DJ 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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respect of the Placing.
At the imminent AGM of the Company to be held on 15 May 2019, after the
proposed completion of the Placing, the Company is proposing to renew its
allotment and dis-application authorities to allow it to carry out issues of
up to 10 per cent. of its shares in issue. The Company has also convened an
EGM on the same date at which it has proposed resolutions to supplement such
AGM authorities with an additional tap issue authority comprising an
allotment authority and dis-application authority in respect of a further 10
per cent. of its shares in issue at that time ("Additional Tap Issue
Authority"). The Company had noted that issuers such as the Company can
issue up to (but not including) 20 per cent. of the securities already
admitted to trading over 12 months by way of issues of shares without any
requirement to publish a prospectus.
The Board notes that the aggregate of issuance of new shares under the
Placing, and any future issuance without a prospectus over 12 months from
and including the date of the Placing, cannot exceed this limit of 20 per
cent. of the securities already admitted to trading. Therefore, to the
extent that the Company issues more than 10 per cent. of its existing shares
under the proposed Placing, and if the renewed AGM allotment and
dis-application authorities over issues of up to 10 per cent. of shares in
issue are approved by shareholders, then the Additional Tap Issue Authority
proposed at the EGM would, in such circumstances, become largely redundant
in respect of an issue of shares without a prospectus. Accordingly, the
Directors intend that in such circumstances at the EGM, they would not
propose to seek shareholder approval for the resolutions comprising the
Additional Tap Issue Authority. To the extent that the Company subsequently
wished to propose issuing shares in excess of 20 per cent. over the 12 month
period following and including the date of the Placing, not only would it be
required to issue a prospectus in respect of such issuance, it would also
seek further shareholder approval by that time for such issuance.
Further Details of the Placing
The Placing Price will be greater than the Ex-dividend NAV as at 30 April
2019 plus the estimated costs of the Placing and is therefore expected to be
accretive to the NAV attributable to existing shareholders.
Application will be made for the admission of the Placing Shares to the
premium segment of the Official List of the Financial Conduct Authority and
to trading on the London Stock Exchange's main market for listed securities.
Stifel Nicolaus Europe Limited ("Stifel") is acting as sole bookrunner to
the Company. Qualified Investors should communicate their firm interest to
their usual sales contact at Stifel. The decision to allot any Placing
Shares to any Qualified Investors shall be at the discretion of the Company
and Stifel. The Company reserves the right, after consultation with Stifel
and Starwood European Finance Partners Limited, to scale back applications
under the Placing at their absolute discretion in such amounts as they
consider appropriate.
By choosing to participate in the Placing and by making an oral and legally
binding offer to subscribe for Placing Shares, investors will be deemed to
have read and understood this Announcement and any subsequent announcement
related to the Placing (including the Appendix), in its entirety and to be
making such offer on the terms and subject to the conditions in this
Announcement, and to be providing the representations, warranties and
acknowledgements contained in the Appendix.
Expected Timetable
Expected time and date
Announcement of Placing 7 May 2019
Expected closing of the Placing 10 May 2019 at 1.00pm
Announcement of results of the Placing 13 May 2019
Admission of the Placing Shares to the 15 May 2019
Official List and
commencement of dealings on the London
Stock Exchange
For further information, please contact:
Apex Fund and Corporate Services (Guernsey) Limited - 01481 735879
Dave Taylor
Starwood Capital - 020 7016 3655
Duncan MacPherson
Stifel Nicolaus Europe Limited - 020 7710 7600
Neil Winward
Mark Bloomfield
Gaudi Le Roux
LEI: 5493004YMVUQ9Z7JGZ50
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 Group 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.
The Company's target dividend is a target only and not a profit forecast.
There can be no assurance that the target will be met and it should not be
taken as an indication of the Company's expected or actual future results.
Appendix - Terms and Conditions of the Placing
INTRODUCTION
IMPORTANT INFORMATION FOR PLACEES ONLY REGARDING THE PLACING.
THIS ANNOUNCEMENT, INCLUDING THIS APPENDIX, AND THE INFORMATION IN IT, IS
RESTRICTED, AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, IN WHOLE OR IN PART TO U.S. PERSONS OR, IN OR INTO THE UNITED
STATES, THE EXCLUDED TERRITORIES OR ANY OTHER JURISDICTION IN WHICH SUCH
PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.
IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES ONLY.
THE PLACING SHARES THAT ARE THE SUBJECT OF THE PLACING ARE ONLY BEING
OFFERED OR SOLD TO QUALIFIED INVESTORS IN THE UNITED KINGDOM, WHICH INCLUDES
LEGAL ENTITIES WHICH ARE REGULATED BY THE FCA OR ENTITIES WHICH ARE NOT SO
REGULATED WHOSE CORPORATE PURPOSE IS SOLELY TO INVEST IN SECURITIES.
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS
ANNOUNCEMENT (INCLUDING THIS APPENDIX) AND THE TERMS AND CONDITIONS SET OUT
HEREIN ARE FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY AT QUALIFIED
INVESTORS IN THE UNITED KINGDOM. QUALIFIED INVESTORS ARE PERSONS WHO (I)
FALL WITHIN ARTICLE 19(5) OF THE ORDER, FALL WITHIN ARTICLE 49(2) (A) TO (D)
OF THE ORDER; OR ARE PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY
COMMUNICATED AND (II) ARE A "PROFESSIONAL CLIENT" OR AN "ELIGIBLE
COUNTERPARTY" WITHIN THE MEANING OF CHAPTER 3 OF THE FCA'S CONDUCT OF
BUSINESS SOURCEBOOK (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS
"RELEVANT PERSONS"). THIS ANNOUNCEMENT (INCLUDING THIS APPENDIX) AND THE
TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY
PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY
TO WHICH THIS ANNOUNCEMENT (INCLUDING THIS APPENDIX) AND THE TERMS AND
CONDITIONS SET OUT HEREIN RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND
WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS.
THIS APPENDIX, AND THE ANNOUNCEMENT OF WHICH IT FORMS PART, IS FOR
INFORMATION PURPOSES ONLY AND DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE
OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY.
THIS ANNOUNCEMENT, INCLUDING THIS APPENDIX, IS NOT AN OFFER FOR SALE OR
SUBSCRIPTION IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE
WOULD BE UNLAWFUL UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION. THIS
ANNOUNCEMENT, INCLUDING THIS APPENDIX, IS NOT AN OFFER OF OR SOLICITATION TO
PURCHASE OR SUBSCRIBE FOR SECURITIES IN THE UNITED STATES.
EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS
AND RELATED ASPECTS OF AN INVESTMENT IN PLACING SHARES. THE PRICE OF THE
PLACING SHARES IN THE COMPANY AND THE INCOME FROM THEM (IF ANY) MAY GO DOWN
AS WELL AS UP AND INVESTORS MAY NOT GET BACK THE FULL AMOUNT INVESTED ON
DISPOSAL OF THE PLACING SHARES.
Placees will be deemed to have read and understood this announcement and
these terms and conditions in its entirety and to be making such offer on
the terms and conditions and to be providing the representations,
warranties, acknowledgements, and undertakings contained in this Appendix.
In particular, each such Placee represents, warrants and acknowledges that:
1. it is a Relevant Person and undertakes that it will acquire, hold, manage
or dispose of any Placing Shares that are allocated to it for the purposes
of its business;
2. in the case of any Placing Shares acquired by it as a financial
intermediary, as that term is used in Article 3(2) of the Prospectus
Directive, (i) the Placing Shares acquired by it have not been acquired on
behalf of, nor have they been acquired with a view to their offer or resale
to, persons in any Member State of the EEA which has implemented the
Prospectus Directive other than Qualified Investors or in circumstances in
which the prior consent of Stifel has been given to the offer or resale; or
(ii) where Placing Shares have been acquired by it on behalf of persons in
any Member State of the EEA other than Qualified Investors, the offer of
those Placing Shares to it is not treated under the Prospectus Directive as
having been made to such persons; and/or
3. (i) (1) it is not a U.S. Person, (2) it is not located in the United
States, and (3) it is not acquiring the Placing Shares for the account or
benefit of a U.S. Person; or (ii) it is a dealer or other professional
fiduciary in the United States acting for a discretionary account (other
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