TIDMSWEF
RNS Number : 4225W
Starwood European Real Estate Finan
27 April 2016
27 April 2016
NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS OR IN, INTO OR FROM
THE UNITED STATES, AUSTRALIA, CANADA, SOUTH AFRICA, JAPAN, NEW
ZEALAND OR ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH
JURISDICTION
Starwood European Real Estate Finance Limited: Quarterly
Factsheet Publication
Starwood European Real Estate Finance Limited (the "Company")
announces that the factsheet for the first quarter ended on 31
March 2016 is available at:
www.starwoodeuropeanfinance.com
Extracted text of the commentary is set out below:
"Investment Portfolio at 31 March 2016
As at 31 March 2016, the Group had 17 investments and
commitments of GBP348.1m as follows:
Transaction Sterling Sterling
equivalent equivalent
balance unfunded
(1) commitment
(1)
----------------------- ------------ ------------
Lifecare Residences, GBP14.2m GBP0.3m
London
----------------------- ------------ ------------
Salesforce Tower, GBP10.8m -
London
----------------------- ------------ ------------
Centre Point, GBP45.0m -
London
----------------------- ------------ ------------
5 Star Hotel, GBP13.0m -
London
----------------------- ------------ ------------
Aldgate Tower, GBP41.5m GBP3.5m
London
----------------------- ------------ ------------
Center Parcs GBP9.5m -
Bonds, UK
----------------------- ------------ ------------
Industrial Portfolio, GBP31.8m -
UK
----------------------- ------------ ------------
Hospitals, UK GBP25.0m -
----------------------- ------------ ------------
Hotel, Channel GBP27.0m -
Islands
----------------------- ------------ ------------
Total Sterling GBP217.8m GBP3.8m
Loans
----------------------- ------------ ------------
Retail Portfolio, GBP25.0m -
Finland
----------------------- ------------ ------------
Industrial Portfolio, GBP21.7m -
Netherlands
----------------------- ------------ ------------
Office, Netherlands GBP11.0m -
----------------------- ------------ ------------
W Hotel, Netherlands GBP17.8m GBP1.9m
----------------------- ------------ ------------
Retail & Residential GBP4.7m -
Portfolio, Ireland
----------------------- ------------ ------------
Residential Portfolio, GBP4.9m -
Cork, Ireland
----------------------- ------------ ------------
Residential Portfolio, GBP6.2m -
Dublin, Ireland
----------------------- ------------ ------------
Total Euro Loans GBP91.3m GBP1.9m
----------------------- ------------ ------------
Industrial Portfolio, GBP33.3m -
Denmark,
----------------------- ------------ ------------
Total Danish GBP33.3m -
Krona Loans
----------------------- ------------ ------------
Total Portfolio GBP342.4m GBP5.7m
----------------------- ------------ ------------
(1) Euro and Danish Krona balances translated to sterling at 31 March 2016 exchange rates.
Portfolio Activity
The following significant activity occurred since the
publication of the last factsheet on 28 January 2016 up to 31 March
2016.
Hotel, Channel Islands: The Group advanced a GBP26.95 million
whole loan in relation to a hotel in the Channel Islands. This
specific hospitality submarket is demonstrating solid performance
and the asset being financed is the market leader. Such an
investment is not only attractive on its own merits but also
further delivers geographical and sector diversity to the overall
portfolio. The fixed rate facility has a term of 5 years and the
Group expects to earn an attractive risk-adjusted return in line
with its stated investment strategy.
Residential Portfolio, Dublin: The Group advanced a EUR7.9
million whole loan relating to the acquisition of 44 apartments in
South Dublin. The sponsor is a highly regarded local investor and
an existing borrower of the Group. The transaction represented the
Group's third loan secured by rented residential units in Ireland,
an attractive asset class due to its consistent demand, stable
income profile, and Ireland's growing economy. The floating rate
facility has a term of 4 years and the Group expects to earn an
attractive risk adjusted return in line with its stated investment
strategy.
The following significant activity occurred since 31 March 2016
up to the publication of this factsheet.
Aldgate Tower, London: On 22 April 2016 the Group received full
repayment of the Aldgate Tower, London loan as a result of the sale
of the property. A number of loans in the portfolio benefit from
prepayment protection in their early years providing a level of
income protection should the loan repay whilst in that protected
period. The Aldgate Tower loan was originated in December 2014 and
the Group benefitted from such a provision.
Salesforce Tower, London: On 7 April 2016 the Group received
full repayment of the Salesforce Tower, London loan as a result of
the refinancing of the property following its successful lease up.
The Group had always anticipated that this loan would be repaid
once the Sponsor had achieved its business plan.
Retail Portfolio, Finland: On 26 April 2016 the Group received
full repayment of the Retail Portfolio, Finland loan as a result of
the sale of the portfolio. This loan was one of the first loans
originated by the Group and it was due to mature this year.
The Group has developed a strong reputation in being willing and
able to support borrowers with clear proactive asset management
business plans. This was the case with all three of the loans
repaid, especially the first two. During the course of the business
plan implementation the Group tends to earn an attractive return
for underwriting and taking risk exposure on that strategy. The
quid pro quo tends to be that once that strategy is successful and
the asset stabilised the Group is usually then repaid by way of
asset sale or refinancing. There is thus a natural order to things
and a number of the Group's "first generation" loans have been
repaid over the last six months being generally replenished by new
investments and, so far, with minimal cash drag. This has required
the Group to manage repayment events by tactically using the GBP60
million revolving credit facility and being cautious on when to
raise additional equity. The proceeds of these most recent
repayments were initially used to repay drawings on the revolving
credit facility. Following these repayments, the Group has
approximately GBP40 million of cash available for reinvestment with
cash drag currently mitigated by the remaining Aldgate Tower
prepayment protection. The Group will endeavour to further mitigate
any future cash drag risk through new investments prior to such
prepayment protection expiring.
Capital Market Activities
For the last 6 months the Group has been extremely focussed on
managing the repayment risk which it had correctly anticipated.
Whilst further loan repayments could occur in the near future, the
Group now expects an investment period whereby, following the
reinvestment of the current approximately GBP40 million of
liquidity, subsequent new loans will be funded by the revolving
credit facility with a view to raising further equity under the
Placing Programme in due course.
At the AGM this year a resolution will be put forward to adjust
the investment policy of the Group to permit the use of longer-term
leverage alongside the current ability to utilise the short term
working capital facility. This year's Chairman's statement in the
2015 annual accounts and the AGM notice to shareholders (both
available on the website) described in detail the rationale for
this proposal.
Dividend
On 25 April 2016 the Directors declared a dividend of 1.625
pence per Ordinary Share (annualised 6.5 pence per Ordinary Share)
in relation to the first quarter of 2016. This is in line with the
target dividend communicated in the second half of 2015. The Group
had a strong first quarter of 2016 and earnings could support a
1.75 pence (7.0 pence annualised) dividend. However, the board
decided that the payment of a 6.5 pence annualised dividend would
enable a small contingency to be retained from those solid
quarterly earnings in the context of the current underlying loan
repayments. The board has decided it would prefer to ensure, so far
as is possible, that it has sufficient reserves to pay a consistent
6.5 pence dividend across the year and will continue to monitor
this provisioning policy.
Business and Market Commentary
We have recently conveyed optimism that ongoing global
macroeconomic volatility is filtering through to the real estate
credit market to the benefit of the Group. The underlying reasons
for the volatility remain, such as the global economies coming out
of a commodity supercycle, the current Chinese economic situation,
political flux and, most relevantly, the banking sector being in
modest retrenchment. We are seeing a tightening in the provision of
real estate loans with enhanced banking regulation and capital
ratio requirements, the splitting of investment and commercial
banking in the UK, the continued presence of significant NPL and
sub performing debt and the lack of any real securitisation market
all have an impact.
(MORE TO FOLLOW) Dow Jones Newswires
April 27, 2016 02:00 ET (06:00 GMT)
The Group was borne out of the substantially more challenged
2012 global market. Now, as then, it is important to adopt an
appropriately cautious investment approach whilst being able to
take advantage of the opportunities such a market provides. The
Group has a counter cyclical strategy at heart and utilizing solid
real estate and credit skills, it should be able to benefit from
such a time.
We do also need to address the impact of the forthcoming
"Brexit" vote. Irrespective of the political arguments for or
against the UK leaving the EU, the very prospect of the June 23(rd)
vote is unquestionably impacting UK real estate investment
activity. A two speed Europe currently seems to exist with,
ironically, the rest of Europe being far more dynamic than the UK
itself. The outcome of the vote will be likely to have an impact on
short to medium term business and property outlook for the UK with
a vote to leave probably having a negative impact. Given that the
Company is denominated in Sterling with a predominantly UK
shareholder base, it will continue to seek and consider British
investments and, indeed at this moment, opportunities exist to
provide lower leverage positions that should be reasonably
insulated from Brexit risk. There will, however, be a continued
focus on continental Europe which should provide an appropriate
balance.
Property lending is strangely a seasonal activity with most
lending done between Easter and early Summer and then early Autumn
through to Christmas. That said, the pipeline is showing the impact
of the world today and is stronger than we have seen historically
at this time of the year. Closing our investments always seems to
take longer than we would ideally wish but this is representative
of the diligence required and the nature of negotiating and
providing loans.
We are optimistic that the strength and depth of then pipeline
will necessitate further equity raises during the course of this
year.
Key Portfolio Statistics at 31 March 2016
Number of investments 17
------------------------ ----------
Percentage of
currently invested
portfolio in floating
rate loans (1) 52.0%
------------------------ ----------
Invested Loan
Portfolio annualised
total return (2) 8.5%
------------------------ ----------
Weighted average
portfolio LTV
- to Group first
GBP (3) 14.2%
------------------------ ----------
Weighted average
portfolio LTV
- to Group last
GBP (3) 65.9%
------------------------ ----------
Average loan term 4.1
(stated maturity years
at inception)
------------------------ ----------
Net Asset Value GBP306.2m
------------------------ ----------
Amount drawn under GBP42.0m
Revolving Credit
Facility (excluding
accrued interest)
------------------------ ----------
Portfolio value GBP349.0m
(including accrued
income)
------------------------ ----------
Cash GBP1.6m
------------------------ ----------
Other net assets/ (GBP2.4m)
(liabilities)
(including hedges)
------------------------ ----------
(1) Calculated on loans currently drawn using the exchange rates
applicable when the loans were funded.
(2) Calculated on amounts currently outstanding, excluding
undrawn commitments, and assuming all currently drawn loans are
outstanding for the full contractual term. Eleven of the loans are
floating rate (partially or in whole and some with floors) and
returns are based on an assumed profile for future interbank rates
but the actual rate received may be higher or lower. Calculated
only on amounts funded to date and excluding committed amounts and
cash un-invested. The calculation excludes the origination fee
payable to the Investment Manager and commitment fees on undrawn
funds.
(3) LTV to Group last GBP means the percentage which the total
loan commitment less any amortisation received to date (when
aggregated with any other indebtedness ranking alongside and/or
senior to it) bears to the market value determined by the last
formal lender valuation received by the date of publication of this
factsheet. LTV to first Group GBP means the starting point of the
loan to value range of the loan commitments (when aggregated with
any other indebtedness ranking senior to it). For Lifecare, W Hotel
and Centre Point the calculation includes the total facility
available and is calculated against the market value on completion
of the project. For Aldgate, the calculation includes the total
facility available against the stabilised value of the
property.
Country % of invested
assets
----------------- --------------
UK 55.7
----------------- --------------
Netherlands 14.9
----------------- --------------
Finland 8.2
----------------- --------------
Denmark 8.8
----------------- --------------
Ireland 4.6
----------------- --------------
Channel Islands 7.8
----------------- --------------
Sector % of invested
assets
------------------ --------------
Office 18.6
------------------ --------------
Retail 10.9
------------------ --------------
Light Industrial
/ logistics 24.6
------------------ --------------
Hospitality 19.5
------------------ --------------
Residential
for sale 14.6
------------------ --------------
Residential
for rent 4.5
------------------ --------------
Healthcare 7.3
------------------ --------------
Loan type % of invested
assets
------------- --------------
Whole loans 69.5
------------- --------------
Mezzanine 27.4
------------- --------------
Other 3.1
------------- --------------
Loan type % of invested
assets
-------------- --------------
Sterling 63.5
-------------- --------------
Euro 27.7
-------------- --------------
Danish Krona 8.8
-------------- --------------
"
For further information, please contact:
Robert Peel
Fidante Capital
T: +44 20 7832 0900
Peter Denton
Starwood Capital
T: +44 20 7832 0900
Notes:
Starwood European Real Estate Finance Limited 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 the wider European Union's internal market.
www.starwoodeuropeanfinance.com.
The Group is the largest London-listed vehicle to provide
investors with pure play exposure to real estate lending.
The Group's assets are managed by Starwood European Finance
Partners Limited, an indirect wholly-owned subsidiary of the
Starwood Capital Group.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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