SWEF : Quarterly Factsheet Publication
26 July 2017 - 4:01PM
UK Regulatory
Dow Jones received a payment from EQS/DGAP to publish this press
release.
Starwood European Real Estate Finance Ltd (SWEF)
SWEF : Quarterly Factsheet Publication
26-Jul-2017 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
26 July 2017
NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, IN WHOLE OR IN PART, DIRECTLY
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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 second quarter ended on 30 June 2017 is available at:
www.starwoodeuropeanfinance.com [1]
Extracted text of the commentary is set out below:
"Investment Portfolio at 30 June 2017
As at 30 June 2017, the Group had 15 investments and commitments of GBP396.1
million as follows:
Transaction Sterling equivalent Sterling equivalent
balance (1) unfunded commitment
(1)
Centre Point, London GBP45.0m -
5 Star Hotel, London GBP13.0m -
Industrial Portfolio, GBP25.5m -
UK
Hospitals, UK GBP25.0m -
Hotel, Channel Islands GBP26.9m -
Varde Partners mixed GBP17.0m -
portfolio, UK
Mixed use development, GBP8.5m GBP5.4m
South East UK
Regional Budget Hotel GBP75.0m -
Portfolio, UK
Total Sterling Loans GBP235.9m GBP5.4m
Office, Netherlands GBP12.2m -
Residential Portfolio, GBP5.3m -
Cork, Ireland
Residential Portfolio, GBP6.8m -
Dublin, Ireland
Logistics, Dublin, GBP13.1m -
Ireland
Hotel, Barcelona, Spain GBP40.5m -
School, Dublin, Ireland GBP16.6m -
Industrial Portfolio, GBP60.3m -
Eastern Europe
Total Euro Loans GBP152.8m -
Total Portfolio GBP390.7m GBP5.4m
(1) Euro balances translated to sterling at 30 June 2017 exchange rates.
Dividend
On 25 July 2017 the Directors declared a dividend of 1.625 pence per
Ordinary Share (annualised 6.5 pence per Ordinary Share) in relation to the
second quarter of 2017.
Portfolio activity
As at 30 June 2017, the average maturity of the Group's GBP390.7 million loan
book was 3.1 years. The Group has GBP2.4 million of cash and GBP7.5 million
drawn on the revolving credit facility, with GBP5.4 million of commitments to
fund. The gross annualised total return of the invested loan portfolio is
7.9 per cent.
The following portfolio activity occurred in the second quarter of 2017:
Industrial Portfolio, Central and Eastern Europe: On 31 May 2017 the Group
funded the remaining commitment of EUR42.0 million for a portfolio of
industrial assets located across Central and Eastern Europe.
Mixed use development, South East: The Group has agreed to a facility
amendment incorporating a modest downsize of the undrawn loan with the
Group's total commitment reducing from GBP15 million to GBP13.9 million.
Center Parcs, UK: The Group received full repayment of GBP9.5 million
(notional) in relation to the Center Parcs bonds at a redemption price of
104.8%. The repayment premium is equivalent to approximately 8 months of
make-whole interest.
Other repayments to 30 June 2017: During June, the Group also received full
repayment of the Retail & Residential Portfolio, Ireland and received
amortisation of GBP2.3 million on the Industrial Portfolio, UK loan. A loan
repayment of GBP4.0 million was also received on the Industrial Portfolio, UK
loan in May 2017 as the borrower sold properties resulting in mandatory
repayments of the loan.
The Company constantly seeks to minimise cash drag and attempts to manage
repayment events by tactically using the GBP50 million revolving credit
facility available to it. The proceeds of these repayments were used to
repay GBP14.0 million of drawings on the revolving credit facility, leaving
GBP7.5 million drawn on the revolving credit facility at 30 June 2017.
Since the quarter end, on 18 July 2017, the Group received full repayment of
the Office, Netherlands loan following a successful refinancing of the
property by the owner. The GBP12.2 million repayment proceeds will be used to
repay the remaining GBP7.5 million balance on the revolving credit facility.
This facility will then be undrawn and available for new investments.
Pipeline
We continue to see similar themes to those seen over the last few quarters.
Geographically we continue to focus on the UK and Spain in particular. We
are being patient with development financing opportunities. While these
loans offer good risk adjusted return opportunities, they also consume
larger amounts of time and resources to underwrite, execute and manage
post-closing. We are also finding that development financing processes are
taking longer to progress from the initial borrower's financing requests to
execution and are often subject to significant scope changes during the
process leading to less execution certainty. We expect to see continuing
acquisition activity in alternative real estate asset classes which should
yield opportunities with early stage hospitality, student accommodation and
leisure asset financings currently on our target pipeline. One loan for
approximately GBP20 million is currently in documentation and we would expect
to close this loan in the third quarter which would lead to the
re-investment of the remaining available cash from recent repayments.
Market Commentary
A number of property finance research pieces focussed on the UK were
released during the quarter. These include the de Montfort University
lending survey, Savills Financing Property 2017 presentation, Laxfield
Capital's 8th Property Finance Barometer and a new piece of research:
Capita's inaugural Real Estate Finance Market Trend Analysis.
The De Montfort University lending survey is the leading commercial property
financing research piece on the UK market. The semi-annual report provides
insights into the opaque lending market with hard data sourced from many
market participants including the Group. The year end 2016 survey was
released at the beginning of May and reports that total year end 2016 debt
secured by commercial real estate in the UK is relatively unchanged at
GBP208.7 billion, down 1.5 per cent year on year. The Brexit effect can be
seen in a number of the outputs, with average loan-to values ("LTVs") down,
and average margins up slightly; but the largest effect has been a reduced
acquisition financing volume as transactions numbers fell. Average LTVs for
prime office lending are down 5 per cent, margins are up 15 basis points
between year-end 2015 and year-end 2016 and new loan origination is down 17
per cent to GBP44.5 billion. A larger proportion of activity, at 61 per cent
of the total is refinancing compared to 44 per cent in 2015.
The proportion of loans made by UK Banks was higher at 47 per cent this year
versus 34 per cent last year. This is likely related to the larger
proportion of refinancings versus new acquisitions, where incumbent UK banks
benefit from existing relationships within the lending book. Syndications
are down from GBP18 billion to GBP14 billion, reflecting a lack of paper rather
than a lack of appetite. Lending volumes continue to be dominated by a small
number of players - 62 per cent of new loan origination by volume came from
only 12 institutions (six UK banks, two German banks, one North American
bank, one insurance company and two other international banks). Only UK
banks and non-bank lenders reported larger balance sheets at year end 2016
than 2015. In particular origination volume by US banks fell 56 per cent and
insurance companies fell 46 per cent (reflecting reduced larger transaction
activity). Non-bank lenders continue to take a market share of around 10 per
cent of the market. 76 per cent of mezzanine / junior debt is held by
non-bank lenders with a further 18 per cent held by insurance companies and
only 6 per cent held by banks.
The Savills report repeats many of the findings from the De Montfort Survey,
which is published a month earlier, adding some further observations in
their Financing Property 2017 report. Savills write that "Property has
rarely been so financeable" comparing the UK All Property Equivalent Yield
and average all in cost of money and showing the all in cost of real estate
debt is at historical lows and the spread between property yield and
financing cost being at historical highs. Savills also note that development
finance is not growing significantly and is at less than half the levels of
2007 and 2008. This theme is in line with what we are seeing in the market
but we also see a risk that as an increasing amount of development financing
is being provided by alternative lenders (especially on the larger tickets),
this could be missed from survey data, as these lenders are less likely to
report their lending to the survey.
Both Savills' and Capita's reports highlight the general desire of the
lending community to do new business. Savills quote 81 per cent of lenders
expressing a desire to increase their lending while Capita say that 52 per
cent of lenders are looking to grow their lending teams and 71 per cent are
looking to grow their lending book over the next year. Both highlight the
variety of different lender types in the market and there is such a
diversity that Capita divide lenders into twelve separate categories.
Capita's report was released after the general election: interestingly they
see very little macro nervousness among lenders despite uncertainties from
Brexit and the recent general election. Evidence of the market shrugging off
Brexit uncertainties for prime London properties can be seen in lower
margins being achieved on recent larger London financings. For example,
according to Debtwire the "Cheesegrater" (122 Leadenhall Street) financing
for CC Land was priced at Libor+ 150bps and, also according to Debtwire,
London and Regional have refinanced 55 Baker Street at 175bps over Libor for
the 60 per cent LTV senior loan and 450bps over Libor for the 60-70 per cent
LTV junior loan. This represents some of the lowest post global financial
crisis mezzanine pricing we have seen in the UK.
The challenge to obtain UK development financing can be seen in the results
of the Laxfield survey which shows that borrowers' development loan margin
expectations are up 21 per cent in the 6 month period ending 31 March 2017
versus the previous six month period. This appears to be an issue which is
affecting the UK specifically and we continue to see much stronger
availability of development financing in most other countries around Europe.
Laxfield report the six months ending 31 March 2017 was the second slowest
by volume after the preceding six months, with volumes of UK commercial
property financing requests down by 20 per cent on the same period last year
from GBP11.8 billion to GBP9.5 billion. At the same time the number of
financings reported was up from 162 to 173 so we are seeing a higher number
of smaller deals make up a lower overall volume. The De Montfort data backs
this up: average loan size fell considerably between 2015 and 2016 with over
50 per cent of loans being in the GBP100-500 million range in 2015 and just 8
per cent in 2016. Laxfield also report borrower expectations on margin for
most LTV points were up in this period.
Share Price / NAV at 30 June 2017
Share price (p) 108.25
NAV (p) 101.89
Premium/ (discount) 6.2%
Dividend yield 6.0%
Market cap GBP406.0 m
Key Portfolio Statistics at 30 June 2017
Number of investments 15
Percentage of currently invested portfolio in floating 73.2%
rate loans (1)
Invested Loan Portfolio annualised total return (2) 7.9%
Weighted average portfolio LTV - to Group first GBP (3) 17.8%
Weighted average portfolio LTV - to Group last GBP (3) 63.9%
Average loan term (stated maturity at inception) 4.4 years
Average remaining loan term 3.1 years
Net Asset Value GBP382.1m
Amount drawn under Revolving Credit Facility -GBP7.5m
(excluding accrued interest)
Portfolio value (including accrued income) GBP393.4m
Cash GBP2.4m
Other net assets/ (liabilities) (including hedges) -GBP6.2m
(1) Calculated on loans drawn at the reporting date using the exchange rates
applicable when the loans were funded.
(2) Calculated on amounts outstanding at the reporting date, excluding
undrawn commitments, and assuming all drawn loans are outstanding for the
full contractual term. Twelve 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 and cash un-invested. The calculation excludes the
origination fee payable to the Investment Manager.
(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
reporting date. 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 Centre Point, the Irish School,
Dublin and the mixed use development, south east UK, the calculation
includes the total facility available and is calculated against the assumed
market value on completion of the project.
Remaining years to Value of loans % of invested
contractual maturity* portfolio
0 to 1 years GBP51.1m 13.1%
1 to 2 years GBP37.7m 9.6%
2 to 3 years GBP121.4m 31.1%
3 to 5 years GBP155.5m 39.8%
5 to 10 years GBP25.0m 6.4%
*excludes any permitted extensions. Note that borrowers may elect to repay
loans before contractual maturity.
Country % of invested assets
UK - Regional England 40.7
UK - Central London 13.5
Hungary 12.6
Spain 10.4
Republic of Ireland 10.0
Channel Islands 7.0
Netherlands 3.0
Czech Republic 2.8
Sector % of invested assets
Hospitality 40.6
Light Industrial 22.8
Residential for sale 10.9
Healthcare 6.5
Retail 5.2
Education 4.2
Office 3.9
Logistics 3.1
Residential for rent 2.7
Other 0.1
Loan type % of invested assets
Whole loans 66.3
Mezzanine 33.7
Loan type % of invested assets*
Sterling 61.2
Euro 38.8
*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:
Robert Peel
Fidante Capital
T: +44 20 7832 0900
Duncan MacPherson
Starwood Capital
T +44 207 016 3655
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 [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.
Language: English
ISIN: GG00B79WC100
Category Code: MSCM
TIDM: SWEF
LEI Code: 5493004YMVUQ9Z7JGZ50
Sequence No.: 4458
End of Announcement EQS News Service
595527 26-Jul-2017
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