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Results analysis: Starwood European Real Estate Finance

SWEF’s managers describe ‘the strongest pipeline of opportunities since inception'...
Thomas McMahon
Last update 07 September 2021

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Starwood European Real Estate Finance. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

  • Starwood European Real Estate Finance (SWEF), which invests in pan-European property loans, has again reported a stable NAV for the half-year to 30 June 2021, while meeting all its dividend targets. The portfolio has therefore once again shown its resilience through a period of disruption, as the recovery from the pandemic starts to build.

  • SWEF paid two dividends of 1.375p in respect of the first two quarters of the year, equating to a 5.5p annualised payout. As of 03/09/2021, the share price yield is 5.8%.

  • NAV per share was 103.63p at the end of June, compared to 104.18p at the end of December 2020.

  • SWEF has missed no dividend payments during the pandemic, the board and manager expect future interest payments from the portfolio to continue to be paid in full, and the board has reaffirmed its commitment to meet its dividend target in the coming quarters. To that end it highlights a revenue reserve of £2.9m which could be used if required.

  • SWEF’s discount did narrow during the reporting period, from c. 14% to c. 8%. Since the period end it has come in further to 7.1% (as of 03/09/2021). Members of the management team and board bought shares during the half year, indicating their belief in the value in the price.

  • With economies now clearly recovering from the pandemic and investment activity in their sector picking up, the investment manager describes the current opportunity set as, “The strongest pipeline of available opportunities since the group’s inception.”

  • SWEF’s managers have c. £70m of capacity for fresh loans. This is available via a revolving credit facility of £115m of which just £11m is drawn down – meaning net gearing is just 2.6% of NAV.

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