Eurocastle Releases First Half 2021 Financial Results

 
TIDMECT 
 

Contact:

Oak Fund Services (Guernsey) Limited

Company Administrator

Attn: Mark Woodall

Tel: [phone]

Eurocastle Releases First Half 2021 Financial Results

Guernsey, 4 August 2021 -- Eurocastle Investment Limited (Euronext Amsterdam: ECT) today https://www.globenewswire.com/Tracker?data=hoOiCKRCfyKlXVVbnFfWm7lATAhbldtpTLb61CYuHZCgjOke2PDlDtHgIhxUc2lK has released its financial report for the six months ended 30 June 2021.

   -- Adjusted Net Asset Value ("NAV") of EUR17.8 million1, or EUR9.60 per 
      share2, up EUR0.83 per share vs. EUR8.77 per share at Q1 2021 (up EUR1.14 
      per share3 since Q4 2020) due to: 
   1. Valuation movements: 
 
          -- EUR0.71 per share, or 26%, increase in Q2 2021 (EUR0.98 per share 
             increase in H1 2021) on its remaining real estate fund investments 
             as a result of realisations being ahead of expectations. 
 
          -- EUR0.19 per share, or 27%, increase in Q2 2021 (EUR0.23 per share 
             increase in H1 2021) on the remaining three NPL and other loan 
             interests. 
 
   2. Increase in existing reserves and other movements resulting in a decrease 
      of EUR(0.07) per share in Q2 2021 (EUR0.07 per share decrease in H1 
      2021). 

The tables below summarise the Adjusted NAV by segment:

 
 
                                     Q2 Cash 
                  Q1 2021 NAV       Movement      Q2 FV Movement    Q2 2021 NAV 
                 --------------  ---------------  ---------------  -------------- 
                           EUR             EUR              EUR              EUR 
                   EUR     per     EUR     per      EUR     per      EUR     per 
                 million  share  million  share   million  share   million  share 
Real Estate 
 Funds               5.1   2.77        -       -      1.3    0.71      6.4   3.47 
Italian NPLs & 
 Other Loans         1.3   0.70    (0.0)  (0.01)      0.4    0.19      1.6   0.88 
Net Corporate 
 Cash(4)             9.8   5.30      0.0    0.01    (0.1)  (0.07)      9.7   5.25 
Adjusted NAV        16.3   8.77        -       -      1.5    0.83     17.8   9.60 
==============   =======  =====  =======  ======  =======  ======  =======  ===== 
 
 

As at 30 June 2021, the Company's remaining assets comprise:

   1. Interests in two fully developed, luxury residential real estate 
      redevelopment funds in Rome where all of the apartments in Real Estate 
      Fund Investment II ("REFI II") are now 100% sold or under contract to be 
      sold and less than 20% of the units in Real Estate Fund Investment V 
      ("REFI V") remain to be sold. 
 
   2. Residual minority interests in three predominantly secured NPL & Other 
      Loan pools where the underlying assets of one pool are under binding 
      contract to be sold in Q3 and, as previously announced, the remaining two 
      NPL pools are under contract to be sold once the underlying portfolio 
      level financing of each is repaid. 
 
   3. Net corporate cash of EUR9.7 million, comprising corporate cash net of 
      liabilities and additional reserves. 

H1 2021 BUSINESS HIGHLIGHTS

H1 2021 Overview

During the first half of 2021, the Company continued to make significant progress on realising its remaining assets as part of its Realisation Plan. Sales of residential units across both of its real estate redevelopment funds have proved resilient despite the ongoing challenges from COVID-19. This positive activity in the RE Funds, where results were achieved above and ahead of what was anticipated, after being adjusted in 2020 for the projected impact of COVID-19, has been the primary driver for a 26% valuation increase in the period for these investments.

In addition, Eurocastle received its last material distribution from its publicly listed fund investment and agreed the sale of all underlying assets in one of the three remaining loan pools the Company has an interest in, comprising 19% of the segment's Q2 2021 NAV. This activity has left the Company well positioned while it undertakes its strategic review, announced in March 2021. The strategic options are under ongoing review by the Board, with the outcome of the review anticipated to be announced to shareholders before the end of 2021.

Investment Realisations & Highlights

   -- During the first half of 2021, the Company realised EUR2.9 million from 
      its investments, of which EUR2.8 million came from its Real Estate Funds 
      (38% of their YE 2020 NAV) and EUR0.1 million from its minority NPL and 
      Other Loan holdings (4% of their YE 2020 NAV). 
 
   -- RE Redevelopment Funds - REFI II & REFI V: 
 
   -- Following sales activity during the period and assuming all units under 
      contract to be sold in REFI II and REFI V close, only 18% of units in 
      REFI V as at 30 June 2021 will remain to be sold. 
 
   -- Received EUR2.4 million in Q1 2021 comprising (i) EUR0.5 million from 
      REFI II (22% of its YE 2020 NAV) and (ii) EUR1.9 million from REFI V 
      (39% of its YE 2020 NAV). The remaining proceeds from closed sales 
      together with those under contract to be sold are expected to be 
      distributed to Eurocastle in H2 2021 (representing 62% of the Q2'21 NAV). 
   -- REFI I: Following the sale of all the assets in Real Estate Fund 
      Investment I in 2019, the Company received its last expected material 
      distribution of EUR0.4 million, or 143% of its YE 2020 NAV, in Q1 2021. 
   -- Italian NPLs & Other Loans: During the year the pools generated and 
      distributed EUR0.1 million, or 4% of its YE 2020 NAV. In June the 
      underlying assets of one of these 3 pools went under contract to be sold 
      with closing expected in Q3 2021. The H1 2021 fair value reflects the 
      impact of this offer which is expected to generate  EUR0.3 million to 
      the Company (19% of Q2'21 NAV). 
   -- Additional Reserves: The Company reduced these reserves from EUR16.2 
      million to EUR15.4 million during the first half of the financial year. 
      The reduction of EUR0.8 million reflects EUR0.9 million of reserves being 
      utilised, in line with anticipated costs, and an increase of EUR0.1 
      million in the existing reserves in H1 2021. 

SUBSEQUENT EVENT TO 30 JUNE 2021

REFI V signed an additional 8% of units under contract and fully repaid the financing facility, leaving 10% of units remaining with closings expected by the end of the year.

 
Income Statement for the Six and Three Months ended 
 30 June 2021 (unaudited)                               H1 2021      Q2 2021 
                                                          EUR          EUR 
                                                       Thousands    Thousands 
----------------------------------------------------  -----------  ----------- 
Portfolio Returns 
---------------------------------------------------- 
  Italian NPLs & Other Loans                                  437          354 
  Real Estate Funds                                         1,809        1,316 
----------------------------------------------------  -----------  ----------- 
Fair value movement on Italian investments                  2,246        1,670 
Fair value movements on residual Legacy entities               28            - 
Gain / (loss) on foreign currency translation                   -          (1) 
                                                                   ----------- 
Total gain                                                  2,274        1,669 
----------------------------------------------------  -----------  ----------- 
 
Operating Expenses 
---------------------------------------------------- 
Manager base and incentive fees                                96           50 
Remaining operating expenses                                  867          501 
----------------------------------------------------  -----------  ----------- 
Other Operating expenses                                      963          551 
----------------------------------------------------  -----------  ----------- 
Total expenses                                                963          551 
----------------------------------------------------  -----------  ----------- 
 
Net profit for the period                                   1,311        1,118 
EUR per share                                                0.71         0.60 
----------------------------------------------------  -----------  ----------- 
 
 
 
 Balance Sheet and Adjusted NAV Reconciliation as at    Italian Investments     Corporate        Total 
 30 June 2021 (unaudited)                                  EUR Thousands      EUR Thousands   EUR Thousands 
-----------------------------------------------------   -------------------  --------------  -------------- 
Assets 
Cash and cash equivalents                                                 -          26,324          26,324 
Other assets                                                              -              48              48 
Investments: 
Italian NPLs & Other Loans                                            1,630               -           1,630 
Real Estate Funds                                                     6,444               -           6,444 
Total assets                                                          8,074          26,372          34,446 
 
Liabilities 
Trade and other payables                                                  -           1,212           1,212 
Manager base and incentive fees                                           -              55              55 
Total liabilities                                                         -           1,267           1,267 
 
IFRS NAV                                                              8,074          25,105          33,179 
------------------------------------------------------  -------------------  --------------  -------------- 
 
Additional Reserves(5)                                                    -        (15,356)        (15,356) 

------------------------------------------------------  -------------------  --------------  -------------- 
Adjusted NAV                                                          8,074           9,749          17,824 
Adjusted NAV (EUR per share)(6)                                        4.35            5.25            9.60 
------------------------------------------------------  -------------------  --------------  -------------- 
 

(1) In light of the Realisation Plan announced in November 2019, the Adjusted NAV as at 30 June 2021 reflects additional reserves for future costs and potential liabilities, which have not been accounted for under the IFRS NAV. No commitments for these future costs and potential liabilities existed as at 30 June 2021.The IFRS NAV, as at 30 June 2021, is EUR33.2 million, or EUR17.86 per share.

(2) Per share calculations for Eurocastle throughout this document are based on 1.9 million shares.

(3) After taking into account payment in Q1 2021 of EUR0.54 per share of 2020 capital distribution.

(4) Reflects corporate cash net of liabilities and additional reserves.

(5) In light of the Realisation Plan, the Adjusted NAV as at 30 June 2021 reflects the additional reserves for future costs and potential liabilities of EUR15.4 million which have not been accounted for under the IFRS NAV.

(6) Amounts per share calculated on 1.9 million outstanding ordinary shares.

NOTICE:

This announcement contains inside information for the purposes of the Market Abuse Regulation 596/2014.

ADDITIONAL INFORMATION

For investment portfolio information, please refer to the Company's most recent Financial Report, which is available on the Company's website (www.eurocastleinv.com).

ABOUT EUROCASTLE

Eurocastle Investment Limited ("Eurocastle" or the "Company") is a publicly traded closed-ended investment company, focused on Italian performing and non-performing loans, Italian loan servicing platforms and other real estate related assets in Italy. On 18 November 2019, the Company announced a plan to realise the majority of its assets with the aim of accelerating the return of value to shareholders. The Company will not currently seek material new investments from the proceeds of the realisation but will continue to support its existing investments to the extent required in order to optimise returns and distribute cash to shareholders when available (the "Realisation Plan"). For more information regarding Eurocastle Investment Limited and to be added to our email distribution list, please visit www.eurocastleinv.com.

FORWARD LOOKING STATEMENTS

This release contains statements that constitute forward-looking statements. Such forward-looking statements may relate to, among other things, future commitments to sell real estate and achievement of disposal targets, availability of investment and divestment opportunities, timing or certainty of completion of acquisitions and disposals, the operating performance of our investments and financing needs. Forward-looking statements are generally identifiable by use of forward-looking terminology such as "may", "will", "should", "potential", "intend", "expect", "endeavor", "seek", "anticipate", "estimate", "overestimate", "underestimate", "believe", "could", "project", "predict", "project", "continue", "plan", "forecast" or other similar words or expressions. Forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, contain projections of results of operations or of financial condition or state other forward-looking information. The Company's ability to predict results or the actual effect of future plans or strategies is limited. Although the Company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, its actual results and performance may differ materially from those set forth in the forward-looking statements. These forward-looking statements are subject to risks, uncertainties and other factors that may cause the Company's actual results in future periods to differ materially from forecasted results or stated expectations including the risks regarding Eurocastle's ability to declare dividends or achieve its targets regarding asset disposals or asset performance.

(END) Dow Jones Newswires

August 04, 2021 02:00 ET (06:00 GMT)

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