Eurocastle Releases Fourth Quarter And Year End 2020 Financial Results

 
TIDMECT 
 
   Contact: 
 
 
   Oak Fund Services (Guernsey) Limited 
 
   Company Administrator 
 
   Attn:  Mark Woodall 
 
   Tel:  [phone] 
 
 
   Eurocastle Releases Fourth Quarter and Year End 2020 Financial Results 
 
   SHYSHY 
 
   Guernsey, 5 March 2021 -- Eurocastle Investment Limited (Euronext 
Amsterdam: ECT) today has released its annual report for the year ended 
31 December 2020. 
 
   Adjusted Net Asset Value ("NAV") of EUR16.7 million(1) , or EUR9.00 per 
share(2) up EUR1.54 per share vs. EUR7.46 per share at Q3 2020 (up 
EUR0.68 per share vs. EUR8.32 per share at YE 2019) due to: 
 
 
   1. Valuation movements: 
 
          -- EUR0.20 per share, or 4%, increase in Q4 2020 (EUR1.03 per share3 
             decrease for the FY 2020) on the remaining three real estate fund 
             investments. 
 
          -- EUR0.02 per share, or 4%, increase in Q4 2020 (EUR0.05 per share 
             increase for the FY 2020) on the remaining three NPL and other 
             loan interests. 
 
   2. Positive reserve and legacy movements of EUR1.32 per share in Q4 2020 
      (EUR1.66 per share increase for the FY 2020) 
 
 
   IFRS NAV of EUR32.9 million, or EUR17.72 per share 
 
   2020 Capital Distribution of EUR1.0 million, or EUR0.54 per share 
declared on 4 March 2021 and to be paid on 30 March 2021 to shareholders 
of record at close of business on 11 March 2021 with an ex-dividend date 
of 10 March 2021. This distribution is being treated as a return of 
capital because there are no current year or carry-forward profits 
available at the Company. It will be reflected in the "Share Capital" 
column in the Statement of Changes in Equity in the Company's financial 
statements. 
 
 
 
   The tables below summarise the Adjusted NAV by segment: 
 
 
 
 
 
                 YE 2020 NAV          YE 2019 NAV        Q3 2020 NAV 
             -------------------  ------------------  ------------------ 
                EUR      EUR per    EUR     EUR per     EUR     EUR per 
              million     share   million    share    million    share 
Real Estate 
 Funds              7.4     4.01      13.9      7.52       8.5      4.58 
Italian 
 NPLs & 
 Other 
 Loans              1.2     0.67       1.2      0.67       1.2      0.67 
Net 
 Corporate 
 Cash(4)            8.0     4.32       0.3      0.13       4.1      2.21 
             ----------  -------                      --------  -------- 
Adjusted 
 NAV               16.7     9.00      15.4      8.32      13.8      7.46 
===========  ==========  =======  ========  ========  ========  ======== 
 
 
 
   The Company's current assets comprise: 
 
 
   1. Interests in two real estate redevelopment funds where construction is 
      fully completed. The units are in the process of being sold but 
      encountering delays due to the COVID-19 outbreak. Both developments offer 
      luxury residential apartments with high specification furnishings in 
      Rome. 
 
   2. Interest in a public fund which is in the process of being liquidated and 
      which recently declared its last expected material distribution of EUR0.4 
      million to be paid to Eurocastle on 10 March 2021. 
 
   3. Residual minority interests in three predominantly secured NPL & Other 
      Loan pools. 
 
   4. Net corporate cash of EUR8.0 million, comprising corporate cash net of 
      liabilities and additional reserves. 
 
 
 
 
   2020 BUSINESS HIGHLIGHTS 
 
   Overview in light of COVID-19 
 
   The Company started 2020 having successfully executed on the first and 
largest part of its Realisation Plan by selling its NPL portfolio and 
tendering its stake in doValue, via a share for share tender. As part of 
this process the Company set aside Additional Reserves determined by the 
Board of Directors in order to take into account anticipated future 
costs and potential liabilities. 
 
   These steps left the Company well capitalised and in a strong position 
to weather the extraordinary circumstances that have followed the 
 
   outbreak of COVID-19. During the year, the Company reviewed its 
underlying cash flow models and adjusted them accordingly by applying 
haircuts and extending out the cash flows of its remaining investments 
to take into account the anticipated impact of COVID-19, with the 
resultant impact reflected in the valuation of the Company's assets at 
the end of YE 2020. 
 
   Investment Realisations & Highlights 
 
   COVID-19 has had an extraordinary impact across all sectors of the 
economy. The Company's move to realise the majority of its assets in YE 
2019 and its prudent management of cash reserves have left the Company 
well placed to maximize the value of its remaining assets. This has been 
evidenced in their performance during 2020 where the Company achieved 
the following milestones: 
 
 
   -- During the year, the Company realised EUR4.7 million from its investments, 
      of which EUR4.6 million came from its Real Estate Funds (33% of YE 2019 
      NAV after asset specific reserves) and EUR0.1 million from its minority 
      NPL and Other Loan holdings (8% of YE 2019 NAV). 
 
   -- RE Redevelopment Funds - REFI II & REFI V: Closed or collected offers 
      under contract on 50% of the remaining real estate units available for 
      sale as at 1 January 2020 in Real Estate Fund Investment II and 47% in 
      Real Estate Fund Investment V, with a significant portion of this 
      activity occurring in H2 2020, after the initial lockdown. Assuming that 
      all these offers close, only 13% of units in one building in Real Estate 
      Fund Investment II (with the second building already fully sold) and 33% 
      of the units in Real Estate Fund Investment V will remain to be sold. The 
      renewed interest in the apartments that was evidenced after the end of 
      the first lockdown in Italy in May 2020 has continued, reflecting the 
      pent-up demand in the market for quality, semi-central residential real 
      estate in Rome. 
 
   -- REFI I: Following the sale of all of the assets in Real Estate Fund 
      Investment I in 2019, the Company received EUR2.2 million, or 89% of its 
      YE 2019 NAV, during 2020. The fund is in the process of being liquidated 
      with its last expected material distribution of EUR0.4 million to be paid 
      to Eurocastle on 10 March 2021, EUR0.1 million above Eurocastle's YE 2020 
      carrying value. 
 
   -- Italian NPLs & Other Loans: The residual NPL & Other Loan interests, 
      which are predominantly secured, have continued to generate cash proceeds, 
      in spite of the turmoil created by COVID-19. During the year the pools 
      generated and distributed EUR0.1 million, or 8% of YE 2019 NAV. 
 
   -- Legacy Realisations: The Company successfully negotiated the positive 
      resolution of a claim relating to its legacy debt business. Given the 
      uncertainty ascribed to the outcome of the claim, the Company did not 
      attribute any value in its accounts other than reserving for its share of 
      the associated costs. The Company received approximately EUR2.2 million 
      and after taking into account costs previously reserved for, the net 
      positive impact to Eurocastle's Adjusted Net Asset Value is EUR2.3 
      million. 
 
   -- Additional Reserves: The Company reduced its Additional Reserves 
      (excluding asset specific reserves) from EUR18.7m to EUR16.2m during the 
      financial year. EUR1.8m of this reduction relates to reserves being 
      utilised, in line with anticipated costs, along with EUR0.7m of net 
      reserve savings having been achieved in 2020. 
 
 
 
 
   SUBSEQUENT EVENTS TO 31 DECEMBER 2020 
 
 
   -- The market turmoil and global distress caused by the COVID-19 pandemic 
      has created a number of potentially attractive investment opportunities. 
      In light of this and the Company's parallel efforts to expedite the 
      resolution of certain key reserves, the Board has decided to undertake a 
      review of the Company's strategic options, including use of available 
      capital. 
 
   -- The Company's current strategy was approved by shareholders as part of 
      the Realisation Plan announced in November 2019. The Board presently 
      anticipates that the outcome of the current review will be announced to 
      shareholders during the second half of 2021. 
 
 
 
 
Income Statement for the Full Year and Fourth Quarter 
 2020                                                    FY 2020     Q4 2020 
                                                           EUR         EUR 
                                                        Thousands   Thousands 
------------------------------------------------------  ----------  ---------- 
Portfolio Returns 
------------------------------------------------------ 
    Italian NPLs & Other Loans                                  99          33 
    Real Estate Funds                                      (2,233)         371 
------------------------------------------------------  ----------  ---------- 
Fair value movement on Italian investments                 (2,134)         404 
Fair value movements on residual Legacy entities             2,501       2,294 
Other income                                                    15           - 
Gains on foreign currency translation                            2           3 
                                                                    ---------- 
Total gain                                                     384       2,701 
------------------------------------------------------  ----------  ---------- 
 
Operating Expenses 
------------------------------------------------------ 
Interest expense                                                43           - 
  Manager base and incentive fees                              111          37 
  Remaining operating expenses                               1,749         316 
------------------------------------------------------  ----------  ---------- 
Other Operating expenses                                     1,860         353 

------------------------------------------------------  ----------  ---------- 
Total expenses                                               1,903         353 
------------------------------------------------------  ----------  ---------- 
 
Net (loss) / profit for the period                         (1,519)       2,348 
EUR per share                                               (0.82)        1.27 
------------------------------------------------------  ----------  ---------- 
 
 
 
 
 
 
 
  Balance Sheet and Adjusted NAV Reconciliation as at    Italian Investments      Corporate        Total 
  31 December 2020                                          EUR Thousands       EUR Thousands   EUR Thousands 
------------------------------------------------------   -------------------  ---------------  -------------- 
Assets 
Cash and cash equivalents                                                  -           25,341          25,341 
Other assets                                                               -              119             119 
Investments: 
  Italian NPLs & Other Loans                                           1,248                -           1,248 
  Real Estate Funds                                                    7,435                -           7,435 
Total assets                                                           8,683           25,460          34,143 
 
Liabilities 
Trade and other payables                                                   -            1,170           1,170 
Manager base and incentive fees                                            -              140             140 
Total liabilities                                                          -            1,274           1,274 
 
IFRS NAV                                                               8,683           24,186          32,869 
-------------------------------------------------------  -------------------  ---------------  -------------- 
 
Additional Reserves(5)                                                     -         (16,183)        (16,183) 
-------------------------------------------------------  -------------------  ---------------  -------------- 
Adjusted NAV                                                           8,683            8,003          16,686 
Adjusted NAV (EUR per share)(6)                                         4.68             4.32            9.00 
-------------------------------------------------------  -------------------  ---------------  -------------- 
 
 
   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 ( 
https://www.globenewswire.com/Tracker?data=D5LzBIXn_BiYtgb_D6fINBmavu8DO_th7k0OkG7DCaamE-0AazzSpPO_jS2lxPK7SyUV900OIv8GurjPWRRYoMhBktDEajYQz7RTY79ptCc= 
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 
https://www.globenewswire.com/Tracker?data=D5LzBIXn_BiYtgb_D6fINBmavu8DO_th7k0OkG7DCaZuJgXrUSQLBz6UW3kbsQG0AKkEfJc4y5x4FHTfLV5sYh9BO5mR3PfWzLtWw4a85ec= 
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. 
 
   (1) In light of the Realisation Plan announced in November 2019, the 
Adjusted NAV as at 31 December 2020 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 31 December 2020. 
 
   (2) Per share calculations for Eurocastle throughout this document are 
based on 1.9 million shares. 
 
   (3) FY 2020 decrease of EUR1.03 per share, includes fair value decrease 
on real estate fund investments of EUR1.21 per share net of a release of 
additional asset specific reserves of EUR0.18 per share. 
 
   (4) Reflects corporate cash net of liabilities and additional reserves. 
 
   (5) In light of the Realisation Plan, the Adjusted NAV as at 31 December 
2020 reflects the additional reserves for future costs and potential 
liabilities of EUR16.2 million which have not been accounted for under 
the IFRS NAV. 
 
   (6) Amounts per share calculated on 1.9 million outstanding ordinary 
shares. 
 
 
 
 

(END) Dow Jones Newswires

March 05, 2021 02:00 ET (07:00 GMT)

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