TIDMSWEF
RNS Number : 0484F
Starwood European Real Estate Finan
16 February 2015
16 February 2015
Starwood European Real Estate Finance Limited: Proposed
amendment of the Company's investment policy
Proposed authority to allot Shares and to dis-apply pre-emption
rights to provide flexibility to enable a Share Issuance Programme
in respect of up to 200 million New Shares and/or C Shares
The Board has today announced its proposal to amend the
Company's investment policy in order to allow the Company the
flexibility to make investments in any state that is a member of
the European Union's internal market (being the countries of the
European Union and the European Free Trade Association) and to
remove the 75 per cent. limitation on investment in the United
Kingdom (together the "Amended Investment Policy Proposal").
The Board has also announced that it is contemplating the
further issue of equity pursuant to a Share Issuance Programme
which, if implemented, would enable the Company to make further
investments in accordance with its investment policy. Whilst, the
timing and amount of further equity issues (if any) remain to be
determined and will depend on consideration of cash drag, amongst
other factors, the Board has resolved to seek Shareholder approval
to provide flexibility for the authority to allot, and to dis-apply
pre-emption rights in connection with the issue of, in aggregate,
up to 200 million New Shares and/or C Shares pursuant to the Share
Issuance Programme (the "Share Issuance Authority Proposal"). The
resolution to approve the Share Issuance Authority Proposal will,
if passed, supersede the more limited existing allotment and
disapplication authorities of the Company in place which are due to
expire at the next annual general meeting.
Background to and reasons for the Amended Investment Policy
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 net proceeds of the
Company's initial public offering and subsequent tap issue have now
been fully committed, the Board believes that it is now a suitable
time to revise the geographic scope of the investment policy and to
remove the maximum permitted exposure to the UK.
The Board believes that these changes are 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.
Investment demand and opportunities have significantly increased
in a wide range of the member states of the EU's internal market as
both opportunistic and core investors have sought exposure. Whilst
any investment in less strong economies of the region would be
approached with caution, the Board believes that the Company should
have the ability to identify and exploit balanced risk return
opportunities in these countries if and when they arise.
Approximately 67 per cent. of the Company's Net Asset Value is
currently invested in the UK and the Board continues to see further
attractive opportunities for continued investments in the UK. The
current investment limit may prohibit the Company from taking
advantage of certain opportunities that may become available and
hence a removal of the limit is being sought. It is not anticipated
that the portfolio will move to be 100 per cent. invested in the
UK, however. In practical terms, it will be some time before all
the non-UK loans are repaid and the Company fully intends to
continue its origination efforts in the wider region outside the
UK.
The Company will continue to seek sector diversification
consistent with balancing risk and return across the portfolio. In
addition to the existing limit on loans relating to residential for
sale, the Amended Investment Policy provides that no more than 50
per cent. of the Company's Net Asset Value will be allocated to any
single real estate sector in the UK, except for the UK office
sector which is limited to 75 per cent. of the Company's Net Asset
Value.
The European Union's internal market comprises the member states
of the European Union and the member states of the European Free
Trade Association, the latter being Iceland, Norway, Lichtenstein
and Switzerland.
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://www.starwoodeuropeanfinance.com/index.php/team-2/corporate
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.
Benefits of the Amended Investment Policy Proposal
Given that the Company has now committed the full amount of the
capital raised to date, the Board believes that the changes provide
an enhanced range of opportunities for investing the proceeds of
potential additional capital raises, loan repayments or
syndications. With these adjustments, the Board believes the
Company would be better placed to raise and deploy capital in the
future.
The Directors believe that the Amended Investment Policy, if
adopted, would have the following benefits for Shareholders:
-- it would allow the Company increased scope for
diversification and attractive risk adjusted returns from
investment in member states of the EU and EFTA, while the countries
of main focus in the investment policy are unchanged;
-- it would allow the Company considerable further scope to
invest in the UK where deal flow is greatest for the Company, which
in turn provides enhanced opportunity to quickly reinvest the
proceeds of loan syndications, prepayments and repayments of loans;
and
-- investments in the UK benefit from being denominated in
sterling and not requiring foreign exchange hedging.
Background to and reasons for the Share Issuance Authority
Proposal
As stated above, the Company has committed the full amount of
the capital raised by the Company to date and, to facilitate
further investments, the Company stands to benefit from the
enhanced flexibility to issue equity capital quickly and
efficiently under a Share Issuance Programme. The Share Issuance
Programme, if implemented, will allow the Company to take advantage
of investment opportunities available in the market from time to
time, allowing the Company to move quickly and strengthening its
competitive position compared to other finance providers.
Accordingly, the Board has decided to seek Shareholder approval
to provide the future flexibility to issue up to 200 million New
Shares and/or C Shares pursuant to the Share Issuance Programme and
to disapply pre-emption rights in connection with the issue of such
shares. The proceeds of the Share Issuance Programme, which, if
implemented, are expected to be raised in one or more tranches,
would be applied to make further investments in accordance with the
Company's investment policy.
Benefits of the Share Issuance Programme
The Directors believe that a Share Issuance Programme, if
implemented, would have the following benefits for the Company and
Shareholders:
-- it would enable the Company to raise additional capital
quickly, in order to take advantage of specific investment
opportunities;
-- having a greater number of Shares in issue (including where
Shares are issued following the conversion of C Shares) is likely
to provide Shareholders with increased secondary market
liquidity;
-- increasing the size of the Company will help to make the
Company more attractive to a wider investor base; and
-- the Company's fixed running costs would be spread across a
larger equity capital base, thereby reducing the Company's on-going
expenses per Share.
Extraordinary General Meeting
The Amended Investment Policy Proposal and the Share Issuance
Authority Proposal require the approval of Shareholders.
The Extraordinary General Meeting is to be held at 1 Royal
Plaza, Royal Avenue, St Peter Port, Guernsey GY1 2HL on 9 March
2015 at 10.30 a.m. 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.
For further information, please contact:
Ipes (Guernsey) Limited
Gillian Newton
T: +44 1481 735869
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 Limited is a Guernsey
incorporated Registered Closed-ended investment scheme 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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