Eurocastle Releases Third Quarter 2023 Interim Management Statement

 
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Eurocastle Releases Third Quarter 2023 Interim Management Statement

Guernsey, 30 November 2023 -- Eurocastle Investment Limited (Euronext Amsterdam: ECT) ("Eurocastle" or the "Company") today https://www.globenewswire.com/Tracker?data=LQXPrkXNZHcj98uvgG3Ue135qU8D8qx5vqt1-IjAe9yv_Ckv8vUJ-3f2rO0Uw_LJ has released its interim management statement for the quarter ended 30 September 2023.

   -- ADJUSTED NET ASSET VALUE ("NAV")1 of EUR11.1 million, or EUR11.14 per 
      share2, up EUR0.89 per share vs. Q2 2023 mainly due to the release of 
      EUR0.9 million of reserves linked to the legacy German tax matter 
      following a partial reimbursement received in July as a result of an 
      appeal made by the Company. 
 
   -- IFRS NAV of EUR21.9 million, or EUR21.89 per share (EUR22.0 million, or 
      EUR21.99 per share as at Q2 2023). 
 
 
                                            Q3 Cash 
                           Q2 2023          Movement     Q3 FV Movement    Q3 2023 NAV 
                       ----------------  --------------  --------------  ---------------- 
                                  EUR             EUR             EUR               EUR 
                        EUR'm    p.s.    EUR'm    p.s.   EUR'm    p.s.    EUR'm    p.s. 
 
 Real Estate Funds        0.08     0.08    -          -    0.00    0.00     0.08     0.08 
Net Corporate 
 Cash(3)                 17.06    17.08   1.09     1.10  (0.10)  (0.10)    18.05    18.08 
Legacy German Tax 
 Asset                    4.82     4.83  (1,09)  (1.10)       -       -     3.73     3.73 
--------------------   -------  -------  ------  ------  ------  ------  -------  ------- 
IFRS NAV                 21.96    21.99    -          -  (0.10)  (0.10)    21.86    21.89 
====================   =======  =======  ======  ======  ======  ======  =======  ======= 
 
Additional 
 Reserves(4)           (11.73)  (11.74)    -          -    0.99    0.99  (10.74)  (10.75) 
 
 
Adjusted NAV             10.23    10.25    -          -    0.89    0.89    11.12    11.14 
====================   =======  =======  ======  ======  ======  ======  =======  ======= 
  Ordinary shares 
     outstanding           998,555                                           998,555 
 
 

As at 30 September 2023, the Company's assets comprise:

   1. EUR18.1 million, or EUR18.08 per share, of net corporate cash3 which is 
      primarily available to fund new investments under the New Investment 
      Strategy. 
 
   2. A tax asset of EUR3.7 million, or EUR3.73 per share, representing amounts 
      paid in relation to additional tax assessed against a German property 
      subsidiary. The Company is currently appealing the assessment through the 
      German fiscal court and expects the matter will eventually be resolved in 
      the Company's favour. 
 
   3. Residual interests in two legacy Italian Real Estate Fund Investments 
      with an NAV of EUR0.08 million, or EUR0.08 per share, where the 
      underlying apartments are now all sold with both funds currently in 
      liquidation. 

BUSINESS HIGHLIGHTS

   -- Legacy German Tax Matter -- In July, the Company received revised tax 
      assessments in relation to the legacy German tax matter which resulted in 
      a total reimbursement to the Company of EUR1.1 million of the EUR4.8 
      million of additional tax paid by Eurocastle in 2022 and 2023. This 
      follows an appeal by the Company against the additional tax assessed in 
      relation to a property subsidiary for the period 2008 to 2012. The 
      revised tax assessments represent a full reversal of the additional tax 
      for 2008 as well as part of the amount for 2009. The years 2013 - 2015 
      remain subject to ongoing tax audits. Prior to the appeal, the Company 
      estimated its total exposure to the tax matter, which relates to the 
      period 2008 -- 2015, at up to EUR6.5 million. and now estimates its total 
      maximum potential liability to be EUR5.6 million. Eurocastle has paid all 
      additional tax assessed to date to avoid interest charges and reserved 
      for the estimated additional potential liability in respect of the 
      2013-2015 audit. However, the Company continues to believe that none of 
      the additional tax assessed or reserved for is due. While it plans to 
      continue to hold reserves until the matter is finally resolved, 
      Eurocastle intends to pursue all available legal means to appeal the 
      findings of the German tax authorities and to be reimbursed (with accrued 
      interest) all amounts paid in connection with these tax audits. 
 
   -- Real Estate Funds --The remaining NAV for these investments of EUR0.1 
      million, or EUR0.08 per share, reflects cash currently reserved in the 
      funds that is expected to be released once the fund manager resolves 
      certain potential liabilities and liquidates each fund. 
 
   -- Additional Reserves -- The Company reduced these reserves during the 
      third quarter of the year from EUR11.7 million to EUR10.7 million, or 
      EUR10.75 per share, mainly due to the release of EUR0.9 million 
      reflecting reserves linked the legacy German tax matter. As at 30 
      September 2023, of the total Additional Reserves of EUR10.7 million, 
      EUR5.6 million related to the legacy German tax matter with the balance 
      of approximately EUR5.1 million in place to cover future costs and 
      potential liabilities while the Company pursues in parallel the New 
      Investment Strategy. 

SUBSEQUENT EVENTS TO 30 SEPTEMBER 2023

New Investment Strategy update

In mid-November 2023, Eurocastle agreed to acquire the first investment under its new strategy, being part of a boutique retail complex in an affluent part of Athens, Greece. The asset is being purchased from one of the largest Greek banks out of a distressed situation where the main leaseholder is in default. Eurocastle's strategy is to lease-up the last 20% of the building which is currently vacant and then seek an exit in the open market.

Eurocastle is acquiring the asset alongside a local partner who is anticipated to take a 20% interest in the asset. The total expected investment is approximately EUR6.3 million, of which Eurocastle's share is approximately EUR5.0 million with a closing targeted before the end of 2023, subject to certain conditions precedent.

As previously announced, Eurocastle intends to leverage the relationship of the Company's investment manager with a local partner in Greece to source investment opportunities. In parallel with executing this first investment, the Company has been underwriting a number of additional opportunities.

In order to support its new investment program, Eurocastle has been working on establishing an investment structure through which it expects to invest the majority of its current net corporate cash of over EUR18 million alongside selected external co-investors. In addition to generating attractive risk adjusted returns on its share of any investments made through the platform, Eurocastle anticipates also receiving market standard management and incentive fees from the external investors.

Income Statement for the Nine Months and Quarter ended 30 September 2023 (unaudited)

 
                                           Income              Income 
                                          Statement           Statement 
                                        9 months 2023          Q3 2023 
                                        EUR Thousands       EUR Thousands 
--------------------------------------  -------------  ----------------------- 
Portfolio Returns 
-------------------------------------- 
  Italian NPLs & Other Loans realised 
   gain                                             2                        - 
  Real Estate Funds unrealised fair 
   value movement                                (49)                        1 
--------------------------------------  -------------  ----------------------- 
Fair value movement on Italian 
 investments                                     (47)                        1 
Other income                                        -                      (2) 
Interest income                                   378                      168 
Total income                                      331                      167 
--------------------------------------  -------------  ----------------------- 
 
Operating Expenses 
-------------------------------------- 
Manager base and incentive fees                    73                       20 
Remaining operating expenses                      775                      251 
--------------------------------------  -------------  ----------------------- 
Other operating expenses                          848                      271 
--------------------------------------  -------------  ----------------------- 
Total expenses                                    848                      271 
--------------------------------------  -------------  ----------------------- 
 
(Loss) for the period                           (517)                    (104) 
EUR per share                                  (0.52)                   (0.10) 
--------------------------------------  -------------  ----------------------- 
 

Balance Sheet and Adjusted NAV Reconciliation as at 30 September 2023

 
 
                                                         Total 
                                                     EUR Thousands 
 ------------------------------------------------- 
Assets 
 Other assets                                                  150 
 Legacy German tax asset                                     3,727 
 Investments - Real Estate Funds                                83 
 Cash, cash equivalents and treasury investments: 
   Cash and cash equivalents                                14,100 
   Treasury Investments                                      4,223 
Total assets                                                22,283 
Liabilities 
 Trade and other payables                                      404 
 Manager base and incentive fees                                20 
 -------------------------------------------------  -------------- 
Total liabilities                                              424 
IFRS Net Asset Value                                        21,859 
--------------------------------------------------  -------------- 
Liquidation cash reserve                                   (5,163) 
Legacy German tax cash reserve                             (1,850) 
Legacy German tax asset reserve                            (3,727) 
Adjusted NAV                                                11,119 
Adjusted NAV (EUR per Share)                                 11.14 
--------------------------------------------------  -------------- 
 

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).

Terms not otherwise defined in this announcement shall have the meaning given to them in the Circular.

ABOUT EUROCASTLE

Eurocastle Investment Limited ("Eurocastle" or the "Company") is a publicly traded closed-ended investment company. On 8 July 2022, the Company announced the relaunch of its investment activity and is currently in the early stages of pursuing its new strategy by initially focusing on opportunistic real estate in Greece with a plan to expand across Southern Europe. 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", "endeavour", "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 2019, the Adjusted NAV as at 30 September 2023 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 September 2023.

(2) Per share calculations for Eurocastle throughout this document are based on 998,555 shares, unless otherwise stated.

(3) Reflects corporate cash and treasury investments net of accrued liabilities and other assets. Treasury investments mainly comprise notice accounts and short term Italian Government Bonds.

(4) Reserves that were put in place when the Company realised the majority of its investment assets in 2019 in order for the Company to continue in operation and fund its future costs and potential liabilities. These reserves are not accounted for under IFRS.

(END) Dow Jones Newswires

November 30, 2023 02:00 ET (07:00 GMT)

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