Starwood European Real Estate Finance (SWEF) was created in 2012 to invest in commercial property by offering mortgages and mezzanine finance. Initial progress was slow, which meant there was a delay in putting to work the £229m raised at the time of the issue. Yet the process gathered momentum last year, and new lending rose by £111m, lifting investments and commitments to a total of £246.6m.
This is important because the dividend forecasts in the prospectus were based on the funds raised being fully deployed. Last year’s payout puts the company well on the way to its target of paying dividends of 7p every year.
The credit quality Starwood has maintained is pretty impressive, with loans never exceeding 85 per cent of the underlying asset value, and with a targeted average of 75 per cent. With the exception of the UK, exposure to any one country is also limited to half the book value, while no single investment will exceed one-fifth of book value.
Demand for finance has prompted Starwood to propose raising fresh funds through a share placing, while the company's short-term liquidity needs will be serviced through a £50m revolving facility.
| STARWOOD EUROPEAN REAL ESTATE FINANCE (SWEF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 103.25p | MARKET VALUE: | £246m | |
| TOUCH: | 103.25-103.75p | 12-MONTH HIGH: | 109p | LOW: 99p |
| DIVIDEND YIELD: | 5.6% | PREMIUM TO NAV: | 3% | |
| LOANS ADVANCED: | £221m | NET CASH: | £13.2m | |
| Year to 31 Dec | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 98 | na | na | na |
| 2013 | 99 | 4.1 | 1.7 | 1.9 |
| 2014 | 100 | 14.6 | 6.2 | 5.8* |
| % change | +1 | +258 | +255 | +205 |
Ex-div:- Payment:- *Final dividend of 1.7p paid on 27 February | ||||
