RCS - Starwood Euro Real - Results analysis from Kepler Trust Intelligence

Starwood European Real Estate Finance

30/03/2022 09:16

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RNS Number : 5723G  Starwood European Real Estate Finan  30 March 2022

Starwood European Real Estate Finance (SWEF)

30/03/2022

 

Results analysis from Kepler Trust Intelligence

Starwood European Real Estate Finance (SWEF) has reported a strong 11.1% share
price total return for the year ending 31/12/2022. During the year SWEF paid
dividends of 5.5p in four equal quarterly installments as targeted and the
board states it expects to continue to pay at this level going forward.

SWEF lends against European real estate, and despite the uncertainties of the
pandemic, SWEF has performed robustly and has reported no writedowns in the
value of its loans. All loan interest and scheduled amortization payments were
paid on time during the year, and the company expects this to continue.

Kepler View

SWEF's performance through the volatility of the pandemic has been rock solid.
No interest payments have been missed and no covenants were breached, with
managers recognising no impairments despite the severe impact of the pandemic
on some of the tenants of the underlying properties, especially in the retail
and leisure sectors. With the peak phase of the pandemic behind us and
economies open, the managers report one of their strongest pipelines of
potential opportunities in a dislocated market and have plenty of resources to
take advantage.

The defensiveness demonstrated by the portfolio could be highly attractive in
2022 as the European economy struggles with the impact of inflationary
pressures exacerbated by the war in Ukraine. Equity and bond markets have been
volatile year-to-date, and the prospect of significant interest rate hikes as
a response to inflation is another risk to bear in mind. This is particularly
germane to bond investors, as fixed interest securities would see hit to their
capital values with rising interest rates. However, 78% of SWEF's portfolio is
in floating rate loans, meaning the majority of the income received will see a
pass through from rate hikes and the duration is very low - in fact not being
marked to market means there will be no negative impact from rising rates on
the carrying values of the loans at all.

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(https://www.trustintelligence.co.uk/investor/articles/news-investor-results-analysis-starwood-european-real-estate-finance-retail-mar-2022)

 

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