SWEF: March 2019 Factsheet (802815)
25 Avril 2019 - 8:02AM
UK Regulatory
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release.
Starwood European Real Estate Finance Ltd (SWEF)
SWEF: March 2019 Factsheet
25-Apr-2019 / 07:00 GMT/BST
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The issuer is solely responsible for the content of this announcement.
25 April 2019
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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 2019 is available at:
www.starwoodeuropeanfinance.com [1]
Extracted text of the commentary is set out below:
Investment Portfolio at 31 March 2019
As at 31 March 2019, the Group had 16 investments and commitments of GBP448
million as follows:
Sterling equivalent Sterling equivalent
balance (1) unfunded commitment
(1)
Hospitals, UK GBP25.0m -
Mixed use development, GBP14.0m GBP1.4m
South East UK
Regional Hotel GBP45.9m -
Portfolio, UK
Credit Linked Notes, UK GBP21.8m -
real estate
Hotel & Residential, UK GBP39.9m -
Total Sterling Loans GBP146.6m GBP1.4m
Logistics, Dublin, GBP12.5m -
Ireland
Hotel, Barcelona, Spain GBP39.5m -
School, Dublin, Ireland GBP16.2m -
Industrial Portfolio, GBP42.7m -
Central and Eastern
Europe
Three Shopping Centres, GBP30.8m GBP7.5m
Spain
Shopping Centre, Spain GBP14.6m -
Hotel, Dublin, Ireland GBP51.5m -
Residential, Dublin, GBP7.7m -
Ireland
Office, Paris, France GBP13.7m -
Hotel, Spain GBP15.9m GBP21.8m
Office & Hotel, Madrid GBP24.7m GBP0.9m
Total Euro Loans GBP269.8m GBP30.2m
Total Portfolio GBP416.4m GBP31.6m
(1) Euro balances translated to sterling at period end exchange rates.
Dividend
On 24 April 2019 the Directors declared a dividend in respect of the fourth
quarter of 1.625 pence per Ordinary Share payable on 24 May 2019 to
shareholders on the register at 3 May 2019.
First Quarter Portfolio Activity
The following portfolio activity occurred in the first quarter of 2019:
- Repayment: Varde Partners mixed portfolio: The remaining balance of GBP1.0
million was repaid at the January 2019 interest payment date following
completion of the borrower's business plan.
- Repayment: Student Accommodation: The loan of EUR10.6 million was repaid
on 01 March 2019 following successful completion of the borrower's business
plan.
Following this portfolio activity the Group remains substantially fully
invested with drawings of GBP37.2 million (net of cash) on its GBP114 million
credit facilities and GBP31.6 million of unfunded commitments.
As we have reported in previous years, the first quarter is frequently quiet
in the market and we have only tended to see high levels activity in the
first quarter when deals which are under execution have not completed over
the Christmas period. This year no deals have rolled over from 2018 and the
first quarter has been relatively subdued. Similarly, we have received
minimal repayments in the quarter. The Group continues to see strong
opportunities to deploy capital in our target markets. The Investment
Adviser has a number of transactions under review, which present solid risk
adjusted returns, some of which are shortly moving into the execution phase
and we expect to announce further loans originated during the course of the
second quarter.
Market Commentary
With the current state of Brexit, and Q1 typically being a quieter quarter
it is unsurprising that the London office market saw mixed data this
quarter. According to CBRE take-up fell by 34 per cent in Q1 2019 versus
2018 to 2.7 million square feet but with availability reaching its lowest
level since Q3 2016. There was mixed reporting by different brokers on
transaction volume but a big fall due to Brexit uncertainty has not been
seen. CBRE reported volume down by 14 per cent to GBP2.4 billion in Q1 2019
but Savills reported GBP3.2 billion in the first quarter of 2019, being a 28
per cent increase on the GBP2.5 billion invested in Q1 2018. What is clear
from both is the high proportion of transactions involving international
capital with 70 per cent of purchases being by overseas buyers according to
CBRE. One clear trend we have seen was a pause on many UK situations where
people had been watching how Brexit would play out. Sentiment has quickly
changed since the longer extension to the 31st October and we have seen a
restarting of momentum on transactions as a result.
Headlines on the UK retail market remain gloomy. More recently we have been
seeing the operational performance and yield sentiment for retail feeding
through and more visibly impacting lenders. For example in March, Property
Week reported on two troubled retail loans. The first example was RDI REIT
experiencing an LTV breach on its Aviva facility secured by a portfolio of
four UK shopping centres where a revaluation has resulted in the lender's
loan to value hitting 89.4 per cent and exceeding the 85 per cent loan to
value (LTV) covenant. The second was in relation to a portfolio of seven
shopping centres, acquired by Lone Star for GBP260 million in 2014 and
financed with a GBP200 million loan from Citi. Following a fall in value of
the portfolio it is reported that the borrower has handed the keys to the
senior mezzanine lender in a capital structure that included senior, senior
mezzanine and junior mezzanine debt.
On the occupational side Debenhams, which is the largest occupier of
non-food retail space in the UK, has been put into administration, there are
reports of William Hill demanding 50 per cent rent decreases from landlords
and Holland and Barrett unilaterally changing terms to paying monthly
(rather than quarterly in advance which is typical for UK leases). We expect
the pace of negative headlines to remain high and the drivers to be a
combination of real occupational performance impacts but also of sentiment.
This volume of headlines does tend to drown out all other news in the sector
but dynamics for prime city centre retail and retail warehouses are markedly
different to those for shopping centres and regional high streets. Headlines
in newspapers do not cover news such as the number of new international
retailers opening debut stores in Central London. This figure increased
significantly in 2018, reaching 33 individual openings (an increase of 26.9
per cent compared to 2017 levels). We continue to monitor the sector
cautiously for potential opportunities.
Link Asset Services released their third Market Trend Analysis report for UK
commercial real estate lending. Key take-aways included that lenders are
less bullish on both expansion of their teams and their lending books than
in the previous survey. However, of the participants surveyed 43 per cent
are still looking to increase the team size and 54 per cent are looking to
expand their lending books. Brexit and political risks dominate the lenders'
concerns about the market: many see a potential softening in the real estate
market, generally, but expect that loan terms will remain broadly stable.
Of the eight loans made by the Company in 2018, seven were in our three main
focus markets for new origination of the UK, Spain and Ireland. While the
market dynamics continually shift, particularly at the moment in the UK, we
expect to continue to see a similar geographical pattern in 2019.
Share Price / NAV at 31 March 2019
Share price (p) 105.50
NAV (p) 102.80
Premium/ (discount) 2.6%
Dividend yield 6.2%
Market cap GBP395.6 m
Key Portfolio Statistics at 31 March 2019
Number of investments 16
Percentage of currently invested portfolio in floating 80.6%
rate loans
Invested Loan Portfolio unlevered annualised total 7.3%
return (1)
Invested Loan Portfolio levered annualised total 7.8%
return (2)
Weighted average portfolio LTV - to Group first GBP (3) 17.6%
Weighted average portfolio LTV - to Group last GBP (3) 63.3%
Average loan term (stated maturity at inception) 4.1 years
Average remaining loan term 2.6 years
Net Asset Value GBP385.5m
Amount drawn under Revolving Credit Facilities -GBP43.9m
(excluding accrued interest)
Loans advanced GBP397.6m
Financial assets held at fair value (including accrued GBP21.9m
income)
Cash GBP6.7m
Other net assets/ (liabilities) (including hedges) GBP3.3m
Origination Fees - current quarter -
Origination Fees - last 12 months GBP0.5m
Management Fees - current quarter GBP0.7m
Management Fees - last 12 months GBP2.9m
(1) The unlevered annualised total return is calculated on amounts
outstanding at the reporting date, excluding undrawn commitments, and
assuming all drawn loans are outstanding for the full contractual term. 13
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 at the reporting date and excluding committed amounts (but including
commitment fees) and excluding cash un-invested. The calculation also
excludes the origination fee payable to the Investment Manager.
(2)The levered annualised total return is calculated as per the unlevered
return but takes into account the amount of net leverage in the Group and
the cost of that leverage at current LIBOR/EURIBOR.
(3) LTV to Group last GBP means the percentage which the total loan drawn 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
reporting date. LTV to first Group GBP means the starting point of the loan to
value range of the loans drawn (when aggregated with any other indebtedness
ranking senior to it). For development projects the calculation includes the
total facility available and is calculated against the assumed market value
on completion of the relevant project.
Remaining years to Value of loans (GBPm) % of invested
contractual maturity* portfolio
0 to 1 years 80.6 19.4
1 to 2 years 113.7 27.2
2 to 3 years 103.9 25.0
3 to 5 years 93.2 22.4
5 to 10 years 25.0 6.0
*excludes any permitted extensions. Note that borrowers may elect to repay
loans before contractual maturity.
Country % of invested assets
Spain 30.1
Republic of Ireland 21.1
UK - Regional England 21.2
UK - Central London 14.0
Hungary 10.2
France 3.3
Czech Republic 0.1
Sector % of invested assets
Hospitality 42.0
Retail 12.8
Residential for sale 10.3
Light Industrial 10.2
Office 7.6
Healthcare 6.0
Education 3.9
Logistics 3.6
Residential for rent 2.6
Other 1.0
Loan type % of invested assets
Whole loans 64.7%
Mezzanine 30.1%
Other debt instruments 5.2%
Loan type % of invested assets*
Sterling 35.2%
Euro 64.8%
*the currency split refers to the underlying loan currency, however the
capital on all non-sterling exposure is hedged back to sterling.
For further information, please contact:
Apex Fund and Corporate Services (Guernsey) Limited - 01481 735879
Dave Taylor
Starwood Capital - 020 7016 3655
Duncan MacPherson
Stifel Nicolaus Europe Limited - 020 7710 7600
Neil Winward
Mark Bloomfield
Gaudi Le Roux
Notes:
Starwood European Real Estate Finance Limited is an investment company
listed on the premium segment of 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 [1].
The Company 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.
ISIN: GG00B79WC100
Category Code: MSCM
TIDM: SWEF
LEI Code: 5493004YMVUQ9Z7JGZ50
Sequence No.: 8316
EQS News ID: 802815
End of Announcement EQS News Service
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