DJ SWEF: March 2021 Fact Sheet
Starwood European Real Estate Finance Ltd (SWEF)
SWEF: March 2021 Fact Sheet
23-Apr-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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23 April 2021
Starwood European Real Estate Finance Limited: Quarterly Factsheet Publication
Starwood European Real Estate Finance Limited (the "Company" and, together with its subsidiaries, the "Group")
announces that the factsheet for the quarter ended on 31 March 2021 is available at:
www.starwoodeuropeanfinance.com
Investment Portfolio at 31 March 2021
As at 31 March 2021, the Group had 18 investments and commitments of GBP442.2 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 GBP4.9 m GBP0.1 m GBP5.0 m
Office, London GBP13.4 m GBP7.1 m GBP20.5 m
Residential, London GBP2.6 m GBP1.1 m GBP3.7 m
Hotel, Oxford GBP16.7 m GBP6.3 m GBP23.0 m
Hotel, Scotland GBP35.1 m GBP7.5 m GBP42.6 m
Hotel, Berwick GBP10.5 m GBP4.5 m GBP15.0 m
Logistics Portfolio, UK GBP4.2 m GBP4.2 m
(2)
Total Sterling Loans GBP162.3 m GBP26.6 m GBP188.9 m
Three Shopping Centres, GBP31.2 m GBP31.2 m
Spain
Shopping Centre, Spain GBP14.5 m GBP14.5 m
Hotel, Dublin GBP51.3 m GBP51.3 m
Hotel, Spain GBP46.3 m GBP46.3 m
Office, Madrid, Spain GBP15.8 m GBP0.9 m GBP16.7 m
Mixed Portfolio, Europe GBP25.5 m GBP25.5 m
Mixed Use, Dublin GBP3.3 m GBP9.3 m GBP12.6 m
Office Portfolio, Spain GBP18.3 m GBP1.9 m GBP20.2 m
Office Portfolio, Ireland GBP30.0 m GBP30.0 m
Logistics Portfolio, GBP5.0 m GBP5.0 m
Germany (2)
Total Euro Loans GBP241.2 m GBP12.1 m GBP253.3 m
Total Portfolio GBP403.5 m GBP38.7 m GBP442.2 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.
New Loan
On 22 April 2021 the Group announced that it had closed a GBP26.6 million floating rate whole loan secured by a portfolio of four properties. The properties being secured against consist of laboratory and office spaces let to a diverse range of life science occupiers in the UK. The financing has been provided in the form of an initial advance along with a smaller capex facility to support the borrower's value-enhancing capex initiatives. The loan term is 4 years, and the Group expects to earn an attractive risk-adjusted return in line with its stated investment strategy.
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 remains 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 various lockdown measures continuing into the second quarter, with realistic pandemic related business plans in place to deal with any underlying income displacement being experienced.
Key updates are outlined below:
Hospitality (40.1 per cent of funded Investment Portfolio) - The largest hotel exposure (Hotel, Dublin), at 25.4 per cent of hospitality exposure, continues to benefit from a
licence in place to the Irish Government's Health Service Executive, while hotels in Ireland remain closed for
leisure in line with government guidelines. This licence has assisted in de-risking the impact of the pandemic in
the medium term. In addition, the sponsor continues to work on complimentary asset management initiatives which are
projected to add value to the overall loan collateral. This includes the successful achievement of a planning grant
for 220 residential units on a separately owned site close to the hotel lands, and following a strategic capex
investment, the ability to generate additional income on over 200 keys owned in a separate aparthotel building.
These initiatives are considered to have enhanced the value of the Group's security. - The UK hotel exposures predominately comprise of three hotels (Hotel Oxford, Scotland and North Berwick, accounting
for 38.5 per cent of hotels in the portfolio). These hotels have all closed in line with business plan in order for
comprehensive refurbishment works to be carried out. The hotels will re-open in summer 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. Remaining UK hotel exposure comprises a 50-key hotel ground up development within the Hotel
and Residential loan. Construction is progressing well, with completion forecast in 2022. This loan is
residential-led and the value of pre-sold residential units is now higher than the total loan commitment (inclusive
of the hotel), which very significantly reduces hospitality exposure on this loan. - Hotel, Spain (accounting for 28.6 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. Re-opening is planned for May 2021 and the volume of forward bookings and average room rates are
considered strong. The sponsor remains well capitalised to fund any operational cash shortfalls in the event of
further delays to opening. - All hospitality loans have adequate resources to meet their cash needs in the medium term.
Retail (12.9 per cent of funded Investment Portfolio) - The Group's exposure to retail is predominantly comprised of the Three Shopping Centres, Spain and Shopping Centre,
Spain loans. These are the only stand-alone retail loans in the portfolio and comprise 88 per cent of the Group's
total retail exposure. All other retail exposure is contained in a limited number of mixed use portfolios where the
retail sector represents less than 25 per cent of the total loan balance. - The Group has updated its independent valuations of the two Spanish shopping centre loans. Compared to the
valuations dated Q1 2019, values have declined on a weighted average basis of 15 per cent. This movement is in line
with expectation and the decline is predominantly driven by an increase in investment yields expected to be
demanded by investors for taking on exposure to retail at a time that the sector faces increased competition from
on-line purchasing and uncertainty given pandemic related lockdown measures imposed by local governments. - The impact of the valuation decline is not considered to have impacted the value of the loans secured against those
assets or have a material adverse impact on the Group's overall portfolio; as a result no impairments to the value
of the Group's loans are being recognised. Weighted average LTV of these two loans is now 82 per cent on gross
basis and 79 per cent net of deductible reserves controlled by the lenders and there continues to be adequate
headroom against the loan basis. The overall impact on the Portfolio LTV is marginal at just 1.3 percentage point
negative movement. The loan sponsor continues to be very actively engaged in the asset management of the portfolio,
including investing new equity to fund capex and tenant incentives related to new leasing. Despite the headwinds
experienced during the pandemic, footfall had encouraging signs of recovery in September 2020, a time where some of
the pandemic related restrictions had been temporarily eased. On the Group's two Spanish shopping centre loans,
footfall in September had recovered on a weighted average basis to approximately 92 per cent of the prior year
comparable month. This was at a time when considerable uncertainty was prevalent and therefore there is a positive
expectation that footfall will recover during 2021 once pandemic restrictions are lifted, the centres and cinemas
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