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18 Nov 2021 07:01
Starwood European Real Estate Finance Ltd (SWEF) SWEF: Portfolio Update 18-Nov-2021 / 07:00 GMT/BST Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group. The issuer is solely responsible for the content of this announcement. 18 November 2021
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Starwood European Real Estate Finance Limited
Investment and Portfolio Update
£76 million UK hotel loan with related party private debt fund
Starwood European Real Estate Finance Limited and its subsidiaries ("SEREF" or "the Group"), a leading investor originating, executing and managing a diverse portfolio of high-quality real estate debt in the UK and Europe, is pleased to announce that during November 2021 it closed a £76 million floating rate, acquisition and capital expenditure whole loan secured on a portfolio of two UK based hotel assets. This loan was closed in conjunction with Starwood European Real Debt Finance I and its subsidiaries, a newly launched, Guernsey domiciled, private debt fund acting as co lender.
SEREF has taken on two thirds of the £76 million commitment, with the private debt fund taking the other third. The loan term is five years and the Group expects to earn an attractive risk-adjusted return in line with its stated investment strategy. The portfolio consists of two hotels in attractive city centre locations in Manchester and Edinburgh. The hotels will be rebranded, targeting domestic and international visitors in two of Europe's best performing markets in 2021. Following the initial drawdown of this loan, SEREF will be fully invested and has a net debt position of £4.3m as at 15 November 2021. The Group's pipeline of prospective new investments is robust, with a strong likelihood of further investments in the medium term.
The loan benefits from a floating interest rate. This provides for an inflation hedge as the loan will generate a greater return in a higher interest rate market that is likely to result from increased inflation. Following this investment circa 78 per cent of the portfolio benefits from floating interest rates.
Stephen Smith, Non-executive Chairman, said:
"The UK hospitality leisure market is performing well, with high levels of domestic demand post-Covid. We are therefore delighted to have entered into this highly attractive new loan. The assets themselves are very well located to capitalise on the strength of the market, and as such will enhance our portfolio and shareholder value"
Portfolio update: transition from LIBOR to Sonia
Some interest rate benchmarks that have historically been used for setting real estate loan interest including Sterling LIBOR are being phased out over the coming years. The Company is well prepared for LIBOR to SONIA transition and implementation of the transition plan well progressed.
Borrowing activities where the Group pays floating rate interest The Group can borrow in Sterling and Euro under two revolving credit facilities being an unsecured corporate RCF of £50 million and a secured RCF of £76 million. All borrowings are floating rate. Euro borrowings use Euribor as the reference rate and will continue to do so as Euribor is not being retired. For Sterling borrowings on the unsecured corporate RCF, conversion to a SONIA based reference rate took effect on September 30th 2021. For Sterling borrowings on the secured RCF, the reference rate matches the underlying collateral that is being borrowed against, i.e. as our loan investments are amended to migrate to SONIA the corresponding borrowings on the secured RCF also automatically migrate.
Loan investments where the Group received floating rate income The Group is actively engaging with existing borrowers on LIBOR referenced loans in order to transition them to SONIA in line with wider market practice given the forthcoming cessation of LIBOR. Engagement started earlier this year and we are targeting to have all remaining LIBOR loans legally transitioned in advance of year end 2021 or latest by the first interest payment date falling in Q1 2022. The relevant loan facility agreements are being amended in line with standard Loan Market Association SONIA conversion provisions which provides for loan interest to be calculated by reference to SONIA on a 'lookback without observation shift' basis.
For further information, please contact: Apex Fund and Corporate Services (Guernsey) Limited as Company Secretary +44 (0) 20 3530 3661 Magdala Mullegadoo
Starwood Capital +44 (0) 20 7016 3655 Duncan MacPherson
Jefferies International Limited +44 (0) 20 7029 8000 Stuart Klein Neil Winward Gaudi Le Roux
Buchanan +44 (0) 20 7466 5000 Helen Tarbet +44 (0) 07788 528143 Henry Wilson Hannah Ratcliff
Notes to Editors:
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. www.starwoodeuropeanfinance.com.
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.
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| ISIN: | GG00B79WC100 |
| Category Code: | PFU |
| TIDM: | SWEF |
| LEI Code: | 5493004YMVUQ9Z7JGZ50 |
| Sequence No.: | 127092 |
| EQS News ID: | 1249846 |
| End of Announcement | EQS News Service |
UK Regulatory announcement transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement.