TIDMSWEF
RNS Number : 8009D
Starwood European Real Estate Finan
01 April 2014
1 April 2014
Starwood European Real Estate Finance Limited
Recommended proposal to amend investment policy
The Board of Starwood European Real Estate Finance Limited (the
"Company") announces that it has today published a circular (the
"Circular") to Shareholders setting out and recommending its
proposal to amend the Company's investment policy in order to:
-- allow the Company the flexibility to make investments in Spain and Italy,
-- to increase the maximum allocation to "residential for sale"
properties from 20 per cent. to 30 per cent. and
-- to amend the section on corporate borrowings (together "the Proposal").
Background to and reasons for the Proposal
The Board regularly reviews the development and strategic
direction of the Company and believes that the investment policy
remains broadly effective. However, as the Company approaches full
investment, the Board believes that now is an opportune moment to
extend the geographic scope of the investment policy and to
increase the maximum allocation that can be made to the residential
for sale sector.
The Board believes that this is justified in light of improving
market conditions, the fact that opportunities have arisen in which
the Company has been unable to participate, notwithstanding that
the transaction would have been acceptable on a risk/reward basis
and the increased liquidity in the market which offers greater
likelihood of a successful realisation.
The occupational real estate markets in Spain and Italy have
shown tentative signs of recovery and investment demand has also
significantly increased as both opportunistic and core investors
have sought exposure. Whilst any investment in Spain or Italy would
be approached with caution, the Board believes that the Company
should have the ability on a selective basis to identify balanced
risk return opportunities in these countries if and when they
arise. The Company's focus in these countries is expected to be the
commercial property sector as opposed to the residential
market.
The Company has gained attractive exposure to residential for
sale within London through its investments in Centre Point and
Battersea. The current limits would currently prohibit the Company
from taking advantage of opportunities observable in other
geographies, not just in the rest of the UK but also Ireland,
Sweden, Holland and Germany. These are markets that all demonstrate
an opportunity to benefit from continued population growth and/or
sector recovery strategies and hence a moderate increase of the
current investment limit is being sought.
The Company will not use these extended investment powers until
the net proceeds of the IPO are substantially fully invested. As
such, the changes contain an element of "future proofing" for
investing the proceeds of potential additional capital raises or
loan repayments. With these adjustments, the Board believes the
Company would be better placed to raise and deploy additional
capital.
Alongside these changes, the Board believes it is necessary to
clarify the scope and intent of the restrictions on the Company's
corporate borrowings.
The current investment policy includes foreign exchange hedging
facilities within the scope of "corporate borrowings". From an
accounting perspective, these types of facilities (and any
mark-to-market liabilities that may arise from time to time) are
not treated as borrowings. On this basis, the Board does not
believe it is appropriate to include foreign exchange hedging
facilities within the definition of borrowings for the purposes of
the restriction on corporate borrowings and recommends the
clarification of the investment policy accordingly.
Whilst not forming part of the investment policy, it is intended
that potential liabilities under foreign exchange hedging
facilities continue to be carefully and regularly monitored. It is
expected that, under normal market conditions, those liabilities
will be no more than 10 per cent. of Net Asset Value.
As set out in the current investment policy, Company-level
recourse borrowings may be used for short term bridging purposes,
amongst other things. Whilst not forming part of the investment
policy, it is anticipated that bridging loans would be used to
reduce cash drag and repaid using, inter alia, the proceeds of one
or more of the following:
-- issues of new Shares for cash;
-- syndication, sale, assignment sub-participation or other
financing (including true sale securitisation) of a loan or loans
held in the portfolio, as set out in the investment policy;
and/or
-- repayment of principal of loans held in the portfolio.
Such repayment of bridging loans and the time taken to achieve
it may be dependent on prevailing or developing market conditions
at the relevant time which cannot always be determined in advance.
The Board therefore believes that it is appropriate to remove the
reference to "short term" in the investment policy.
The full texts of the Company's current investment policy and
the proposed amended investment policy are set out in the circular,
which can be accessed on the Company's website at
http://starwoodeuropeanfinance.com/index.php/documents and which
has been submitted to the National Storage Mechanism and will be
available in due course for inspection at
http://morningstar.co.uk/uk/NSM.
Extraordinary General Meeting
The Proposal will constitute a material change to the investment
policy under the Listing Rules and, as a result, requires the
approval of Shareholders. The Proposal is therefore conditional on
the passing of the Resolution, which will be proposed at the
Extraordinary General Meeting as an ordinary resolution.
The Extraordinary General Meeting is to be held at 1 Royal
Plaza, Royal Avenue, St Peter Port, Guernsey GY1 2HL on 2 May 2014
at 12:15 p.m. (or, if later, as soon as reasonably practicable
following the conclusion or adjournment of the Annual General
Meeting of the Company convened for the same date and place).
Notice of the Extraordinary General Meeting is set out in the
Circular.
Definitions
Capitalised terms used but not defined in this announcement bear
the meanings ascribed to them in the Circular.
Further information
For further information, please contact:
Ipes (Guernsey) Limited
John Ellman-Brown
T: +44 1481 713843
Dexion Capital plc
Robert Peel
T: +44 20 7832 0983
Jefferies International Limited
Stuart Klein
T: +44 20 7029 8703
Notes:
Starwood European Real Estate Finance is an investment company
listed on the main market of the London Stock Exchange with an
investment objective to provide Shareholders with regular dividends
and an attractive total return while limiting downside risk,
through the origination, execution, acquisition and servicing of a
diversified portfolio of real estate debt investments in the UK and
Continental European markets. www.starwoodeuropeanfinance.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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