Last checked at 
11 Dec 2015 07:00
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Starwood European Real Estate Finance Limited: Investment Update
The Company today announces updates on investments made since the quarterly fact sheet of the Company as at 30 September 2015 which was published on 23 October 2015.
Investment Update
Starwood European Real Estate Finance Limited (the "Company") announces that on 10 December 2015 it entered into an agreement with an existing borrower to refinance and enlarge upon a facility previously provided by it in relation to a portfolio of Dutch light industrial assets. The Company will increase its commitment by €20.4m to €40.3m, reflecting the positive asset management being achieved in an improving occupational and investment market. The Company may seek to syndicate part of this increased exposure in due course with a view to enhancing returns. The revised facility has a remaining term of approximately 3 years, and the interest rate is floating over 3 month EURIBOR. By finalising this agreement the Company has mitigated one of the larger and more imminent repayment risks as well as being able to deploy further funds into an attractive loan position. On 30 November 2015 the Company funded a €6.2m 4 year floating whole loan relating to the acquisition of 47 apartments in Cork, the Republic of Ireland by a strong and highly regarded local sponsor. On 1 October 2015 the Company also purchased a further £1.5 million of the £560 million Class B2 Fixed Rate Secured Notes issued by CPUK Finance Limited following the acquisition of the Center Parcs group by a Brookfield managed fund. All of these investments offer the Company the potential to earn a good risk-adjusted blended return commensurate with its stated investment strategy.
Since the publication of the factsheet on 23 October 2015, the £11.2m Maybourne Hotel loan has been repaid and, taking account of the above new investments and future commitments under existing loan agreements, the Company is fully invested. The Company has a number of further transactions with agreed terms which are in the due diligence and execution process.
Smaller related party transaction
The Company's increased commitment to the facility provided in relation to a portfolio of Dutch light industrial assets (the "Amended Dutch Loan"), described above, has been structured as an amendment of the existing loan documentation. The other lender under this documentation is Starfin European Debt TC, LP ("Starfin") which is a related party of the Company by virtue of its general partner, Starfin GP Limited, being part of the Starwood Capital Group. Starfin is not participating in the Amended Dutch Loan and the Company has agreed to a transfer to it of Starfin's rights and obligations under the existing loan agreement in consideration for a payment by the Company to Starfin equal to the principal balance and accrued interest of Starfin's proportion of the existing loan, being the amount, €5,609,131, that it would receive if the existing loan were repaid in full by the borrower (the "Transfer"). Starfin will receive no additional consideration in relation to the Transfer (or otherwise) beyond the amount above. No member of the Starwood Capital Group will receive any additional consideration for the Transfer. The Starwood Capital Group is interested in 1% of the interests of Starfin. The Transfer falls within LR 11.1.10R (a smaller related party transaction).
For further information, please contact:
For further information, please contact:
Peter Denton - Starwood Capital - 020 7016 3664
Robert Peel - Dexion Capital - 020 7832 0900
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 (including debt instruments) in the UK and the wider European Union's internal market. www.starwoodeuropeanfinance.com.
The Company's assets are managed by Starwood European Finance Partners Limited, an indirect wholly-owned subsidiary of the Starwood Capital Group.
A summary analysis of its investments as at 31st October 2015 split by investment type is as follows:
| Senior and Whole Loans | Mezzanine & Other Debt Instruments |
Current Drawn Value | £4.3m - £45.0m | £6.0m - £16.6m |
Loan Portfolio annualised total return (note a) | 5.4% - 9.4% | 7.0% - 15.4% |
Average loan term at origination (years) | 2.0 years - 5.0 years | 2.0 years - 5.1 years |
Percentage of loans that amortise (note b) | 36.7% | 15.4% |
Current LTV | 42.6% - 75.5% | 45.3% - 70.9% |
Sector | Mixed Use, Residential for Sale, Retail, Office, Hospitality, Industrial | Hospitality, Residential for sale, Office, Industrial |
See the latest factsheet as at 30 September 2015 for the definition of how items are calculated.
Note a - the bottom of the returns range for senior and whole loans are transactions which also have a separate mezzanine component and the aggregate returns of both components fall within the mezzanine and other debt instruments range shown above.
Note b - on mezzanine and other debt instruments, the Company's philosophy is to generally seek derisking through amortisation but for the most part it seeks to see the amortisation being applied to the third party senior financing.