Hardman & Co Research: Portfolio repayments fund enhanced return pipeline

The key messages from RECI's November quarterly investor update, interim results and end-December factsheet are i) RECI's asset selection and management make it defensive to recessionary risks, ii) its customer base is robust, with £100m+ interest and principal repayments since March, and iii) lower-risk, higher-margin new business is available, as mainstream banks remain cautious. This has led to stable dividends, with a yield of 8.7%. If investors anticipated the recovery in bond MTM or a housebuilder writeup, it would be a trigger for the discount to close further, or the shares to go to a premium to NAV, in line with RECI's January 2020 rating.

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