20 March 2020

 

NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS OR IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, SOUTH AFRICA, JAPAN, NEW ZEALAND OR ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

 

Starwood European Real Estate Finance Limited: COVID-19 update

 

Starwood European Real Estate Finance Limited (the "Company" and, together with its subsidiaries, the "Group") notes the recent negative price movements in the Company's shares and provides an update in light of the current disruption to markets as a result of COVID-19.

 

The Company currently has no impairments, is very modestly levered with net debt of just £16.5 million at 28 February (equal to 3.9 per cent of NAV), has no repo facilities outstanding and significant available but undrawn revolving credit facilities of £98.5 million. As such, the Company considers that the recent share price movements have been driven by market conditions and flows as opposed to a significant change in the Company's fundamental value or outlook.

 

In the current market, the Company is particularly focussed on its exposure to hospitality, which was 31.4 per cent of invested assets as at 31st December 2019, and expects to see a negative impact in operational performance generally across the hospitality sector. In common with similar crises of the past such as the 9/11 terror attacks and during the SARS virus scare, the market will see a particularly difficult hospitality trading period.

 

Whilst this negative impact is expected across the hospitality sector in the near term, the Company's Investment Manager is confident in the fundamentals of the markets in which the assets are located and the borrower's business plans for the assets over the medium to long term. The Company's hospitality exposure has been structured defensively by the Investment Manager by conducting thorough due diligence, working with strong sponsors and implementing robust loan structures combined with significant diversification by jurisdiction and asset type.  Each investment has a significant cushion to real estate collateral value protecting the lender's position.

 

The Company has always looked to limit downside risk by focusing on secured debt with quality collateral and contractual protections. The Company's loans have modest senior LTVs which provide substantial headroom and strong loan structures in line with the Company's investment policy.

 

As reported in the most recent Quarterly Investment Update, as at 31 December 2019 the Company's Weighted average portfolio LTV to Group first £ was 18.4 per cent and the Weighted average portfolio LTV to Group last £ was 63.0 per cent.  The corresponding metrics for the hotel portfolio on its own were a weighted average first £ LTV of 4.4 per cent and a weighted average last £ LTV of 60.7 per cent.

 

The Investment Manager is in regular dialogue with all of the borrowers in the Company's portfolio and is working alongside them to navigate these currently disrupted markets.

 

The Company looks forward to releasing its Annual Results on 25 March 2020.

 

For further information, please contact:

Apex Fund and Corporate Services (Guernsey) Limited as Company Secretary - 01481 735879

Dave Taylor

 

Starwood Capital - 020 7016 3655

Duncan MacPherson

 

Stifel Nicolaus Europe Limited - 020 7710 7600

Mark Bloomfield

Mark Young

Nick Donovan

Maarten Freeriks

 

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. .

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.