SWEF : Quarterly Factsheet Publication

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 Starwood European Real Estate Finance Ltd (SWEF) 
SWEF : Quarterly Factsheet Publication 
 
26-Jul-2017 / 07:00 GMT/BST 
Dissemination of a Regulatory Announcement that contains inside information 
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group. 
The issuer is solely responsible for the content of this announcement. 
 
26 July 2017 
 
 NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, IN WHOLE OR IN PART, DIRECTLY 
       OR INDIRECTLY, TO U.S. PERSONS OR IN, INTO OR FROM THE UNITED STATES, 
     AUSTRALIA, CANADA, SOUTH AFRICA, JAPAN, NEW ZEALAND OR ANY JURISDICTION 
         WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR 
           REGULATIONS OF SUCH JURISDICTION 
 
Starwood European Real Estate Finance Limited: Quarterly Factsheet 
Publication 
 
Starwood European Real Estate Finance Limited (the "Company") announces that 
 the factsheet for the second quarter ended on 30 June 2017 is available at: 
 
           www.starwoodeuropeanfinance.com [1] 
 
           Extracted text of the commentary is set out below: 
 
           "Investment Portfolio at 30 June 2017 
 
  As at 30 June 2017, the Group had 15 investments and commitments of GBP396.1 
           million as follows: 
 
            Transaction Sterling equivalent Sterling equivalent 
                                balance (1) unfunded commitment 
                                                            (1) 
   Centre Point, London              GBP45.0m                   - 
   5 Star Hotel, London              GBP13.0m                   - 
  Industrial Portfolio,              GBP25.5m                   - 
                     UK 
          Hospitals, UK              GBP25.0m                   - 
 Hotel, Channel Islands              GBP26.9m                   - 
   Varde Partners mixed              GBP17.0m                   - 
          portfolio, UK 
 Mixed use development,               GBP8.5m               GBP5.4m 
          South East UK 
  Regional Budget Hotel              GBP75.0m                   - 
          Portfolio, UK 
   Total Sterling Loans             GBP235.9m               GBP5.4m 
    Office, Netherlands              GBP12.2m                   - 
 Residential Portfolio,               GBP5.3m                   - 
          Cork, Ireland 
 Residential Portfolio,               GBP6.8m                   - 
        Dublin, Ireland 
     Logistics, Dublin,              GBP13.1m                   - 
                Ireland 
Hotel, Barcelona, Spain              GBP40.5m                   - 
School, Dublin, Ireland              GBP16.6m                   - 
  Industrial Portfolio,              GBP60.3m                   - 
         Eastern Europe 
       Total Euro Loans             GBP152.8m                   - 
        Total Portfolio             GBP390.7m               GBP5.4m 
 
(1) Euro balances translated to sterling at 30 June 2017 exchange rates. 
 
           Dividend 
 
        On 25 July 2017 the Directors declared a dividend of 1.625 pence per 
 Ordinary Share (annualised 6.5 pence per Ordinary Share) in relation to the 
           second quarter of 2017. 
 
           Portfolio activity 
 
 As at 30 June 2017, the average maturity of the Group's GBP390.7 million loan 
     book was 3.1 years. The Group has GBP2.4 million of cash and GBP7.5 million 
 drawn on the revolving credit facility, with GBP5.4 million of commitments to 
   fund. The gross annualised total return of the invested loan portfolio is 
           7.9 per cent. 
 
    The following portfolio activity occurred in the second quarter of 2017: 
 
Industrial Portfolio, Central and Eastern Europe: On 31 May 2017 the Group 
funded the remaining commitment of EUR42.0 million for a portfolio of 
industrial assets located across Central and Eastern Europe. 
 
       Mixed use development, South East: The Group has agreed to a facility 
      amendment incorporating a modest downsize of the undrawn loan with the 
        Group's total commitment reducing from GBP15 million to GBP13.9 million. 
 
         Center Parcs, UK: The Group received full repayment of GBP9.5 million 
   (notional) in relation to the Center Parcs bonds at a redemption price of 
    104.8%. The repayment premium is equivalent to approximately 8 months of 
           make-whole interest. 
 
 Other repayments to 30 June 2017: During June, the Group also received full 
       repayment of the Retail & Residential Portfolio, Ireland and received 
   amortisation of GBP2.3 million on the Industrial Portfolio, UK loan. A loan 
 repayment of GBP4.0 million was also received on the Industrial Portfolio, UK 
     loan in May 2017 as the borrower sold properties resulting in mandatory 
           repayments of the loan. 
 
   The Company constantly seeks to minimise cash drag and attempts to manage 
       repayment events by tactically using the GBP50 million revolving credit 
     facility available to it. The proceeds of these repayments were used to 
   repay GBP14.0 million of drawings on the revolving credit facility, leaving 
        GBP7.5 million drawn on the revolving credit facility at 30 June 2017. 
 
Since the quarter end, on 18 July 2017, the Group received full repayment of 
      the Office, Netherlands loan following a successful refinancing of the 
 property by the owner. The GBP12.2 million repayment proceeds will be used to 
  repay the remaining GBP7.5 million balance on the revolving credit facility. 
       This facility will then be undrawn and available for new investments. 
 
           Pipeline 
 
We continue to see similar themes to those seen over the last few quarters. 
Geographically we continue to focus on the UK and Spain in particular. We 
are being patient with development financing opportunities. While these 
loans offer good risk adjusted return opportunities, they also consume 
larger amounts of time and resources to underwrite, execute and manage 
post-closing. We are also finding that development financing processes are 
taking longer to progress from the initial borrower's financing requests to 
execution and are often subject to significant scope changes during the 
process leading to less execution certainty. We expect to see continuing 
acquisition activity in alternative real estate asset classes which should 
yield opportunities with early stage hospitality, student accommodation and 
leisure asset financings currently on our target pipeline. One loan for 
approximately GBP20 million is currently in documentation and we would expect 
to close this loan in the third quarter which would lead to the 
re-investment of the remaining available cash from recent repayments. 
 
           Market Commentary 
 
A number of property finance research pieces focussed on the UK were 
released during the quarter. These include the de Montfort University 
lending survey, Savills Financing Property 2017 presentation, Laxfield 
Capital's 8th Property Finance Barometer and a new piece of research: 
Capita's inaugural Real Estate Finance Market Trend Analysis. 
 
The De Montfort University lending survey is the leading commercial property 
financing research piece on the UK market. The semi-annual report provides 
insights into the opaque lending market with hard data sourced from many 
market participants including the Group. The year end 2016 survey was 
released at the beginning of May and reports that total year end 2016 debt 
secured by commercial real estate in the UK is relatively unchanged at 
GBP208.7 billion, down 1.5 per cent year on year. The Brexit effect can be 
seen in a number of the outputs, with average loan-to values ("LTVs") down, 
and average margins up slightly; but the largest effect has been a reduced 
acquisition financing volume as transactions numbers fell. Average LTVs for 
prime office lending are down 5 per cent, margins are up 15 basis points 
between year-end 2015 and year-end 2016 and new loan origination is down 17 
per cent to GBP44.5 billion. A larger proportion of activity, at 61 per cent 
of the total is refinancing compared to 44 per cent in 2015. 
 
The proportion of loans made by UK Banks was higher at 47 per cent this year 
versus 34 per cent last year. This is likely related to the larger 
proportion of refinancings versus new acquisitions, where incumbent UK banks 
benefit from existing relationships within the lending book. Syndications 
are down from GBP18 billion to GBP14 billion, reflecting a lack of paper rather 
than a lack of appetite. Lending volumes continue to be dominated by a small 
number of players - 62 per cent of new loan origination by volume came from 
only 12 institutions (six UK banks, two German banks, one North American 
bank, one insurance company and two other international banks). Only UK 
banks and non-bank lenders reported larger balance sheets at year end 2016 
than 2015. In particular origination volume by US banks fell 56 per cent and 
insurance companies fell 46 per cent (reflecting reduced larger transaction 
activity). Non-bank lenders continue to take a market share of around 10 per 
cent of the market. 76 per cent of mezzanine / junior debt is held by 
non-bank lenders with a further 18 per cent held by insurance companies and 
only 6 per cent held by banks. 
 
The Savills report repeats many of the findings from the De Montfort Survey, 
which is published a month earlier, adding some further observations in 
their Financing Property 2017 report. Savills write that "Property has 
rarely been so financeable" comparing the UK All Property Equivalent Yield 
and average all in cost of money and showing the all in cost of real estate 
debt is at historical lows and the spread between property yield and 
financing cost being at historical highs. Savills also note that development 
finance is not growing significantly and is at less than half the levels of 
2007 and 2008. This theme is in line with what we are seeing in the market 
but we also see a risk that as an increasing amount of development financing 

is being provided by alternative lenders (especially on the larger tickets), 
this could be missed from survey data, as these lenders are less likely to 
report their lending to the survey. 
 
Both Savills' and Capita's reports highlight the general desire of the 
lending community to do new business. Savills quote 81 per cent of lenders 
expressing a desire to increase their lending while Capita say that 52 per 
cent of lenders are looking to grow their lending teams and 71 per cent are 
looking to grow their lending book over the next year. Both highlight the 
variety of different lender types in the market and there is such a 
diversity that Capita divide lenders into twelve separate categories. 
 
Capita's report was released after the general election: interestingly they 
see very little macro nervousness among lenders despite uncertainties from 
Brexit and the recent general election. Evidence of the market shrugging off 
Brexit uncertainties for prime London properties can be seen in lower 
margins being achieved on recent larger London financings. For example, 
according to Debtwire the "Cheesegrater" (122 Leadenhall Street) financing 
for CC Land was priced at Libor+ 150bps and, also according to Debtwire, 
London and Regional have refinanced 55 Baker Street at 175bps over Libor for 
the 60 per cent LTV senior loan and 450bps over Libor for the 60-70 per cent 
LTV junior loan. This represents some of the lowest post global financial 
crisis mezzanine pricing we have seen in the UK. 
 
The challenge to obtain UK development financing can be seen in the results 
of the Laxfield survey which shows that borrowers' development loan margin 
expectations are up 21 per cent in the 6 month period ending 31 March 2017 
versus the previous six month period. This appears to be an issue which is 
affecting the UK specifically and we continue to see much stronger 
availability of development financing in most other countries around Europe. 
Laxfield report the six months ending 31 March 2017 was the second slowest 
by volume after the preceding six months, with volumes of UK commercial 
property financing requests down by 20 per cent on the same period last year 
from GBP11.8 billion to GBP9.5 billion. At the same time the number of 
financings reported was up from 162 to 173 so we are seeing a higher number 
of smaller deals make up a lower overall volume. The De Montfort data backs 
this up: average loan size fell considerably between 2015 and 2016 with over 
50 per cent of loans being in the GBP100-500 million range in 2015 and just 8 
per cent in 2016. Laxfield also report borrower expectations on margin for 
most LTV points were up in this period. 
 
Share Price / NAV at 30 June 2017 
 
Share price (p)     108.25 
NAV (p)             101.89 
Premium/ (discount) 6.2% 
Dividend yield      6.0% 
Market cap          GBP406.0 m 
 
Key Portfolio Statistics at 30 June 2017 
 
Number of investments                                         15 
Percentage of currently invested portfolio in floating     73.2% 
rate loans (1) 
Invested Loan Portfolio annualised total return (2)         7.9% 
Weighted average portfolio LTV - to Group first GBP (3)      17.8% 
Weighted average portfolio LTV - to Group last GBP (3)       63.9% 
Average loan term (stated maturity at inception)       4.4 years 
Average remaining loan term                            3.1 years 
Net Asset Value                                          GBP382.1m 
Amount drawn under Revolving Credit Facility              -GBP7.5m 
(excluding accrued interest) 
Portfolio value (including accrued income)               GBP393.4m 
Cash                                                       GBP2.4m 
Other net assets/ (liabilities) (including hedges)        -GBP6.2m 
 
(1) Calculated on loans drawn at the reporting date using the exchange rates 
           applicable when the loans were funded. 
 
      (2) Calculated on amounts outstanding at the reporting date, excluding 
   undrawn commitments, and assuming all drawn loans are outstanding for the 
  full contractual term. Twelve of the loans are floating rate (partially or 
  in whole and some with floors) and returns are based on an assumed profile 
    for future interbank rates but the actual rate received may be higher or 
lower. Calculated only on amounts funded at the reporting date and excluding 
        committed amounts and cash un-invested. The calculation excludes the 
           origination fee payable to the Investment Manager. 
 
(3) LTV to Group last GBP means the percentage which the total loan commitment 
      less any amortisation received to date (when aggregated with any other 
     indebtedness ranking alongside and/or senior to it) bears to the market 
        value determined by the last formal lender valuation received by the 
reporting date. LTV to first Group GBP means the starting point of the loan to 
         value range of the loan commitments (when aggregated with any other 
     indebtedness ranking senior to it). For Centre Point, the Irish School, 
        Dublin and the mixed use development, south east UK, the calculation 
 includes the total facility available and is calculated against the assumed 
           market value on completion of the project. 
 
        Remaining years to Value of loans          % of invested 
     contractual maturity*                             portfolio 
              0 to 1 years         GBP51.1m                  13.1% 
              1 to 2 years         GBP37.7m                   9.6% 
              2 to 3 years        GBP121.4m                  31.1% 
              3 to 5 years        GBP155.5m                  39.8% 
             5 to 10 years         GBP25.0m                   6.4% 
 
  *excludes any permitted extensions. Note that borrowers may elect to repay 
           loans before contractual maturity. 
 
              Country % of invested assets 
UK - Regional England                 40.7 
  UK - Central London                 13.5 
              Hungary                 12.6 
                Spain                 10.4 
  Republic of Ireland                 10.0 
      Channel Islands                  7.0 
          Netherlands                  3.0 
       Czech Republic                  2.8 
 
              Sector % of invested assets 
         Hospitality                 40.6 
    Light Industrial                 22.8 
Residential for sale                 10.9 
          Healthcare                  6.5 
              Retail                  5.2 
           Education                  4.2 
              Office                  3.9 
           Logistics                  3.1 
Residential for rent                  2.7 
               Other                  0.1 
 
  Loan type % of invested assets 
Whole loans                 66.3 
  Mezzanine                 33.7 
 
Loan type % of invested assets* 
 Sterling                  61.2 
     Euro                  38.8 
 
*the currency split refers to the underlying loan currency, however the 
capital on all non-sterling exposure is hedged back to sterling." 
 
For further information, please contact: 
 
Robert Peel 
 
Fidante Capital 
 
T: [phone] 
 
Duncan MacPherson 
 
Starwood Capital 
 
T [phone] 
 
Notes: 
 
      Starwood European Real Estate Finance Limited is an investment company 
   listed on the main market of the London Stock Exchange with an investment 
  objective to provide Shareholders with regular dividends and an attractive 
         total return while limiting downside risk, through the origination, 
     execution, acquisition and servicing of a diversified portfolio of real 
   estate debt investments in the UK and the wider European Union's internal 
           market. www.starwoodeuropeanfinance.com [1]. 
 
  The Company is the largest London-listed vehicle to provide investors with 
           pure play exposure to real estate lending. 
 
The Group's assets are managed by Starwood European Finance Partners 
Limited, an indirect wholly-owned subsidiary of the Starwood Capital Group. 
 
Language:      English 
ISIN:          GG00B79WC100 
Category Code: MSCM 
TIDM:          SWEF 
LEI Code:      5493004YMVUQ9Z7JGZ50 
Sequence No.:  4458 
 
End of Announcement EQS News Service 
 
595527 26-Jul-2017 
 
 
1: http://public-cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=becc5c83790358f02808a7970e9d8d13&application_id=595527&site_id=vwd_london&application_name=news 
 

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July 26, 2017 02:01 ET (06:01 GMT)