Starwood European Real E... Share Discussion Threads

[m1das_touch] 22/3/2014 16:01

Hopefully the investment manager's cautious and conservative approach will provide some protection in the event of another commercial property crash. I like the fact that they're building a well-diversified portfolio, both by property type and geography.

[jonwig] 22/3/2014 09:18

I don't see any surprises in yesterday's results. On track to meet targets on investment and dividend payments.

No gearing at holding company level is important, given up to 50% of loans are subordinated.

If there were to be another commercial property crash this would dent the NAV and payout significantly, but I'm unsure of the position regarding senior loans: would a sale be forced or a repossession and debt/equity swap be feasible? The latter would provide better opportunities!
(I imagine the answer will depend on each individual loan.)

I'm likely to add with my next ISA funds.

[m1das_touch] 24/1/2014 08:47

I'm sure you're right - somehow I can't imagine Claridges being repossessed, for example!!

[jonwig] 24/1/2014 06:59

I'm not looking for a re-rating, since this won't really gain benefit from rising property values, as it provides debt.

However, the loans will be more secure if values rise, and there seem to be mezzanine elements in some, which will no doubt be tied to property values.

The loan rates to date seem to be fixed rather than floating with LIBOR or base rates. That's a bit of downside risk if rates rise, but not as bad as property equities would be!

Senior status of the loans to date will mean the borrowers won't be keen to default and lose their prime assets!

[m1das_touch] 23/1/2014 12:56

Recently increased my own holding jonwig - very little financial press coverage and the company seems to be under the radar of many investors.

With so many REITS and other property funds trading at well above NAV and looking expensive, I think this could re-rate as the remaining cash is invested and the forward 7% yield comes to investors' attention.

[jonwig] 23/1/2014 12:30

Yes, in my ISA. Agree with your header summary, and may increase my present small holding in April.

[m1das_touch] 23/1/2014 12:03

Holding these in my SIPP for long-term growth and dividends. Any other holders?

[m1das_touch] 23/1/2014 12:02

Guernsey domiciled closed-end investment company that originates, executes and services a diversified portfolio of commercial real estate debt investments in liquid markets (office, retail, logistics, light industrial, hospitality and residential) in the UK and Continental Europe.

I see this as an interesting and relatively low-risk property play, different to a mainstream REIT in that it focuses on providing commercial loans (usually syndicated) of between 3-7 years, secured on high quality property assets.

Current loanees include the Maybourne Hotel Group in London (loans secured against luxury hotels Claridges, The Connaught and The Berkeley), Almacantar (Centre Point Tower, London), Tristan Capital Partners (retail portfolio, Finland) and Lifecare Residences Group (loan to develop a retirement village in London).

Management seem to have a very conservative approach and it's taken longer than originally anticipated to find appropriate investment opportunities, but SWEF is now around 90% invested and is committed to paying a 7% yield on original NAV once fully invested.

The managers of the fund, Starwood European Finance Partners Ltd, are an indirectly wholly-owned subsidiary of the well-respected USA-based Starwood Capital Group, which has an established history of financing these types of commercial property loans.