DJ SWEF: December 2020 Fact Sheet
Starwood European Real Estate Finance Ltd (SWEF)
SWEF: December 2020 Fact Sheet
22-Jan-2021 / 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.
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22 January 2021
Starwood European Real Estate Finance Limited: Quarterly Factsheet Publication
Starwood European Real Estate Finance Limited (the "Company") announces that the factsheet for the quarter ended on 31
December 2020 is available at:
www.starwoodeuropeanfinance.com
Investment Portfolio at 31 December 2020
As at 31 December 2020, the Group had 18 investments and commitments of GBP490.1 million as follows:
Sterling equivalent Sterling equivalent unfunded Sterling Total (Drawn and
balance (1) commitment (1) Unfunded)
Hospitals, UK GBP25.0 m GBP25.0 m
Hotel & Residential, UK GBP49.9 m GBP49.9 m
Office Scotland GBP4.8 m GBP0.2 m GBP5.0 m
Office, London GBP13.3 m GBP7.3 m GBP20.6 m
Residential, London GBP24.5 m GBP1.1 m GBP25.6 m
Hotel, Oxford GBP16.7 m GBP6.3 m GBP23.0 m
Hotel, Scotland GBP27.2 m GBP15.5 m GBP42.7 m
Hotel, Berwick GBP10.5 m GBP4.5 m GBP15.0 m
Logistics Portfolio, UK GBP12.0 m GBP12.0 m
(2)
Total Sterling Loans GBP183.9 m GBP34.9 m GBP218.8 m
Three Shopping Centres, GBP33.3 m GBP33.3 m
Spain
Shopping Centre , Spain GBP15.4 m GBP15.4 m
Hotel, Dublin GBP54.2 m GBP54.2 m
Hotel, Spain GBP47.7 m GBP1.3 m GBP49.0 m
Office & Hotel, Madrid, GBP16.7 m GBP0.9 m GBP17.6 m
Spain
Mixed Portfolio, Europe GBP29.5 m GBP29.5 m
Mixed Use, Dublin GBP3.2 m GBP10.1 m GBP13.3 m
Office Portfolio, Spain GBP19.3 m GBP2.0 m GBP21.3 m
Office Portfolio, Ireland GBP31.8 m GBP31.8 m
Logistics Portfolio, GBP5.9 m GBP5.9 m
Germany (2)
Total Euro Loans GBP257.0 m GBP14.3 m GBP271.3 m
Total Portfolio GBP440.9 m GBP49.2 m GBP490.1 m 1. Euro balances translated to sterling at period end exchange rate. 2. Logistics Portfolio, UK and Logistics Portfolio, Germany is one single loan agreement with sterling and Euro
tranches.
Portfolio Update
All loan interest and scheduled amortisation payments up to the date of this factsheet have been paid in full and on time.
Notwithstanding the pandemic-related disruption continuing to be experienced, the portfolio continues to be robust and portfolio performance is in line with expectations. In the sectors that are most impacted, hospitality and retail, borrowers remain adequately capitalised and are projecting to continue to pay loan interest and capital repayments despite the latest lockdown measures, with realistic pandemic related business plans in place to deal with any underlying income displacement being experienced.
Key updates are outlined below;
Hospitality (35.7 per cent of Investment Portfolio) - The largest hotel exposure (Hotel, Dublin), at 27 per cent of hospitality exposure, continues to benefit from a
licence in place to the Irish Government's Health Service Executive. This has de-risked the impact of the pandemic
in the medium term. In addition, the sponsor has continued to work on their wider business plan in relation to the
extensive land adjacent to the hotel that also forms part of the loan's collateral. In the last quarter, the
sponsor has been successful in achieving planning permission for a residential scheme of over 220 apartments on a
small island site that forms part of the wider land collateral. This has enhanced the value and future liquidity of
this site. - The UK hotel exposures (Hotel Oxford, Scotland and North Berwick, accounting for 35 per cent of hotels in the
portfolio) all successfully re-opened during the summer following the lifting of domestic travel restrictions.
Trading was generally positive despite the backdrop of the wider market uncertainty. This reflected the domestic
demand for staycation breaks in the UK, particularly for leisure destinations with nearby outdoor facilities such
as golf which is offered by the Hotel Scotland and North Berwick. This trend is expected to continue into 2021 with
market commentators such as VisitBritain.org forecasting that the recovery of domestic tourism in 2021 will be
significantly stronger than inbound tourism. While 2021 is not expected to recover to pre-Covid-19 levels,
VisitBritain.org (as of mid December 2020) forecast that the value of domestic tourism spending could reach up to
84 per cent of 2019 levels by December 2021. All three of these UK hotels have comprehensive re-positioning capex
plans in place, which sees each sponsor injecting material additional equity into the properties. In line with the
underwritten capex plan, each hotel has now closed and refurbishment projects are underway as planned, thereby any
planned revenue from these sites are not impacted by the current Covid-19 restrictions in the UK. The hotels will
re-open during 2021 with attractive new brands and a fully refurbished offering which is expected to be well placed
to benefit from pent up UK domestic leisure travel demand. - Hotel, Spain (accounting for 30 per cent of hospitality exposure) completed a heavy refurbishment project in late
summer 2020 and opened for a very successful short marketing period before closing for winter 2020/21. The
underwritten business plan and hotel operating model sees this hotel closing annually during the winter months in
any event. Ordinarily the hotel would open in April 2021, however contingency plans are in place to delay this
should substantial travel restrictions remain in place by that time. The sponsor remains well capitalised to fund
any operational cash shortfalls in the event of further delays to opening. Forward customer bookings for summer
2021 are strong and the hotel is expected to trade well once the pandemic restrictions are lifted. - All hospitality loans have adequate resources to meet their cash needs in the medium term.
Retail (12.9 per cent of Investment Portfolio) - Retail re-opened across Europe during summer 2020 following the lifting of local restrictions, before new measures
to reduce the autumn / winter virus infection rates were re-introduced. By September 2020 we saw encouraging signs
of footfall and sales recovery, whereby on the Group's largest retail loan exposure (a portfolio of three shopping
centres), footfall had recovered on a weighted average basis to approximately 92 per cent of the prior year
comparable month. - While new restrictions introduced in late Q4 2020 and early 2021 have meant that footfalls and sales have again
materially reduced, the sponsors have worked intensively to support tenants by signing specific pandemic related
discounts in line with wider industry practice. As part of these pandemic related tenant measures, the sponsors
have also extended the term certain under leases, which is advantageous and provides greater certainty of future
income. The impact of supporting tenants during the pandemic has meant that occupancy has remained robust, with a
weighted average occupancy decline across the four centres of only 1% since mid-2020. - Loans with retail exposure continue to have adequate cash reserves to pay interest, with detailed business plans in
place to deal with any underlying income displacement related to granting tenants concessions during shutdown and
recovery periods.
Construction & Heavy Refurbishment (21.2 per cent of Investment Portfolio) - The Group's construction and heavy refurbishment exposure has decreased by 28 per cent since mid-2020 with the
successful completion of the Hotel, Spain project in late summer and completion of the London Residential project. - While some construction programme disruption has been experienced by mandated site shutdowns and the adjustment of
work practices to new Covid-19 related industry regulations, all sites re-opened in summer 2020. Despite the latest
restrictive measures introduced in December 2020, construction sites in the UK remain open. Construction sites in
the Republic of Ireland were mandated by the government to close on 8th January 2021, however we note that the
Group's exposure to Irish construction loans is limited to under 1 per cent of loans invested as of 31 December
2020. In any event all construction loans remain adequately capitalised with funding in place to complete projects. - Please note that the construction & heavy refurbishment exposure noted above will include assets also included in
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