REG-Starwood European Real Estate Finance Ltd SWEF: Update on Office Portfolio, Ireland

Starwood European Real Estate FinanceAnnouncement

21/10/2024 07:15

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   Starwood European Real Estate Finance Ltd (SWEF)
   SWEF: Update on Office Portfolio, Ireland

   21-Oct-2024 / 07:00 GMT/BST

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   THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF  ARTICLE
   7 OF  THE MARKET  ABUSE REGULATION  EU 596/2014  AS IT  FORMS PART  OF  UK
   DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018.

    

   NOT FOR RELEASE, PUBLICATION OR  DISTRIBUTION, DIRECTLY OR INDIRECTLY,  IN
   WHOLE OR IN  PART, TO  US PERSONS  OR INTO  OR WITHIN  THE UNITED  STATES,
   AUSTRALIA, CANADA OR  JAPAN, OR ANY  OTHER JURISDICTION WHERE,  OR TO  ANY
   OTHER PERSON  TO  WHOM,  TO  DO SO  WOULD  BE  UNLAWFUL.  THE  INFORMATION
   CONTAINED HEREIN DOES NOT CONSTITUTE OR FORM PART OF ANY OFFER TO SELL  OR
   ISSUE, OR ANY  SOLICITATION OF  ANY OFFER  TO PURCHASE,  SUBSCRIBE FOR  OR
   OTHERWISE ACQUIRE, ANY INVESTMENTS IN ANY JURISDICTION.

    

    

                 Starwood European Real Estate Finance Limited

                                Portfolio Update

                      Update on Office Portfolio, Ireland

    

   Starwood European Real  Estate Finance Limited  (the “Company” or  “SWEF”)
   provides an  update  on  the  loan  investment  called  Office  Portfolio,
   Ireland.

    

   On 2 January 2020 SWEF committed to a €35.2 million mezzanine loan secured
   on a portfolio  of 12 properties  in Central Dublin,  an investment  which
   equated to 7.0 per  cent of NAV  as of 31  December 2019.  The  successful
   sale of some assets in 2021 and  2022 reduced the balance of the loan  and
   as of 30 September 2024 the remaining balance (including accrued interest)
   is  €25.9  million  secured  against   a  remaining  portfolio  of   seven
   properties. As of 31 August  2024, the loan represents approximately  10.6
   per cent of the Company’s Net Asset Value (“NAV”).  The loan has  remained
   in compliance with its covenants but  was re-classified as a Stage-2  loan
   (significant increase in  credit risk  since initial  recognition) in  the
   first half of 2023. 

    

   In the Q2 2024 Quarterly Portfolio  Update, released on 24 July 2024,  the
   Company provided the following update on the loan:

    

   “The underlying assets  comprise seven well  located European city  centre
   CBD buildings and are well tenanted, albeit certain assets are expected to
   require capital  expenditure  to  upgrade to  Grade-A  quality  to  retain
   existing tenants  upon future  lease expiry  events. The  loan remains  in
   compliance of  its  third-party  senior  loan  facility  and  the  Group’s
   mezzanine loan facility, however  given the persisting challenging  market
   dynamics, the Group  is working  closely with  the sponsor,  a very  large
   institutional asset manager, and a  leading global valuation and  advisory
   firm to identify future capital  expenditure needs, funding sources,  exit
   values and the business plan to exit”.

    

   Since then, the sponsor of the  loan has provided new operational  updates
   and the  Board  has evaluated  various  business plan  scenarios  and  the
   uncertainty related  to these  scenarios.  As a  consequence of  this  new
   information, combined with the  challenging local office market  dynamics,
   the Board has determined to  provide for a 50  per cent impairment of  the
   Company’s loan, equivalent to €12.9  million. Nevertheless, the Board  and
   the Investment Adviser consider  that there are a  wide range of  possible
   outcomes whereby the loan may have a lesser or greater degree of  recovery
   due to  the  ongoing uncertainty  related  to the  various  business  plan
   scenarios. The Investment Adviser will  be actively managing the  position
   to maximise the opportunity for value recovery. The Company looks  forward
   to  providing  further  updates   as  appropriate  and  when   practically
   available.

    

   As of 31 August  2024, the Company’s  NAV was £203.7  million and NAV  per
   share was 105.02 pence. After adjusting  for the impairment of the  Office
   Portfolio, Ireland loan, the adjusted  NAV is £192.8 million and  adjusted
   NAV per share is 99.43 pence as of 31 August 2024.

    

   The Company is currently finalising its third quarter Quarterly  Portfolio
   Update, which is expected to be  published later this month. To date,  the
   Company  has  returned   £210  million  to   shareholders  in   Compulsory
   Redemptions in accordance with its orderly realisation strategy adopted on
   27 January 2023.  This is  equivalent to  50.8 per cent  of NAV  as of  31
   January 2023.

    

   For further information, please contact: 

    

   Apex Fund and Corporate Services (Guernsey) Limited as Company Secretary

    

   Duke Le Prevost

   T: +44 (0) 203 5303 630

   E:  1 Starwood@apexgroup.com

    

   Jefferies International Limited

   Gaudi Le Roux

   Harry Randall

   Ollie Nott

    

   T: +44 (0) 20 7029 8000

    

   The person responsible for arranging the release of this information on
   behalf of the Company is Duke Le Prevost.

    

   A copy of this announcement can be found on the Company’s webiste:
    2 www.starwoodeuropeanfinance.com.

    

   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 conduct an orderly realisation of the assets of the  Company.
    3 www.starwoodeuropeanfinance.com.

    

   The Group's  assets  are managed  by  Starwood European  Finance  Partners
   Limited, an  indirect  wholly-owned  subsidiary of  the  Starwood  Capital
   Group.

    

   Information regarding forward-looking statements

    

   This announcement contains (or may contain) statements that are, or may be
   deemed to be,  ‘‘forward-looking statements’’. Forward-looking  statements
   are based on current expectations and projections about future events  and
   other  matters  that  are  not  historical  fact.  These   forward-looking
   statements are sometimes identified by the use of a date in the future  or
   forward-looking terminology,  including, but  not  limited to,  the  words
   “consider” ‘‘aim’’,  ‘‘anticipate’’,  ‘‘believe’’,  ‘‘intend’’,  ‘‘plan’’,
   ‘‘estimate’’,  ‘‘expect’’,  ‘‘may’’,  ‘‘target’’,  ‘‘project’’,  ‘‘will’’,
   ‘‘could’’ or  ‘‘should’’  or,  in  each  case,  their  negative  or  other
   variations or words of  similar meaning. These forward-looking  statements
   include matters that are not historical facts and include statements  that
   reflect intentions,  beliefs and  current expectations.  By their  nature,
   forward-looking statements involve  risks and  uncertainties because  they
   relate to events and depend on circumstances that may or may not occur  in
   the future or are beyond the Company’s control. They are not guarantees of
   future value or performance and are based on one or more assumptions.

   Forward-looking statements contained in this announcement apply only as at
   the date of  this announcement. Subject  to any obligations  under the  UK
   Listing Rules and FCA’s Disclosure Guidance and Transparency Rules, the UK
   version of the  Market Abuse  Regulation or  any other  applicable law  or
   regulation, the Company  undertakes no  obligation publicly  to update  or
   review  any  forward-looking  statement,  whether  as  a  result  of   new
   information, future developments or otherwise.

    

    

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   Dissemination of a Regulatory Announcement that contains inside
   information in accordance with the Market Abuse Regulation (MAR),
   transmitted by EQS Group.
   The issuer is solely responsible for the content of this announcement.

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   ISIN:           GG00BPLZ2K28
   Category Code:  MSCU
   TIDM:           SWEF
   LEI Code:       5493004YMVUQ9Z7JGZ50
   OAM Categories: 2.2. Inside information
   Sequence No.:   353913
   EQS News ID:    2011947


    
   End of Announcement EQS News Service

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References

   Visible links
   1. mailto:Starwood@apexgroup.com
   2. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=becc5c83790358f02808a7970e9d8d13&application_id=2011947&site_id=refinitiv~~~790ea929-3c21-49b8-8ff9-1aed464daef1&application_name=news
   3. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=becc5c83790358f02808a7970e9d8d13&application_id=2011947&site_id=refinitiv~~~790ea929-3c21-49b8-8ff9-1aed464daef1&application_name=news


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