Starwood European Real Estate Finance Ltd: March 2017 Factsheet

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 Starwood European Real Estate Finance Ltd (SWEF) 
Starwood European Real Estate Finance Ltd: March 2017 Factsheet 
 
25-Apr-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. 
 
*25 April 2017* 
 
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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 first quarter ended on 31 March 2017 is available at: 
 
www.starwoodeuropeanfinance.com [1] 
 
Extracted text of the commentary is set out below: 
 
'*Investment Portfolio at 31 March 2017* 
As at 31 March 2017, the Group had 17 investments and commitments of GBP413.5 
million as follows: 
 
+-----------------------+------------------+-------------------+ 
|*Transaction*          |         *Sterling|          *Sterling| 
|                       |equivalent balance|equivalent unfunded| 
|                       |              (1)*|    commitment (1)*| 
+-----------------------+------------------+-------------------+ 
|Centre Point, London   |            GBP45.0m|                  -| 
+-----------------------+------------------+-------------------+ 
|5 Star Hotel, London   |            GBP13.0m|                  -| 
+-----------------------+------------------+-------------------+ 
|Center Parcs Bonds, UK |             GBP9.5m|                  -| 
+-----------------------+------------------+-------------------+ 
|Industrial Portfolio,  |            GBP31.8m|                  -| 
|UK                     |                  |                   | 
+-----------------------+------------------+-------------------+ 
|Hospitals, UK          |            GBP25.0m|                  -| 
+-----------------------+------------------+-------------------+ 
|Hotel, Channel Islands |            GBP26.9m|                  -| 
+-----------------------+------------------+-------------------+ 
|Varde Partners mixed   |            GBP18.3m|                  -| 
|portfolio, UK          |                  |                   | 
+-----------------------+------------------+-------------------+ 
|Mixed use development, |             GBP8.3m|              GBP6.7m| 
|South East UK          |                  |                   | 
+-----------------------+------------------+-------------------+ 
|Regional Budget Hotel  |            GBP75.0m|                  -| 
|Portfolio, UK          |                  |                   | 
+-----------------------+------------------+-------------------+ 
|*Total Sterling Loans* |         *GBP252.8m*|            *GBP6.7m*| 
+-----------------------+------------------+-------------------+ 
|Office, Netherlands    |            GBP11.9m|                  -| 
+-----------------------+------------------+-------------------+ 
|Retail & Residential   |             GBP2.8m|                  -| 
|Portfolio, Ireland     |                  |                   | 
+-----------------------+------------------+-------------------+ 
|Residential Portfolio, |             GBP5.2m|                  -| 
|Cork, Ireland          |                  |                   | 
+-----------------------+------------------+-------------------+ 
|Residential Portfolio, |             GBP6.7m|                  -| 
|Dublin, Ireland        |                  |                   | 
+-----------------------+------------------+-------------------+ 
|Logistics, Dublin,     |            GBP12.8m|                  -| 
|Ireland                |                  |                   | 
+-----------------------+------------------+-------------------+ 
|Hotel, Barcelona, Spain|            GBP39.5m|                  -| 
+-----------------------+------------------+-------------------+ 
|School, Dublin, Ireland|            GBP16.2m|                  -| 
+-----------------------+------------------+-------------------+ 
|Industrial Portfolio,  |            GBP22.8m|             GBP36.1m| 
|Eastern Europe         |                  |                   | 
+-----------------------+------------------+-------------------+ 
|*Total Euro Loans*     |         *GBP117.9m*|           *GBP36.1m*| 
+-----------------------+------------------+-------------------+ 
|*Total Portfolio*      |         *GBP370.7m*|           *GBP42.8m*| 
+-----------------------+------------------+-------------------+ 
 
(1) Euro balances translated to sterling at 31 March 2017 exchange rates. 
 
*Dividend* 
On 24 April 2017 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 2017. 
 
*Portfolio commentary * 
The first quarter of 2017 was a busy quarter for the Group and we were 
pleased to announce the origination of three new loans with GBP79.2 million of 
capital deployed and a further GBP36.1 million committed. In the context of 
the first quarter of any year normally being particularly quiet this was a 
strong performance. This also enabled the Group to quickly re-invest the 
proceeds from the two repayments also received in March. 
 
As at 31 March, the average maturity of the Group's GBP370.7 million loan book 
was 3.4 years with GBP12.2 million of cash and substantial liquidity lines of 
GBP50.0 million available to use for existing commitments of GBP42.8 million and 
new investments. The gross annualised total return of the invested loan 
portfolio is 8.1 per cent. 
 
The following portfolio activity occurred in the first quarter of 2017: 
 
*New loans* 
 
*Irish School, Dublin*: On 31 March 2017 the Group advanced a EUR18.85 
million 3-year floating rate whole loan to support the acquisition and 
repositioning of a South Dublin office building in the Republic of Ireland. 
The building will be converted to educational use with a new lease to a 
premium global education company. The sponsor, Barry O'Callaghan, is a 
highly regarded local investor with deep experience in the education sector. 
The transaction represents a continuation of the Group's lending strategy in 
Ireland, and adds to the diversity of its portfolio with its first loan in 
the educational sector. 
 
*Hotel, Barcelona*: On 31 March 2017 the Group advanced a EUR46.0 million 
4-year floating rate whole loan to finance the acquisition of a 4-star, 
240-key hotel in central Barcelona's 22@ district. The borrower is a 
partnership between institutional-quality investors with track records of 
successful hotel acquisitions throughout Europe. The hotel is 
well-positioned to benefit from the sponsors' active asset management 
strategy in a Barcelona market with appealing hospitality performance 
metrics and high barriers to entry. The transaction represents the Group's 
entry to the Spanish market, a large market opportunity with attractive real 
estate fundamentals and macroeconomic growth trends. 
 
*Industrial Portfolio, Central and Eastern Europe* : On 30 March 2017 the 
Group committed to provide a EUR68.5 million whole loan for a portfolio of 
industrial assets located across Central and Eastern Europe. The 3-year 
floating rate loan represents the opportunity to further diversify 
geographically and support a strong sponsor with a proven track record. 
EUR26.5 million of the loan was funded on 30 March 2017 with the remaining 
commitment expected to be drawn-down in the coming weeks. 
 
*Repayments* 
 
*Industrial Portfolio, Denmark:* The Group received full repayment of the 
Danish Industrial Portfolio loans as a result of the sale of the portfolio. 
A number of loans in the Group's portfolio benefit from prepayment 
protection in their early years, providing the Group with a level of income 
protection should such loans repay whilst in that protected period. The 
Danish loan was originated in June 2015 and benefits from such provisions, 
meaning that the Group will bear no effective drag on the repayment of this 
loan for a further few months. 
 
*Industrial Portfolio, Netherlands: *The Group received full repayment of 
the Industrial Portfolio, Netherlands loan as a result of the sale of the 
portfolio, in line with the Sponsor's business plan. 
 
Whilst we do anticipate some further repayments in the coming year we expect 
the quantum and pace to be slower than we experienced in the first quarter 
of 2017. Together with a number of opportunities currently under review, we 
anticipate, if they proceed, being able to raise further equity later in the 
year. All current opportunities remain, however, subject to final due 
diligence, documentation and Investment Manager Board approval. 
 
*Hedging* 
At 31 March 2017, the Group's FX hedges were out of the money in an amount 
of GBP1.2 million. This was significantly lower than the 31 December 2016 
liability of GBP9.2 million. The reduction is mainly due to the repayment of 
the two loans referred to above which had associated hedging liabilities of 
GBP6.4 million at the year end. 
 
*Revolving credit facility* 
During the first quarter of 2017, the Group extended the maturity of the GBP50 
million revolving credit facility from 31 March 2017 to 31 March 2018. As 
part of the amendments to the facility, an uncommitted 'Accordion' feature 
has been added which would allow the Group to increase the available loan up 
to GBP100 million by bringing additional lenders into the facility. 
 
*Market commentary* 
 
As a general theme, we have seen lending terms remain stable across Europe 
over the past few months with little recent change to risk appetite or 
pricing. In respect of the UK in particular, whilst there was an initial 
widening of spreads in the run up to and immediately post the Brexit 

referendum, the lending approach has since stabilised. 
 
We have seen a pick-up in financing requests since the end of February for 
new acquisitions, refinancings and equity re-capitalisations. In particular, 
there has been a significant increase in the number of requests for large 
development financings. With funding for this type of loan becoming 
increasingly fragmented, more borrowers are using debt brokerage firms to 
assist them in sourcing construction finance. 
 
In total, there are over EUR2 billion of active development financing 
requirements on our radar. Whilst we anticipate that the current market 
limitations on the availability of development financing present an 
opportunity to earn good risk adjusted returns, we will maintain our 
considered risk return approach and only pursue opportunities where we can 
achieve the best combination of return, structure, and sponsor and project 
quality. 
 
In addition, we have seen a number of processes where the borrower has run a 
highly competitive and lengthy process and then not proceeded with the 
financing so we are wary of committing the Group's resources to these kind 
of processes unless there is a high degree of certainty around a deal 
advancing. 
 
In the capital markets, the Brookfield Student CMBS closed in March and was 
the first new European CMBS issuance since June 2016. The securitisation 
comprised a GBP215 million single tranche, BBB rated bond secured by 
Brookfield's UK student accommodation portfolio. The LTV was 53 per cent, 
with a 7-year tenor and all in pricing of 2.66 per cent (being 185bps over 
the benchmark gilt). Whilst the transaction attracted a lot of attention and 
we do expect to see further CMBS activity in markets such as Italy and the 
Netherlands, CMBS issuance is still a small overall contributor to European 
commercial real estate debt. According to Debtwire's CMBS April 2017 monthly 
summary, the total CMBS issuance for 2016 was only EUR885 million and 
outstanding total CMBS in Europe was EUR32.7 billion. This is in marked 
contrast to new acquisition commercial real estate ('CRE') financing which 
was estimated by CBRE to be EUR116 billion for 2016 and a total outstanding 
CRE debt at EUR1.1 trillion. 
 
In the syndication market, Dealogic figures published for CRE debt 
syndication showed a sharp decline between 2015 to 2016 driven by lower 
transaction volumes - UK syndication volumes fell by 51 per cent to GBP9.8 
billion and EMEA as a whole fell 39 per cent to EUR48.6 billion with the 
decline attributed to a lower volume of larger acquisitions that would 
require syndicated financing. In contrast, in 2017 we have already seen a 
number of larger transactions close or launch: Pradera completing a EUR900 
million acquisition of a pan European retail portfolio; the EUR1.28 billion 
acquisition by M7 and Blackstone of the Hansteen portfolio; and Blackstone's 
EUR3.3 billion acquisition of the Office First and Couer Defense portfolio 
is currently being brought to the market with an expected debt requirement 
of EUR1.8 billion. 
 
We said in the December factsheet that we expected to see opportunities in 
Spain, Ireland and CEE and we have closed loans in each of these areas in 
the first quarter. Whilst the Dublin school financing is the Group's fifth 
transaction in Ireland, the loans in Spain and CEE are our first investments 
in these jurisdictions. We continue to see a good level of pipeline and, 
given market dynamics, expect that the largest number of new opportunities 
are likely to be in the UK, Ireland and Spain. We are, however, also seeing 
investment opportunities all across Europe including early stage pipeline 
deals in France and Germany. 
 
*Share Price / NAV at 31 March 2017* 
 
+-------------------+--------+ 
|Share price (p)    |109.50  | 
+-------------------+--------+ 
|NAV (p)            |102.03  | 
+-------------------+--------+ 
|Premium/ (discount)|7.3 %   | 
+-------------------+--------+ 
|Dividend yield     |6.0%    | 
+-------------------+--------+ 
|Market cap         |GBP410.6 m| 
+-------------------+--------+ 
 
*Key Portfolio Statistics at 31 March 2017* 
 
+----------------------------------------------------+---------+ 
|Number of investments                               |       17| 
+----------------------------------------------------+---------+ 
|Percentage of currently invested portfolio in       |    69.3%| 
|floating rate loans (1)                             |         | 
+----------------------------------------------------+---------+ 
|Invested Loan Portfolio annualised total return (2) |     8.1%| 
+----------------------------------------------------+---------+ 
|Weighted average portfolio LTV - to Group first GBP   |    20.0%| 
|(3)                                                 |         | 
+----------------------------------------------------+---------+ 
|Weighted average portfolio LTV - to Group last GBP (3)|    65.0%| 
+----------------------------------------------------+---------+ 
|Average loan term (stated maturity at inception)    |4.5 years| 
+----------------------------------------------------+---------+ 
|Average remaining loan term                         |3.4 years| 
+----------------------------------------------------+---------+ 
|Net Asset Value                                     |  GBP382.6m| 
+----------------------------------------------------+---------+ 
|Amount drawn under Revolving Credit Facility        |    GBP0.0m| 
|(excluding accrued interest)                        |         | 
+----------------------------------------------------+---------+ 
|Portfolio value (including accrued income)          |  GBP373.1m| 
+----------------------------------------------------+---------+ 
|Cash                                                |   GBP12.2m| 
+----------------------------------------------------+---------+ 
|Other net assets/ (liabilities) (including hedges)  |   -GBP2.7m| 
+----------------------------------------------------+---------+ 
|                                                    |         | 
+----------------------------------------------------+---------+ 
 
(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. Thirteen 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 market 
value on completion of the project. 
 
+-------------------------+---------------+--------------------+ 
|*Remaining years to      |      *Value of|      *% of invested| 
|contractual maturity**   |         loans*|          portfolio*| 
+-------------------------+---------------+--------------------+ 
|0 to 1 years             |         GBP51.1m|               13.8%| 
+-------------------------+---------------+--------------------+ 
|1 to 2 years             |          GBP2.8m|                0.7%| 
+-------------------------+---------------+--------------------+ 
|2 to 3 years             |        GBP128.1m|               34.6%| 
+-------------------------+---------------+--------------------+ 
|3 to 5 years             |        GBP163.7m|               44.2%| 
+-------------------------+---------------+--------------------+ 
|5 to 10 years            |         GBP25.0m|                6.7%| 
+-------------------------+---------------+--------------------+ 
 
_*excludes any permitted extensions. Note that borrowers may elect to repay 
loans before contractual maturity._ 
 
+---------------------+----------------------+ 
|*Country*            |*% of invested assets*| 
+---------------------+----------------------+ 
|UK - Regional England|                  47.4| 
+---------------------+----------------------+ 
|UK - Central London  |                  14.1| 
+---------------------+----------------------+ 
|Republic of Ireland  |                  11.1| 
+---------------------+----------------------+ 
|Spain                |                  10.8| 
+---------------------+----------------------+ 
|Channel Islands      |                   7.3| 
+---------------------+----------------------+ 
|Hungary              |                   6.2| 
+---------------------+----------------------+ 
|Netherlands          |                   3.1| 
+---------------------+----------------------+ 
+--------------------+----------------------+ 
|*Sector*            |*% of invested assets*| 
+--------------------+----------------------+ 
|Hospitality         |                  45.0| 
+--------------------+----------------------+ 
|Light Industrial    |                  15.8| 
+--------------------+----------------------+ 
|Residential for sale|                  11.3| 
+--------------------+----------------------+ 
|Healthcare          |                   6.8| 
+--------------------+----------------------+ 
|Retail              |                   5.7| 
+--------------------+----------------------+ 
|Education           |                   4.4| 
+--------------------+----------------------+ 
|Residential for rent|                   4.1| 

+--------------------+----------------------+ 
|Office              |                   3.4| 
+--------------------+----------------------+ 
|Logistics           |                   3.2| 
+--------------------+----------------------+ 
|Other               |                   0.2| 
+--------------------+----------------------+ 
+-----------+----------------------+ 
|*Loan type*|*% of invested assets*| 
+-----------+----------------------+ 
|Whole loans|                  61.7| 
+-----------+----------------------+ 
|Mezzanine  |                  38.3| 
+-----------+----------------------+ 
+-----------+-----------------------+ 
|*Loan type*|*% of invested assets**| 
+-----------+-----------------------+ 
|Sterling   |                   68.8| 
+-----------+-----------------------+ 
|Euro       |                   31.2| 
+-----------+-----------------------+ 
 
*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: [phone] 
 
Duncan MacPherson 
Starwood Capital 
T [phone] 
 
*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 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. 
 
Language:      English 
ISIN:          GG00B79WC100 
Category Code: PFU 
TIDM:          SWEF 
LEI Code:      5493004YMVUQ9Z7JGZ50 
Sequence No.:  4093 
 
End of Announcement EQS News Service 
 
566861 25-Apr-2017 
 
 
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(END) Dow Jones Newswires

April 25, 2017 02:02 ET (06:02 GMT)