Starwood European Real E... Share Discussion Threads

[makinbuks] 25/10/2024 09:07

SWEF recovering some composure which is nice to see. Still good value. 6% yield and at least 8% discount to ultimate NAV. Possibly 15% if all the loans were repaid in full (105p). Just my estimates DYOR

Thanks Sky for posting the link here and on the wind up thread. I just assumed everyone would look it up or would have already read it in the morning

[skyship] 22/10/2024 10:31

This is the RNS to which Makinbuks refers:

[makinbuks] 21/10/2024 11:55

Not such good news this morning, but after the 5% fall a bargain again against a revised 99p NAV. Collect a 6% yield in the meantime

[edwardt] 10/10/2024 20:21

Regulation is dire

[makinbuks] 10/10/2024 09:46

ii won't allow me to reinvest the proceeds of the redemption. Here's what they say:

"Unfortunately, we are unable to set up ‘SWEF’ for purchases as we have not received a ' Value For Money ' assessment from the provider.



This is due to a recent update on consumer duty, and Fund managers and providers of ETFs have had to confirm if their ETF/fund is good value for money and justify their charges by completing a 'Value for Money Assessment' (VFMA). It is the responsibility of the fund manager/ETF provider to do this, and without this information, we cannot allow it to be purchased on our platform."

[makinbuks] 09/9/2024 11:12

Half Year Report out

NAV 104.92, discount 11%, yield 5.9%
£8.8m lent this year
£0.6m interest capitalised (trivial, but a concern)

"We do not expect to see significant movements in NAV as the Group’s loans are held at amortised cost, Euro exposures are hedged and credit risk is proactively managed."

"The Board, the Investment Manager and Adviser continue to believe that the shares represent attractive value at this level."

As do I!

[stemis] 25/7/2024 08:41

It does in the context in which I was discussing it, which was the recovery required to underpin the current share price. Assuming all stage 1 loans repay, then to recover 94p a share (the current share price) 43% of the value of stage 2 loans would need to repay. So even in the unlikely event that the office portfolio repaid zero, the required recovery would still be achieved by the repayment of 73% of the other two stage 2 loans.

[williamcooper104] 25/7/2024 02:41

Yes but the equity behind the loans aren't cross collateralised so the equity in a good loan doesn't make good your losses in a bad loan

[makinbuks] 24/7/2024 17:40

Just another set of stunningly dull, "does what its supposed to do" set of results. The absolute tragedy of this fund being wound up is emphasised by the market commentary. Why this didn't trade close to NAV throughout its life I cannot fathom. Wealth managers should be ashamed of themselves.

Good work Stemis, I do agree that these average figures are irrelevant. The office mezzanine is the one to worry about. Less concerned about hotels and life sciences

[hindsight] 24/7/2024 09:36

I do not consider that swings and roundabouts, unless prices completely collapse across the board

[stemis] 24/7/2024 09:13

But it's swings and roundabouts. If the office loans have higher than the average, the others must have lower...

[williamcooper104] 24/7/2024 08:59

Be careful of average valuations It's not the average that produces the lossesThe office loans have materially higher leverage from valuation falls

[stemis] 24/7/2024 08:54

Current net asset value, prior to redemption, is £283.5m. Current market cap, at 94p is £254.0m. Difference of £29.5m represents 57% of Stage 2 loans*

By a process of elimination I believe these loans comprise

Hotel, North Berwick - £15.0m (due in next 12 months)
Life Science, UK - £15.5m (due in next 12 months)
Office Portfolio, Ireland - £21.3m (due in 1-2 years)

*If a significant increase in credit risk since initial recognition is identified, the financial instrument is moved to Stage 2 but is not yet deemed to be credit impaired. The average loan to value of these exposures is 67 per cent. Typically, where sponsors are willing to inject additional equity to partially pay down the loans and support their business plan execution, then the Group will grant some temporary financial covenant headroom. Otherwise, sponsors are running sale processes to sell assets and repay their loans.

Based on an average LTV of 67%, these assets must have a valuation of £77.7m. To recover 43% of our loans (which is implicit in the current market cap) they'd need to sell for £22.3m i.e. 29% of valuation.

[stemis] 24/7/2024 08:14

£80m redemption, 28.22% of shares in issue, at 104.92p

[makinbuks] 10/7/2024 12:39

NAV still £1.04, cash in excess of remaining commitments c.£30m so we should see another £25m distribution at NAV announced later this month

Will those commitments ever be drawn? Appears unlikely given their vintage. Surely they would like to negotiate their way out of them or pass them to another fund??

[williamcooper104] 19/3/2024 14:14

I did buy some GABI when the discount was too compelling but yes far more comfortable with Starwood 1 Starwood have decades of real estate lending experience and when they moved over to the UK recruited some (I might have said painful when I was borrowing from them) senior UK real estate bankers; ones who didn't blow themselves totally up in the GFC 2 There has been connected party loans at GABI - and that's a big red flag 3 GABI principles have infra investment experience they weren't real estate bankers - plus for development loans you really need real estate experience

[makinbuks] 19/3/2024 13:41

Until the write off announced today their record was 100%, albeit the fund was short lived. The LTV even on the cat 2's is still sub 80% (if you believe the V of course)

[ammons] 19/3/2024 11:41

Interesting Wc104. Do you think the incestuous sounding related party loans are somehow less recoverable by GABI?

[williamcooper104] 19/3/2024 11:09

Thanks; will check it outSeems this is a lesser discount/return than GABI but I've a lot more confidence in Starwoods underwriting than GABIs (especially as the later has at least 5% of NAV in connected party loans to their managers)

[makinbuks] 19/3/2024 09:57

Positive news today: stage three loan repaid with a small release of provision, significant repayments on stage two loans, fifth distribution announced, NAV still £1.04

I make it the stage two loans are now around £65m

[makinbuks] 25/1/2024 11:04

Update published today:

Dividend 6p , 0.5p higher than forecast, very nice with over 90% now variable rate with floors. 5.5p reaffirmed for 2024 (yield 6%) and may be beaten if rates stay higher for longer (UK and US inflation both increased MOM in Dec)

Disappointingly, the Spanish retail asset sale did not go through and the provision was doubled but they sound very confident of Q1 24 completion.

Not material to the NAV which remains above £1.04 (discount 10%) My expectation is for them to return 45% of NAV at that level in 2024

Got to keep an eye of the 4 stage 2 loans, with avg LTV 77% representing 31% of NAV. A year ago there were only two loans in this category but it had risen to 5 earlier in the year

Summary, holding for an expected 10% return this year with 45% of capital repaid. Limited downside risk

[makinbuks] 06/1/2024 10:00

The early December rise would have been down to Schroders building an 8% stake. Clearly they see value

[makinbuks] 06/1/2024 09:59

From the half year report

"One asset moved from Stage 2 to Stage 3 and a small credit loss of £1.7 million was recognised – this represents 0.5% of the funded portfolio and is the result of the Group prudently applying sensitivities to net proceeds from an agreed asset sale currently progressing through exclusivity"

Of course since then the second and third distributions have occurred so it will be greater in % terms

[edwardt] 05/1/2024 12:29

How large is the impaired asset? Ie what percentage of nav?

[makinbuks] 19/12/2023 12:49

Nice rise post distribution