DJ SWEF: Half Yearly Report 30 June 2021
Starwood European Real Estate Finance Ltd (SWEF) SWEF: Half Yearly Report 30 June 2021 07-Sep-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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7 September 2021
Starwood European Real Estate Finance Limited
Half Yearly Report 30 June 2021
Another Period of Robust Income Generation
Fully Covered Quarterly Dividend Totalling 5.5 Pence Annually; 8 per cent Share Price Total Return in the Period
Starwood European Real Estate Finance Limited and its subsidiaries ("the Group"), a leading investor originating, executing and managing a diverse portfolio of high-quality real estate debt investments in the UK and Europe, announces its Half Year Results for the six month period ended 30 June 2021.
Highlights over the six months to 30 June 2021
-- Income stability - all loan interest and scheduled amortisation payments received in full and on time
-- Strong cash generation - the portfolio continues to support annual dividend payments of 5.5 pence pershare, paid quarterly, and generates an annual dividend yield of 5.9 per cent on the share price as at 30 June 2021
-- Robust portfolio - despite pandemic-related disruption, the portfolio continues to perform in line withexpectations? Borrowers remain adequately capitalised and are expected to continue to pay loan interest and capitalrepayments in line with contractual obligations - Entry into life sciences sector - On 22 April 2021 the Group announced that it has closed a GBP26.6mfloating rate whole loan secured by a portfolio of four UK life science properties - On 21 July 2021 the Group announced that it had closed a GBP13.5m floating rate whole loan secured by aportfolio of a hotel and office complex in Northern Ireland
-- 8 per cent - Share price total return during the six months ended 30 June 2021
-- 46.5 per cent - Share price total return since inception in December 2012
-- The Investment Manager believes the current investment pipeline is the strongest since the Company wasestablished
Portfolio Statistics - diverse, 78.3% floating rate, LTV maintained
As at 30 June 2021, the portfolio was invested in line with the Group's investment policy. The key portfolio statistics are summarised below.
30 June 2021 30 June 2020 Number of investments 18 18 Percentage of currently invested portfolio in floating rate loans 78.3% 79.5% Invested Loan Portfolio unlevered annualised total return* 6.6% 6.7% Portfolio levered annualised total return* 6.8% 7.0% Weighted average portfolio LTV - to Group first GBP* 18.0% 18.4% Weighted average portfolio LTV - to Group last GBP* 63.5% 62.9% Average loan term (stated maturity at inception) 4.7 years 4.4 years Average remaining loan term 2.2 years 2.8 years Net Asset Value GBP423.7m GBP430.1m Amount drawn under Revolving Credit Facilities (excluding accrued interest) (GBP11.0m) (GBP24.1m) Loans advanced GBP420.8m GBP448.9m Cash GBP1.4m GBP9.0m Other net assets (including hedges) GBP12.5m GBP3.8m
*Alternative performance measure
NAV Performance - as anticipated and stable demonstrating resilience of portfolio
The table below shows the NAV per share achieved over the 6 months to 30 June 2021:
January February March April May June Cum-dividend NAV per share (pence) 103.91 104.42 103.56 103.59 104.25 103.63
Stephen Smith, Chairman of the Company commented:
"During the past six months the Company has yet again proven its credentials as a highly stable source of robust dividends for shareholders. In contrast to many equity REITs, there has not been a single missed payment across the portfolio for the entire duration of the Covid-19 pandemic. This has ensured total continuity of income supporting the annual 5.5 pence dividend yield paid quarterly to shareholders, which remains fully covered. Further, the underlying risk of the portfolio has not shifted with LTVs maintained in the low 60% historical range that the manager has skilfully maintained since the Company's inception in 2012 across even the most volatile recent environment.
"At the outset of the Covid-19 period, in a time of famously turbulent equity market volatility, the Company's share price fell to a persistent discount to NAV for the first time since inception, albeit this has been gradually reducing over the past six-month period under review. Given the extremely robust performance of the portfolio through even the most hostile of market tests and the ongoing uncertainty around many traditional forms of dividend income, it is our belief that the Company's current share price discount to NAV represents compelling risk adjusted value."
Analyst Call
A conference call for analysts will be held remotely at 9:30am, to receive details please contact henryw@buchanan.uk.com
For further information, please contact:
Apex Fund and Corporate Services (Guernsey) Limited as Company Secretary
01481 735814
Magdala Mullegadoo
Starwood Capital +44 (0) 20 7016 3655
Duncan MacPherson
Jefferies International Limited +44 (0) 20 7029 8000
Stuart Klein
Neil Winward
Gaudi Le Roux
Buchanan +44 (0) 20 7466 5000
Helen Tarbet +44 (0) 07788 528143
Henry Wilson
Hannah Ratcliff
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.
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.
Interim Financial Report and Unaudited Condensed
Consolidated Financial Statements
for the six-month period from 1 January 2021 to 30 June 2021
CONTENTS
Overview Corporate Summary Chairman's Statement Investment Manager's Report Principal Risks Governance Board of Directors Statement of Directors' Responsibilities Interim Financial Statements Independent Review Report Unaudited Condensed Consolidated Statement of Comprehensive Income Unaudited Condensed Consolidated Statement of Financial Position Unaudited Condensed Consolidated Statement of Changes in Equity Unaudited Condensed Consolidated Statement of Cash Flows Notes to the Unaudited Condensed Consolidated Financial Statements Further Information Alternative Performance Measures Corporate Information
Overview
Corporate Summary
PRINCIPAL ACTIVITIES AND INVESTMENT OBJECTIVE
The investment objective of Starwood European Real Estate Finance Limited (the "Company"), together with its wholly owned subsidiaries Starfin Public Holdco 1 Limited, Starfin Public Holdco 2 Limited, Starfin Lux S.à.r.l, Starfin Lux 3 S.à.r.l and Starfin Lux 4 S.à.r.l (collectively the "Group"), 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 in the UK and the European Union's internal market.
The Company seeks to limit downside risk by focusing on secured debt with both quality collateral and contractual protection.
The Company anticipates that the typical loan term will be between three and seven years. Whilst the Company retains absolute discretion to make investments for either shorter or longer periods, at least 75 per cent of total loans by value will be for a term of seven years or less.
The Group aims to be appropriately diversified by geography, real estate sector, loan type and counterparty. The Group pursues investments across the commercial real estate debt asset class through senior loans, subordinated loans and mezzanine loans, bridge loans, selected loan-on-loan financings and other debt instruments.
STRUCTURE
The Company was incorporated with limited liability in Guernsey under the Companies (Guernsey) Law, 2008, as amended, on 9 November 2012 with registered number 55836, and has been authorised by the Guernsey Financial Services Commission ("GFSC") as a registered closed-ended investment company. The Company's ordinary shares were first admitted to the premium segment of the UK's Financial Conduct Authority's Official List and to trading on the Main Market of the London Stock Exchange as part of its initial public offering which completed on 17 December 2012.
Further issues took place in March 2013, April 2013, July 2015, September 2015, August 2016 and May 2019. The issued capital during the period comprises the Company's Ordinary Shares denominated in Sterling.
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