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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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