SWEF: Proposed placing of new ordinary shares

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Starwood European Real Estate Finance Ltd (SWEF) 
SWEF: Proposed placing of new ordinary shares 
 
07-May-2019 / 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. 
 
 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 
 
  The information contained in this announcement may constitute inside 
  information for the purpose of the Market Abuse Regulation (EU) no. 
  596/2014. The person responsible for the release of this announcement on 
  behalf of the Company is Apex Fund and Corporate Services (Guernsey) 
  Limited. 
 
 Starwood European Real Estate Finance Limited (the "Company") 
 
 Proposed placing of new ordinary shares 
 
The Board of Directors of the Company (the "Board") is pleased to announce a 
  placing of new ordinary shares (the "Placing" and the "Placing Shares" 
 respectively"). The Placing will target gross proceeds of approximately GBP40 
 million by way of a non pre-emptive issue of Placing Shares at 104.75 pence 
  per Placing Share (the "Placing Price"). 
 
  Highlights 
 
  · Placing targeting 38,200,000 Placing Shares at 104.75 pence per Placing 
  Share, to be undertaken by way of a non pre-emptive placing under the 
  Company's existing shareholder authorities 
 
  · The Company targets paying quarterly a dividend of 6.5 pence per 
  Ordinary Share per annum. The Placing Shares issued under the Placing will 
  not qualify for the dividend declared on 24 April 2019 in respect of the 
  quarter ended 31 March 2019, which had an ex-dividend date of 2 May 2019. 
  However, they will qualify for the dividend relating to the quarter ended 
  30 June 2019 and in all other respects will rank pari passu with the 
  existing Ordinary Shares 
 
  · On 3 May 2019, the Company announced an unaudited cum-dividend net asset 
  value as at 30 April 2019 of 103.65 pence per existing Ordinary Share in 
  the capital of the Company ("Existing Ordinary Shares"). Accordingly, the 
  adjusted unaudited net asset value, adjusted to exclude the dividend 
  declared on 24 April 2019, was 102.02 pence per Existing Ordinary Shares 
  as at 30 April 2019 (the "Ex-dividend NAV") 
 
  · The Placing Price represents a discount of 1.6 per cent. to the closing 
  share price of 106.5 pence per Existing Ordinary Share on 3 May 2019 
  (being the last business day prior to the announcement of the Placing) and 
  a premium of 2.7 per cent. to the Ex-dividend NAV as at 30 April 2019 of 
  102.02 pence per Existing Ordinary Share 
 
  · As at 3 May 2019, the Company is substantially fully invested with 
  drawings of GBP31.6 million (net of cash) on its GBP114 million of credit 
  facilities and GBP33.6 million of unfunded commitments 
 
  · The Company maintains a strong pipeline of potential new investments. 
  Near term opportunities in the pipeline are consistent with previous 
  investment themes and are spread across both senior and subordinated debt 
  and a diverse geographic profile 
 
  · The Company intends to use the proceeds of the Placing to repay its 
  drawings under its credit facilities in order to be ready to draw again on 
  these facilities in the near future as it executes on its near term 
  pipeline (absent any unexpected repayments received prior to execution of 
  any pipeline deals) 
 
  Stephen Smith, Chairman of the Company, said: 
 
"Following the Company's successful year of originating investments in 2018, 
  we continue to see attractive opportunities in the market and have 
  identified a strong short term pipeline of assets that meet our strict 
  investment criteria and which are either in execution or are currently in 
  negotiation. 
 
  The equity issue will meet the Company's strategy of incrementally growing 
  the size of the Company through an efficient capital structure which 
 minimises cash drag from repayments. Additionally, by increasing the market 
  capitalisation of the Company, the issue of equity will support improved 
  liquidity and reduce the Company's ongoing costs per share." 
 
  Background to the Placing 
 
 The investment objective of the Company is to provide its 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 (including debt 
  instruments) in the UK and the wider European Union's internal market. 
 
  The Company had a successful origination year in 2018 with GBP208 million of 
  new commitments made to borrowers. With repayments and amortisation at a 
 more typical level than in 2017, net commitments increased by GBP70.8 million 
during 2018. The table below shows the loan commitment and repayment profile 
  over the last five years: 
 
                       2014    2015     2016     2017     2018 
New loans to          GBP143.2m  GBP118.7m  GBP175.9m   GBP245.8m   GBP208.0m 
borrowers 
(commitment) 
Loan repayments and   -GBP48.8m  -GBP49.0m  -GBP129.3m  -GBP213.1m  -GBP137.2m 
amortisation 
Net Investment        GBP94.4m   GBP69.7m   GBP46.6m   GBP32.7m   GBP70.8m 
 
  Use of Proceeds 
 
   The Company remains substantially fully invested with drawings of GBP31.6 
    million (net of cash) on its GBP114 million credit facilities and GBP33.6 
 million of unfunded commitments. The Company intends to use the proceeds of 
the Placing to repay its drawings under its credit facilities before drawing 
  on these facilities in the near future as it executes on its near term 
  pipeline. Near term opportunities in the pipeline are consistent with 
  previous investment themes and are spread across both senior and 
  subordinated debt and a diverse geographic profile. 
 
  The Company's portfolio will continue to be originated from the larger and 
  more established real estate markets in the European Union's internal 
market. UK exposure is expected to represent a significant proportion of the 
  Company's portfolio. Outside of the UK, investment in the European Union's 
  internal market will mainly be focused on Northern and Southern Europe. 
Northern European markets include Germany, France, Scandinavia, Netherlands, 
  Belgium, Poland, Switzerland, Ireland, Slovakia and the Czech Republic. 
  Southern European markets include Italy and Spain. 
 
  The Company's portfolio focuses on lending into commercial real estate 
 sectors including office, retail, logistics, light industrial, hospitality, 
  student accommodation, residential for sale and multi-family rented 
  residential. Investments in student accommodation and residential for sale 
  are expected to be limited primarily to the UK, while multi-family 
  investments are expected to be limited primarily to the UK, Germany and 
 Scandinavia. Not more than 30 per cent, in aggregate, of the Company's NAV, 
 calculated at the time of investment, will be invested in loans relating to 
 residential for sale. No more than 50 per cent of the Company's NAV will be 
  allocated to any single real estate sector of the UK, except for the UK 
  office sector which is limited to 75 per cent of the Company's NAV. 
 
  Dividend 
 
  The Company targets paying quarterly a dividend of 6.5 pence per Ordinary 
 Share per annum. The Placing Shares, when issued, will rank in full for all 
 future dividends or other distributions declared, made or paid (save as set 
  out below) after the admission of the Placing Shares issued under the 
  Placing to the premium segment of the Official List and to trading on the 
 London Stock Exchange's Main Market ("Admission") and in all other respects 
  will rank pari passu with the existing Ordinary Shares. 
 
For the avoidance of doubt, the Placing Shares issued under the Placing will 
  not qualify for the dividend declared on 24 April 2019 in respect of the 
quarter ended 31 March 2019, which had an ex-dividend date of 2 May 2019 and 
 a payable date of 24 May 2019. However, the Placing Shares will qualify for 
  the dividend relating to the quarter ended 30 June 2019, which is expected 
  to be declared in July 2019. 
 
  Benefits of the Placing 
 
  The Board believes the Placing will confer the following benefits for 
  shareholders and the Company: 
 
· enable the Company to continue with its strategy and provide scale to 
its investment portfolio; 
 
· increase the liquidity of the shares by increasing the market 
capitalisation of the Company and with the potential to further diversify 
the shareholder register; 
 
· provide additional capital which should enable the Company to take 
advantage of the current attractive investment opportunities in the market 
and make further investments in accordance with the Company's investment 
policy and within its investment criteria; 
 
· further diversify the existing portfolio by introducing new loans into 
the portfolio across various eligible jurisdictions where the Company is 
currently seeing opportunities; and 
 
· provide a larger equity base over which the fixed costs of the Company 
may be spread, thereby reducing the Company's ongoing costs per Ordinary 
Share. 
 
  Shareholder Authorisation of the Placing 
 
  The issue of the Placing Shares will be undertaken under the Company's 
  current authorities to allot shares and dis-apply pre-emption rights as 
  approved by shareholders at the Company's Annual General Meeting and 
  Extraordinary General Meeting on 15 May 2018 for an aggregate amount of up 
  to 20 per cent. of the Ordinary Shares in issue as at the date of the 
  resolutions (less one Ordinary Share). A prospectus is not required in 

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