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Starwood reports on busy 2014

Starwood European Real Estate Finance has announced results for the year ended 31 December 2014 that show a small increase in its net asset value from 99.13p to 100.08p but a much larger increase in its share price from 100.75p to 106.25p. Dividends per share were 5.8p, to give a total return on net assets of 6.2% and a total return to shareholders of 10.9%.

Shareholders approved a change to the investment policy on 9 March that will allow the fund to include the wider European Union’s internal market and to remove the limitation of 75 per cent on investment in the United Kingdom.

They have secured a £50m bank facility that will cost them 250bp over LIBOR for short term loans and more for those exceeding six months.

There was a fair bit of activity within the portfolio over 2014.

The Group provided a €14.3m financing facility for the acquisition of an office building in Amsterdam fully occupied by UPC Nederlands, BV.

They provided a £27m financing facility for an office building in Park Royal, West London.  The three year financing is secured against a six-storey, 160,000 square foot building named FC200 located within the First Central mixed-use development site in Park Royal. The financing allowed the sponsors to refinance the all-cash acquisition of the property in late 2011 as well as providing funding for the remaining capex to complete its fit out. On 15 September 2014, the Group completed the syndication of a £13.5m senior note on to a UK clearer.

Industrial Portfolio, Netherlands: On 30 June 2014, the existing €35.3m whole loan facility was increased by €36.1m to a total facility of €71.4m in cooperation with private debt funds associated with Starwood Capital Group. The Group’s overall exposure increased to €55.9m with the Starwood associated private debt funds taking the remaining €15.5m. The additional funds facilitated the acquisition of nine light-industrial and office properties in the Netherlands taking the overall portfolio to 28 assets.   On 5 December 2014, the Group completed the syndication of a €35.9m senior note.

W Hotel, Amsterdam:  The Group has committed to provide €25m out of a total of €99m for the refinancing and refurbishment of a new W branded hotel located in the centre of Amsterdam. The sponsor is Liran Wizman, a highly experienced hotel owner and key shareholder in Grand City Hotels, a highly rated pan- European hotel management company. Expected to be completed in the second half of 2015, the refurbished hotel is based on Spuistraat, a prime location within the city and providing easy access to transport links and attractions including the Royal Palace and Dam Square, which the hotel adjoins.

Centre Point, London:   On 4 December 2014, the Group, along with other Starwood affiliated vehicles, reached an  agreement to supplement its existing loan to Almacantar, a property investment and development company specialising in large-scale complex investments in London, for the comprehensive refurbishment of Centre Point, the iconic 34-story tower located at 103 New Oxford Street in Central London. The overall facility will increase by £45m to £265m, with the Group funding £5m of the increase.  This is expected to be drawn in the first half of 2015.

5 Star Hotel, London:  On 17 December 2014, the Group provided £6.9m of a £14m junior loan to refinance a 5 star hotel in central London. The loan’s interest rate floats over LIBOR and has a term of 5 years. TheGroup expects to earn a return consistent with its target for junior loans.

Aldgate Tower, London:  On 22 December 2014, the Company provided a £45m participation in a £200mfacility for the refinancing of Aldgate Tower, a new Grade A office building located in the City of London. Thefacility will support the acquisition and stabilisation through the leasing of the property.  The loan’s interest rate is part fixed with part floating over 3 month LIBOR.  The Company expects to earn an attractive risk adjusted return commensurate with its stated investment strategy.

Then, on 23 January 2015, the Maybourne facilities were amended and restated with the effect of increasing the senior financing by £40m and the mezzanine facilities being reduced by a corresponding amount.  This restructure was an alternative to a complete refinancing of the debt and enabled the Group to retain an investment (albeit lower) notwithstanding the improvement in the debt markets since the time of the original transaction. Following the amendments, the Group’s participation has been reduced to £11,244,898 and a lower interest rate is now being received.  The returns are, however, commensurate with a transaction of this nature.

Since the year end, additional drawdowns of €2,233,117 under the W Hotel, Amsterdam facility; £147,006 under the Aldgate Tower, London facility; £2,042,056 under the Centre Point, London facility and £378,943 under the FC200, London facility have been made. Scheduled amortisation of €35,750 on the Office, Amsterdam facility and £797,389 on the Heron Tower, London facility have been received. In addition, repayments of €2,363,980 from the Retail Portfolio, Finland facility have been received.

SWEF : Starwood reports on busy 2014

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