Real Estate Credit Investments : Prospectus

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to the action you should take, you are recommended to seek immediately your own personal financial advice from your independent financial adviser, stockbroker, bank manager, solicitor, accountant, fund manager or other appropriately qualified adviser authorised under the Financial Services and Markets Act 2000, as amended (the "FSMA") if you are in the United Kingdom or, if not, from another appropriately authorised independent adviser.

A copy of this Prospectus, which comprises a prospectus relating to the admission to trading of securities in Real Estate Credit Investments Limited (the "Company") prepared in accordance with the Listing Rules and the Prospectus Rules made under Section 73A of FSMA, has been delivered to the Financial Conduct Authority ("FCA") in accordance with Rule 3.2 of the Prospectus Rules.

The Company has been declared to be an authorised closed-ended investment scheme by the Guernsey Financial Services Commission under Section 8 of The Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended. Neither the States of Guernsey Policy and Resources Committee nor the Guernsey Financial Services Commission takes any responsibility for the soundness of the Company or for the correctness of any statements made or opinions expressed with regard to it.

Applications will be made to the UK Listing Authority and the London Stock Exchange for the New Ordinary Shares issued pursuant to the Placing Programme to be admitted to the premium segment of the Official List and to trading on the premium segment of the Main Market for securities admitted to trading ("Admission"). It is expected that each Admission will become effective and dealings in New Ordinary Shares will commence between 30 November 2018 and 1 November 2019. Admission is conditional upon the Existing Ordinary Shareholders voting in favour of the Required Resolution at the Extraordinary General Meeting.

If you sell or have sold or otherwise transferred your Existing Ordinary Shares please send this Prospectus as soon as possible to the purchaser or transferee or to the bank, stockbroker or other agent through whom or by whom the sale or transfer was effected, for delivery to the purchaser or transferee. The distribution of this Prospectus and any accompanying documents in jurisdictions other than the United Kingdom, including the United States, Australia, Canada, South Africa or Japan, may be restricted by law. Persons into whose possession these documents or the New Ordinary Shares come must inform themselves about and observe all restrictions applicable to them. Any failure to comply with these restrictions may constitute a violation of the securities laws of the relevant jurisdictions. This Prospectus and any accompanying documentation may not be distributed, forwarded, transmitted or otherwise made available, and their contents may not be disclosed, in, into or from any Excluded Territory. Persons within any Excluded Territory who obtain a copy of this Prospectus are required to disregard it.

The Company, and each of the Directors, whose names appear on page 49 of this Prospectus, accept responsibility for the information contained in this Prospectus. To the best of the knowledge of the Company and the Directors, who have taken all reasonable care to ensure that such is the case, the information contained in this Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information.

Cheyne Capital Management (UK) LLP accepts responsibility for the information contained in the Prospectus relating to it and all statements which are attributed to it. To the best of the knowledge of Cheyne Capital Management (UK) LLP (which has taken all reasonable care to ensure such is the case), the information contained in this Prospectus for which it takes responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.

Investment in the Company involves significant risks and special considerations. Prospective investors should read this entire document and, in particular, the section entitled "Risk Factors" on pages 18 to 41 of this Prospectus. The definitions used in this Prospectus are set out on pages 126 to 134.

Real Estate Credit Investments Limited

(an authorised closed-ended investment scheme limited by shares and incorporated under the laws of Guernsey with registered number 43634)

Placing Programme in respect of up to 100 million New Ordinary Shares

Investment Manager

Cheyne Capital Management (UK) LLP

Sponsor and Bookrunner

Liberum Capital Limited

This Prospectus does not constitute or form part of any offer or invitation to sell or issue, or the solicitation of an offer to purchase, subscribe for or otherwise acquire, any securities other than the securities to which it relates or any offer or invitation to sell or issue, or any solicitation of any offer to purchase, subscribe for or otherwise acquire, such securities by any person in any circumstances in which such offer or solicitation would be unlawful.

Except with the express written consent of the Company given in respect of an investment in the Company, the New Ordinary Shares may not be acquired by: (i) investors using assets of: (A) an "employee benefit plan" as defined in Section 3(3) of the United States Employee Retirement Income Security Act of 1974, as amended ("ERISA") that is subject to Title I of ERISA; (B) a "plan" as defined in Section 4975 of the United States Internal Revenue Code of 1986, as amended (the "US Tax Code"), including an individual retirement account or other arrangement that is subject to Section 4975 of the US Tax Code; or (C) an entity whose underlying assets are considered to include "plan assets" by reason of investment by an "employee benefit plan" or "plan" described in preceding clause (A) or (B) in such entity pursuant to the US Plan Assets Regulations; or (ii) a governmental, church, non-US or other employee benefit plan that is subject to any federal, state, local or non-US law that is substantially similar to the provisions of Title I of ERISA or Section 4975 of the US Tax Code, unless its purchase, holding, and disposition of the New Ordinary Shares will not constitute or result in a non-exempt violation of any such substantially similar law.

The Company has not been and will not be registered under the US Investment Company Act of 1940, as amended (the "US Investment Company Act") and as such investors are not and will not be entitled to the benefits of the US Investment Company Act. The Ordinary Shares have not been and will not be registered under the US Securities Act, or with any securities regulatory authority of any state or other jurisdiction of the United States, and may not be offered, sold, resold, pledged, delivered, distributed or otherwise transferred, directly or indirectly, into or within the United States or to, or for the account or benefit of, "US persons" as defined in Regulation S under the US Securities Act ("US Persons"), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States and in a manner which would not result in the Company being required to register under the US Investment Company Act. In connection with the Placing Programme, subject to certain exceptions, offers and sales of Ordinary Shares will be made only outside the United States in "offshore transactions" to non-US Persons pursuant to Regulation S under the Securities Act. There has been and will be no public offering of the Ordinary Shares in the United States.

Neither the US Securities and Exchange Commission (the "SEC"), nor any securities regulatory authority of any state or other jurisdiction of the United States, has approved or disapproved of the Ordinary Shares or passed upon or endorsed the merits of any offering of New Ordinary Shares or the adequacy or accuracy of this Prospectus. Any representation to the contrary is a criminal offence in the United States.

The offer and sale of New Ordinary Shares have not been and will not be registered under the securities laws of Australia, Canada, South Africa or Japan. The New Ordinary Shares may not be offered or sold into or within Australia, Canada, South Africa or Japan or to any national, resident or citizen of Australia, Canada, South Africa or Japan.

The distribution of this Prospectus and the offer of the New Ordinary Shares in certain jurisdictions may be restricted by law. Other than in the United Kingdom, no action has been or will be taken to permit the possession, issue or distribution of this Prospectus (or any other offering or publicity material relating to the New Ordinary Shares) in any jurisdiction where action for that purpose may be required or doing so is restricted by law. Accordingly, neither this Prospectus, nor any advertisement, nor any other offering material may be distributed or published in any jurisdiction except under circumstances that will result in compliance with any applicable laws and regulations. Persons into whose possession this Prospectus comes should inform themselves about and observe any such restrictions. None of the Company, the Investment Manager or Liberum Capital Limited ("Liberum") or any of their respective Affiliates or advisers accepts any legal responsibility to any person, whether or not a prospective investor, for any such restrictions.

In addition, the New Ordinary Shares are subject to restrictions on transferability and resale in certain jurisdictions and may not be transferred or resold except as permitted under applicable securities laws and regulations and under the Articles. Investors may be required to bear the financial risks of their investment in the New Ordinary Shares for an indefinite period of time. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdictions. For further information on restrictions on offers, sales and transfers of the New Ordinary Shares, please refer to "United States Purchase and Transfer Restrictions" in Part VII of this Prospectus.

In making an investment decision, each investor must rely on their own examination, analysis and enquiry of the Company and the terms of the Placing Programme including the merits and risks involved. The investors also acknowledge that: (i) they have not relied on Liberum or any person affiliated with Liberum in connection with any investigation of the accuracy of any information contained in this Prospectus or their investment decision; and (ii) they have relied only on the information contained in this document. No person has been authorised to give any information or make any representations other than those contained in this Prospectus and, if given or made, such information or representations must not be relied on as having been so authorised. Neither the delivery of this Prospectus nor any subscription or sale made under it shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since the date of this document or that the information in it is correct as of any subsequent time.

The Placing Programme will remain open until 1 November 2019 or such earlier time at which the maximum number of New Ordinary Shares to be issued pursuant to the Placing Programme has been issued.

None of the Company, the Investment Manager, Liberum or any of their respective representatives, is making any representation to any prospective investor of the New Ordinary Shares regarding the legality of an investment in the New Ordinary Shares by such prospective investor under the laws applicable to such prospective investor.

The contents of this Prospectus should not be construed as legal, financial or tax advice. Each prospective investor should consult his, her or its own legal, financial or tax adviser for legal, financial or tax advice.

Liberum, which is regulated in the United Kingdom by the FCA, is acting for the Company and for no one else and will not regard any other person (whether or not a recipient of this document) as a client in relation to Admission or the Placing Programme and will not be responsible to anyone other than the Company for providing the protections afforded to its clients, nor for providing any advice in connection with Admission, the Placing Programme, the contents of this document or any other matter referred to herein. Nothing in this paragraph shall serve to exclude or limit any responsibilities which Liberum may have under FSMA or the regulatory regime established thereunder. Liberum takes no responsibility for any part of the contents of this document pursuant to sections 79(3) or 90 of FSMA and does not accept any responsibility for, or authorise, any part of the contents of this document under rule 5.5 of the Prospectus Rules of the FCA.

2 November 2018

CONTENTS

Page
SUMMARY	3
RISK FACTORS	18
IMPORTANT INFORMATION	42
EXPECTED TIMETABLE	48
PLACING PROGRAMME STATISTICS	48
CORPORATE INFORMATION	49

PART I	THE COMPANY'S BUSINESS AND THE PROPOSAL	51
PART II	THE INVESTMENT OPPORTUNITY	61
PART III	MANAGEMENT OF THE COMPANY	70
PART IV	TAX CONSIDERATIONS	80
PART V	FINANCIAL INFORMATION	85
PART VI	THE PLACING PROGRAMME	87
PART VII	TERMS AND CONDITIONS OF EACH PLACING	94
UNDER THE PLACING PROGRAMME
PART VIII	ADDITIONAL INFORMATION	103
126

DEFINITIONS AND GLOSSARY

SUMMARY

Summaries are made up of disclosure requirements known as "Elements". These Elements are numbered in sections A - E (A.1 - E.7). This summary contains all the Elements required to be included in a summary for this type of security and issuer. Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements. Even though an Element may be required to be inserted in the summary because of the type of security and issuer, it is possible that no relevant information can be given regarding the Element. In this case, a short description of the Element is included in the summary with the mention of the words "not applicable".

Section A - Introduction and warnings

DisclosureElementrequirement

Disclosure

A1

Warning

Warning that:

• ● this summary section should be read as an introduction to this Prospectus;

• ● any decision to acquire Shares should be based on a consideration of the Prospectus as a whole by an investor;

• ● where a claim relating to the information contained in this Prospectus is brought before a court, a plaintiff investor might, under national legislation of the relevant Member State, have to bear the costs of translating that prospectus before the legal proceedings are initiated; and

• ● civil liability attaches only to those persons who have tabled the summary, including any translation of the summary, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of this Prospectus or it does not provide, when read together with the other parts of the Prospectus, key information in order to aid investors when considering whether to invest in such securities.

A2

Use of prospectus by financial intermediaries

Not applicable. No consent has been given by the Company or any person responsible for drawing up this Prospectus to the use of this Prospectus for subsequent resale or final placement of securities by financial intermediaries.

Section B - Issuer

ElementDisclosure requirementDisclosure

B1

Legal and commercial nameReal Estate Credit Investments Limited.

B2

Domicile and legal form

An authorised closed-ended investment scheme limited by shares and incorporated in Guernsey under the provisions of the Companies Law with registered number 43634 on 6 September 2005.

B5

Group descriptionNot applicable. The Company is not a part of a group and does not currently have any subsidiaries.

B6

Major ShareholdersInsofar as is known to the Company as at the date of this Prospectus, the following persons are, directly or indirectly, interested in 5 per cent. or more of the issued share capital of the Company:

No. of Percentage of Existing Existing Ordinary

Ordinary Shareholder

Ordinary SharesShares in issue

Canaccord Genuity Wealth Management 13,581,853 8.86

Premier Asset Management 12,689,111 8.28

Fidelity Worldwide Investment (FIL) 11,540,130 7.53

Close Brothers Asset Management 11,320,400 7.38

Bank Leumi Israel 9,133,429 5.96

AXA Investment Managers UK 8,850,000 5.77

Standard Life Aberdeen plc 8,629,483 5.63

Smith & Williamson Investment Management 8,582,284 5.60

None of the Company's Existing Ordinary Shareholders has voting rights attached to the Existing Ordinary Shares they hold which are different to the voting rights attached to the other Existing Ordinary Shares in the Company.

B7

Key financial information

Significant changes to the Company's financial condition and operating results set out above for each of the financial years ended 31 March 2016, 31 March 2017 and 31 March 2018 are described below:

Year ended March 2016

A fourth interim dividend for the year ended 31 March 2016 of 2.7p per Ordinary Share and a special dividend of 0.8p per Ordinary Share were approved by the Directors on 16 June 2016.

The final asset which remained in the Cell was realised in January 2016, and the remaining cash distributed in March 2016. As at 31 March 2016 the Cell had no assets or cash held and therefore ceased to exist. Following this, the Company converted from a protected cell company to a non-cellular company on 25 October 2016.

Year ended March 2017

A preference dividend of 2.0p per Preference Share (as were then in existence) for the period from 1 April 2017 to 30 June 2017 was approved by the Directors on 23 May 2017.

A fourth interim dividend for the year ended 31 March 2017 of 3.0p per Ordinary Share was approved by the Directors on 15 June 2017.

Year ended March 2018

The Company successfully redeemed all of its 44,962,834 Preference Shares (3,032,415 of which were held in treasury) (with a value of £41.9 million) on 16 September 2017, replacing it with relatively inexpensive and flexible funding. The listing of the Preference Shares on the Official List and the trading of the Preference Shares on the Main Market were cancelled on 18 September 2017.

As at	As at	As at
31 March 2016	31 March 2017	31 March 2018
£	£	£
Interest Income	17,705,838	15,288,890	18,413,836
Net gains/losses on
financial assets and
liabilities at fair value
through profit or loss	(2,564,470)	461,095	2,173,787
Operating Expenses	(3,138,734)	(3,226,188)	(3,741,454)
Finance Costs	(3,464,988)	(3,444,325)	(1,911,444)
Net Profit/(Loss)	8,537,646	9,079,472	14,934,725
Total Assets	163,838,399	189,271,376	308,157,688
				--------------	--------------	--------------
Total Liabilities	45,017,119	45,020,458	79,633,776
				--------------	--------------	--------------

On 15 December 2017, the Company issued 1,564,488 new Ordinary Shares pursuant to the Company's general authority to allot and issue equity securities contained in the Articles, the authority to issue and allot shares on a non-pre-emptive basis granted to the Directors by an extraordinary resolution of the Shareholders, and Article 1(5)(a) of Regulation (EU) 2017/1129.

On 16 December 2017, the Company completed a placing programme under which it issued 65 million new Ordinary Shares, thereby raising the total number of Ordinary Shares to 139,382,984.

A fourth interim dividend for the year ended 31 March 2018 of 3.0p per Ordinary Share was approved by the Directors on 14 June 2018.

Following the year end, on 21 September 2018 the Company issued 13,938,298 new Ordinary Shares, thereby raising the total number of Ordinary Shares in issue to 153,321,282.

B8

Key pro forma

Not applicable. No pro forma information about the Company is included infinancial information this document.

B9

Profit forecastNot applicable. No profit estimate or forecast for the Company is made.

B10

Description of the nature of any qualifications in the audit report on the historical financial information

There were no qualifications in the audit reports for the financial years ended 31 March 2016, 31 March 2017 or 31 March 2018.

B11

Insufficient working capital

Not applicable. The Company is of the opinion that the working capital available to the Company is sufficient for its present requirements, that is, for at least the next 12 months from the date of this Prospectus.

B34

Investment policy

Investment Objective and Policy

Investment objective

The investment objective of the Company is to provide Ordinary 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.

Asset allocation

To achieve the investment objective, the Company invests and will continue to invest in real estate credit secured by commercial or residential properties in the United Kingdom and Western Europe ("Real Estate Credit Investments"). 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 weighted average life profile ranging from six months to 15 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 loan to value ("LTV") of 85 per cent. 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;

• (iii) other direct or indirect opportunities, including equity participations in real estate, save that no more than 20 per cent. of the Total Assets will be invested in positions with an LTV in excess of 85 per cent. 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.