying
assets is rising and exceeds the cost of borrowing, it will have
the opposite effect where the return on the Company’s
underlying assets is falling or rising at a lower rate than the
cost of borrowing, reducing the total return on the shares.
As a result, the use of borrowing by the Company may
increase the volatility of the NAV per share.
Any reduction in the value of the Company’s investments may
lead to a correspondingly greater percentage reduction in
its NAV (which is likely to adversely affect the price of a
share). Any reduction in the number of shares in issue (for
example, as a result of buybacks or tender offers) will, in the
absence of a corresponding reduction in borrowing, result
in an increase in the Company’s level of gearing.
To the extent that a fall in the value of the Company’s
investments causes gearing to rise to a level that is not
consistent with the Company’s gearing policy or borrowing
limits, the Company may have to sell investments in order
to reduce borrowing.
The Company will pay interest on its borrowing. As such, the
Company is exposed to interest rate risk due to fluctuations
in the prevailing market rates. The Company may employ
hedging techniques designed to reduce the risk of adverse
movements in interest rates. However, such strategies may
also result in losses and overall poorer performance than if the
Company had not entered into such hedging transactions.
The risks associated with the derivatives used by the Company
and that may contribute to the leverage of the Company
are set out earlier.
Leverage is limited to 500% of NAV of the Company under
both the Gross and Commitment approaches. Up to 31 March
2025, the maximum leverage calculated has been 164.00%
(31 March 2024: 146.87%) for the Gross Approach and 128.45%
(31 March 2024: 107.90%) for the Commitment Approach.
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 99
Directors and Advisers
Directors
Andreas Tautscher
(appointed 7 May 2024 and Chairman from 1 November 2024)
Susie Farnon
Colleen McHugh
Mark Thompson (appointed 4 November 2024)
Bob Cowdell (resigned 31 October 2024)
John Hallam (resigned 18 September 2024)
Secretary of the Company
Aztec Financial Services (Guernsey) Limited
PO Box 656
East Wing
Trafalgar Court
Les Banques, St. Peter Port
Guernsey, GY1 3PP
Corporate Broker
Panmure Liberum Limited
Ropemaker Place, Level 12
25 Ropemaker Street
London, EC2Y 9LY
Registrar
MUFG Corporate Markets (Guernsey) Limited
Mount Crevelt House
Bulwer Avenue
St. Sampson
Guernsey, GY2 4LH
Depositary
The Bank of New York Mellon (International) Limited
One Canada Square
London, E14 5AL
Registered Office
Alternative Investment Fund Manager
Cheyne Capital Management (UK) LLP
Stornoway House
13 Cleveland Row
London, SW1A 1DH
Independent Auditor
Deloitte LLP
Regency Court
Glategny Esplanade
St. Peter Port
Guernsey, GY1 3HW
UK Transfer Agent
MUFG Corporate Markets
Central Square
29 Wellington Street
Leeds, LS1 4DL
Administrator
Citco Fund Services (Guernsey) Limited
PO Box 273
Frances House
Sir William Place
St. Peter Port
Guernsey, GY1 3RD
Sub-Administrator
Citco Fund Services (Ireland) Limited
Custom House Plaza, Block 6
International Financial Services Centre
Ireland, Dublin 1
Annual Report and Accounts 2025Real Estate Credit Investments Limited100
Glossary
Asset Strategy definitions
Core Assets that benefit from having long-term income.
Core + Assets that benefit from having strong current income but do require some measure of
asset management to optimise their income profile and term.
Development De-Risked Development assets which benefit from being substantially pre-sold or pre-let.
Development Fit-Out Assets that have either been built from the ground up and have reached the completion of
the superstructure (“topped out”), or assets which are in need of substantial refurbishment
works. These typically already benefit from the requisite consent to develop.
Development Groundworks/
Superstructure
Assets that are to be built from the ground up and are in the groundworks stage or building
the superstructure has commenced. These typically already benefit from the requisite
consent to develop.
Real Estate Op-Co/Prop-Co Loan Loan secured by both the operating company as well as all of the Company’s real assets.
Value add/transitional Assets that require asset management (typically refurbishment) and re-letting to secure
a core income profile.
Weighted Average Life (“WAL”) Represents the average time until principal is repaid, weighted by the size of each
principal payment. WAL is calculated by excluding all cash flows prior to the reporting
date and adjusting for accrued value in the current period, to reflect only the expected
future repayments.
Alternative Performance Measures
Dividend Yield The total dividends paid in the reporting period (per share) divided by the quoted price
of each share as at the relevant reporting date.
Market Capitalisation The number of shares in issuance at the relevant reporting date multiplied by the share
price at the relevant reporting date.
NAV per share The net asset value of the Company divided by the number of shares in issuance at the
relevant reporting date.
Share Price Premium/Discount The percentage difference between the NAV per share and the quoted price of each
share as at the relevant reporting date.
Total NAV Return The return on the movement in the NAV per share at the end of the period together with
all the dividends paid during the period, divided by the NAV per share at the beginning
of the period.
Annual Report and Accounts 2025 Real Estate Credit Investments Limited 101
Annual Report and Accounts 2025Real Estate Credit Investments Limited102
Real Estate Credit Investments Limited
East Wing
Trafalgar Court
Les Banques
St. Peter Port
Guernsey
GY1 3PP
www.realestatecreditinvestments.com