REG-Starwood European Real Estate Finance Ltd SWEF: Portfolio Update
23/01/2026 07:05
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Starwood European Real Estate Finance Ltd (SWEF)
SWEF: Portfolio Update
23-Jan-2026 / 07:02 GMT/BST
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Starwood European Real Estate Finance Limited
Quarterly Portfolio Update
£376 million of capital redeemed to date since January 2023 (91% of the
January 2023 NAV);
Following the repayment of three loans during Q4 2025, one loan remains in
the portfolio
Starwood European Real Estate Finance Limited (“SEREF”, the “Company” or
the “Group”), a leading investor managing and realising a diverse
portfolio of real estate debt in the UK and Europe, presents its
performance for the quarter ended 31 December 2025.
Highlights
• Orderly realisation of the portfolio almost complete – during the
quarter to 31 December 2025 three loan investments (amounting to £56
million) repaid. As a result of these repayments the portfolio has
only one loan investment remaining.
• Continuing the orderly and timely return of capital to Shareholders –
during the quarter to 31 December 2025 the Company returned £55
million to Shareholders. To 31 December 2025 the Company has returned
£376 million to Shareholders, equating to 91 per cent of the Company’s
NAV as of 31 January 2023.
• All assets constantly monitored for changes in risk profile – the
current risk status of the investments is listed below:
◦ One loan investment equivalent to 100 per cent of the funded
portfolio as of 31 December 2025 is classified in the lowest risk
profile, Stage 1.
• Cash balances – as of 31 December 2025, following the return of £55
million of capital to Shareholders in the quarter, the Group held cash
balances of circa £14 million and had no unfunded loan commitments.
• Dividend – on 23 January 2026, the Directors announced a dividend, to
be paid in February 2026, in respect of the fourth quarter of 2025 of
1.375 pence per share in line with the 2025 full year dividend target
of 5.5 pence per share. Given that the Company is now coming to the
end of the orderly realisation of its loan assets, the Directors have
not set a target dividend for 2026.
• The weighted average remaining contractual loan term of the funded
portfolio as of 31 December 2025 was 0.1 years
• Equity cushion – the weighted average Loan to Value for the portfolio
is 47 per cent.
John Whittle, Chairman of SEREF, said:
“We are extremely pleased to have made such strong progress in the final
quarter of 2025. There now remains just one loan realisation outstanding,
which is classified at the lowest risk profile, Stage 1. Having returned
£55 million in the last quarter, the Company has now returned 91% of the
January 2023 NAV or £376 million and we are looking forward to providing
further updates in respect of the final investment.”
The factsheet for the period is available at:
1 www.starwoodeuropeanfinance.com
Share Price / NAV as of 31 December 2025
Share price (p) 87.0
NAV (p) * 96.82
Discount 10.1%
6.3%
Dividend yield (on share price)
Market cap £20m
*The 31 December 2025 NAV shown here has been calculated before taking
into account the dividend of 1.375 pence per Share announced by the
Company on 23 January 2026.
Key Portfolio Statistics as of 31 December 2025
Number of investments 1
Percentage of currently invested portfolio in floating rate 100%
loans
Invested Loan Portfolio unlevered annualised total return (1) 11.2%
Weighted average portfolio LTV – to Group first £ (2) 14.1%
Weighted average portfolio LTV – to Group last £ (2) 46.8%
Average remaining loan term 0.1 years
Net Asset Value £22.5m
Loans advanced (including accrued interest and exit fees) £8.3m
Cash £14.4m
Other net liabilities (including hedges) £0.2m
(1) The unlevered annualised total return is calculated on amounts
outstanding at the reporting date, excluding undrawn commitments, and
assuming all drawn loans are outstanding for the full contractual term.
The one remaining loan is floating rate and returns are based on an
assumed profile for future interbank rates, but the actual rate received
may be higher or lower. Calculated only on amounts funded at the
reporting date and excluding committed amounts (but including commitment
fees) and excluding cash uninvested. The calculation also excludes the
origination fee paid to the Investment Manager.
(2) LTV (Loan to Value) to Group last £ means the percentage which the
total loan drawn less any deductible lender controlled cash reserves and
less any amortisation received to date (when aggregated with any other
indebtedness ranking alongside and/or senior to it) bears to its value
determined by the last independent third party appraisals. Loan to Value
to first Group £ means the starting point of the Loan to Value range of
the loans drawn (when aggregated with any other indebtedness ranking
senior to it).
Remaining years to contractual Funded loan balance % of funded portfolio
maturity* (£m)
0 to 1 years £7.7 100%
*Remaining loan term to current contractual loan maturity excluding any
permitted extensions. Note that borrowers may elect to repay loans before
contractual maturity or may elect to exercise legal extension options,
which are typically one year of additional term subject to satisfaction of
credit related extension conditions. The Group, in limited circumstances,
may also elect to extend loans beyond current legal maturity dates if that
is deemed to be required to affect an orderly realisation of the loan.
Country % of funded portfolio
Spain 100%
Sector % of funded portfolio
Office 100%
Loan type % of funded portfolio
Junior & Mezzanine 100%
Currency * % of funded portfolio
Euro 100%
*The currency split refers to the underlying loan currency, however the
capital on all non-sterling exposure is hedged back to sterling.
Orderly Realisation and Return of Capital
On 31 October 2022, the Board announced the Company’s Proposed Orderly
Realisation and Return of Capital to Shareholders. A Circular relating to
the Proposed Orderly Realisation, containing a Notice of an Extraordinary
General Meeting (the “EGM”) was published on 28 December 2022. The
proposals were approved by Shareholders at the EGM in January 2023 and the
Company is seeking to return cash to Shareholders in an orderly manner as
soon as reasonably practicable following the repayment of loans, while
retaining sufficient working capital for ongoing operations and the
funding of committed but currently unfunded loan commitments.
Since then, the Company has returned circa £376 million to Shareholders
(including £55 million in the fourth quarter of 2025), equating to 90.9
per cent of the Company’s NAV as of 31 January 2023. As of the date of
the issuance of this factsheet the Company had 23,204,738 shares in issue
and the total number of voting rights was 23,204,738.
Liquidity and credit facilities
The Company held £14.4 million of cash as of 31 December 2025 and no
longer has any unfunded loan related cash commitments. The Company is
confident that it holds sufficient cash to meet its ongoing operational
commitments.
Dividend
On 23 January 2026, the Directors announced a dividend, to be paid in
February 2026, in respect of the fourth quarter of 2025 of 1.375 pence per
Ordinary Share in line with the 2025 dividend target of 5.5 pence per
Ordinary Share. The dividend will be paid on Ordinary Shares in issue as
of 6 February 2026.
The unaudited 31 December 2025 financial statements of the Company show
negative income reserves. Dividend payments can continue to be made by the
Company (as a Guernsey registered limited company) as long as it passes
the solvency test (i.e. it is able to pay its debts as they come due).
Portfolio Update
The Group continues to closely monitor and manage the credit quality of
its loan exposures and repayments.
The Group’s exposure as of 31 December 2025 and the date of the
publication of this factsheet is limited to one loan investment. This is
a loan secured against an office portfolio in Spain. The office portfolio
is currently under offer for sale and the sale is expected to complete
during Q1 2026. This loan investment is classified as a Stage 1 loan
investment and has an LTV of 46.8 per cent.
Credit Risk Analysis
All loans within the portfolio are classified and measured at amortised
cost.
The Group follows a three-stage model for impairment based on changes in
credit quality since initial recognition as summarised below:
• A financial instrument that is not credit-impaired on initial
recognition is classified as Stage 1 and has its credit risk
continuously monitored by the Group. The expected credit loss (“ECL”)
is measured over a 12-month period of time.
• If a significant increase in credit risk since initial recognition is
identified, the financial instrument is moved to Stage 2 but is not
yet deemed to be credit-impaired. The ECL is measured on a lifetime
basis.
• If the financial instrument is credit-impaired it is then moved to
Stage 3. The ECL is measured on a lifetime basis.
The Group closely monitors all loans in the portfolio for any
deterioration in credit risk. As of 31 December 2025, assigned
classifications are:
• Stage 1 loans – the remaining loan investment equivalent to 100 per
cent of the funded portfolio as of 31 December 2025 is classified in
the lowest risk profile, Stage 1.
• Stage 2 loans – as of 31 December 2025, there are no loan investments
classified as Stage 2.
• Stage 3 loans – as of 31 December 2025, there are no loan investments
classified as Stage 3.
This assessment has been made based on information in our possession at
the date of publishing this factsheet, our assessment of the risks of each
loan and certain estimates and judgements around future performance of the
assets.
Market Commentary and Outlook
2025 was a successful year for investment markets across many asset
classes. Global stock markets registered healthy returns across the
board. In the United States the S&P registered a 16 per cent increase,
The FTSE 100 rose 22 per cent and Euro Stoxx 600 was up 17 per cent. Gold
appreciated 75 per cent in dollar terms during 2025.
Globally, interest rates generally fell in 2025. In Europe there was a
further decrease of 100 basis points taking the European deposit rate to 2
per cent, a decline of 200 basis points in total since the peak in 2023.
The United States and United Kingdom also had decreases in base interest
rates but remain at higher levels than Europe. The Bank of England base
rate finished the year at 3.75 per cent having started at 4.75 per cent
and having peaked at 5.25 per cent in 2023. The Fed Funds rate finished
the year at 3.75 per cent having started at 4.5 per cent and having peaked
at 5.5 per cent in 2023.
The relative interest rates between Europe and the UK and US reflect the
different inflation pictures in the regions. In the UK and the US,
inflation remains above the national target rates and has remained as high
as it was this time last year. The November 2025 UK CPI growth rate was
3.5 per cent which is exactly where it was in November 2024 with the rate
having risen as high as 4.2 per cent in July 2025. There is a similar
pattern in the US. Glass half full commentators point out that the
November 2025 CPI growth in the US was 2.7 per cent and that it is lower
than the 3.0 per cent expected by analysts but, like the UK, this is a
decline versus higher rates in the middle of the year but not against the
level of a year ago, which was also 2.7 per cent.
On potential risks, 2026 has started with many geopolitical
considerations. The Trump presidency is characterised by a very high
level of activity which has changed the nature of the news cycle. There
is a lot of speculation around what would be required to bring an end to
the war in Ukraine. Other examples include the extraction of Venezuelan
president Maduro by US special forces to be tried in New York and
speculation about further international intervention in other countries
including Greenland. Meanwhile China-Taiwan tensions continue. Markets
have become very resilient to this type of news generally but there is
always a risk that this market resilience changes.
Supporting markets, after a significant amount of global easing in the
last two years, monetary policy is expected to continue to be
accommodative in 2026. Several large central banks are expected to either
ease further or keeping rates on hold. Globally only a small minority of
central banks (the Bank of Japan and the Reserve Bank of Australia) are
expected to tighten policy in the year ahead. We are also expecting
economic stimulus in the US from the implementation of tax breaks
including no tax for tips and other tax breaks. Furthermore, Trump is
expected to choose a Fed Chairman who will be more open to a faster
decrease in interest rates.
In the commercial real estate world, the slow recovery continues to
progress forwards. Credit capital markets have led the way for liquidity
and borrowing conditions are now some of the best since the Great
Financial Crisis. 2025 was a big year for CMBS with USD 158 billion in
the United States being one of the biggest years ever for that market.
With lower transactional volumes, refinancing volumes continue to make up
a larger part of the market than usual.
Office markets had been a particular focus in the post Covid years and as
companies get used to better technology enabling flexible working and the
continuing evolution of the possibilities created through Artificial
Intelligence. We can see in prime markets the pendulum for occupational
markets has swung back. There has been low delivery of new high quality
office product and in particular large occupiers in prime markets are
suffering from low availability of quality space. Recent headlines about
London availability have highlighted JP Morgan’s decision to go ahead with
a large new office development at Canary Wharf. Visa and Deutsche Bank
have also been reported to be taking space at Canary Wharf with it being
notable that in Visa’s case that decision involves making the move all the
way across London from Paddington.
There are some encouraging signs in the underlying real estate transaction
market. According to CBRE data, transaction volumes in the main real
estate asset classes of Office, Retail, Logistics and Hospitality had
reduced by 48 per cent from 2022 to 2023 but the latest data showed that
the year to date (as at the end of the third quarter 2025) European
investment volumes were up 6 per cent compared with the previous year.
There is significant differentiation between asset classes and countries
across Europe. For example, in Europe, retail transactions were up by 22
per cent whereas hospitality transactions were only up 5 per cent. Office
transactions had been subdued during the last couple of years,
particularly for larger lot sizes, but we are now seeing some increases.
In London, Savills reported 21 London office transactions of over £100
million which is a notable increase of 9 compared to last year.
Overall as we go into 2026 real estate credit markets are very healthy and
the outlook for the transaction market is as good as it has been since
2022.
Investment Portfolio as of 31 December 2025
As of 31 December 2025, the Group had one investment with total cash
commitments (funded and unfunded) of £7.7 million as shown below.
Sterling Sterling equivalent Sterling Total
equivalent balance unfunded commitment (Drawn and
(1) Unfunded)
Office Portfolio, £7.7 m £7.7 m
Spain
Total Euro Loans £7.7 m £0.0 m £7.7 m
Total Portfolio £7.7 m £0.0 m £7.7 m
1. Euro balances translated to sterling at period end exchange rate.
Loan to Value
All assets securing the loans undergo third party valuations before each
investment closes and periodically thereafter at a time considered
appropriate by the lenders. The Loan to Value shown below is based on the
independent third-party appraisal for the remaining loan in the portfolio.
The age of this valuation is less than one year.
As of 31 December 2025, the Group has an average last £ Loan to Value of
46.8 per cent (30 September 2025: 75.1 per cent).
The Group’s last £ Loan to Value means the percentage which the total loan
drawn less any deductible lender controlled cash reserves and less any
amortisation received to date (when aggregated with any other indebtedness
ranking alongside and/or senior to it) bears to the market value
determined by the last formal lender valuation received, reviewed in
detail and approved by the reporting date. Loan to Value to first Group £
means the starting point of the Loan to Value range of the loans drawn
(when aggregated with any other indebtedness ranking senior to it).
The table below shows the sensitivity of the Loan to Value calculation for
movements in the underlying property valuation and demonstrates that the
Group has considerable headroom within the currently reported last £ Loan
to Values.
Change in Valuation Office
-15% 55.1%
-10% 52.0%
-5% 49.3%
0% 46.8%
5% 44.6%
10% 42.5%
15% 40.7%
Share Price performance
The Company's shares closed on 31 December 2025 at 87.0 pence, resulting
in a share price total return for the fourth quarter of 2025 of 1.6 per
cent. As of 31 December 2025, the discount to NAV stood at 10.1 per cent,
with an average discount to NAV of 13.8 per cent over the quarter.
Note: the 31 December 2025 discount to NAV is based off the 31 December
2025 NAV as reported in this factsheet. All average discounts to NAV are
calculated as the latest cum-dividend NAV available in the market on a
given day, adjusted for any dividend payments from the ex-dividend date
onwards.
For further information, please contact:
Apex Fund and Corporate Services (Guernsey) Limited
as Company Secretary
Duke Le Prevost
+44 (0)20 3530 3630
Starwood Capital
Duncan MacPherson +44 (0) 20 7016 3655
Jefferies International Limited
Gaudi Le Roux
Harry Randall
+44 (0) 20 7029 8000
Ollie Nott
Burson Buchanan +44 (0) 20 7466 5000
Helen Tarbet +44 (0) 7788 528 143
Henry Wilson
Nick Croysdill
Notes:
Starwood European Real Estate Finance Limited is an investment company
listed on the premium segment of the main market of the London Stock
Exchange with an investment objective to conduct an orderly realisation of
the assets of the Company. 2 www.starwoodeuropeanfinance.com.
The Group's assets are managed by Starwood European Finance Partners
Limited, an indirect wholly owned subsidiary of Starwood Capital Group.
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ISIN: GG00BW9KGG29
Category Code: PFU
TIDM: SWEF
LEI Code: 5493004YMVUQ9Z7JGZ50
Sequence No.: 415908
EQS News ID: 2264724
End of Announcement EQS News Service
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