Starwood grows loan book despite repayments

The real estate fund underwrote £176m of debt last year through its listed vehicle - the firm's highest total since 2013.

Starwood Capital’s listed property debt fund, Starwood European Real Estate Finance Limited (SEREFL), originated £175.9 million of debt during 2016, against a backdrop of “greater than usual” loan repayments, PDI sister publication Real Estate Capital has reported.

Last year’s lending total was the fund’s highest since its launch in 2013, it said this morning (29 March) in its annual results. During 2015, £118.7 million was written, with totals of £143.2 million and £139 million in 2014 and 2013, respectively.

However, the volume of loan repayments, plus amortisation, last year was significantly higher than in previous years, meaning 2016’s net investment stood at $46.6 million, down from £69.7 million. During 2016, repayment and amortisation amounted to £129.3 million, an increase from £49 million in the previous year.

“As was expected, 2016 was also a big year for repayments and so the net position showed relatively modest growth in the overall loan book,” said chairman Stephen Smith.
Repayments during the year included the £42 million loan secured by London’s Aldgate Tower in April, as well as a £9.9 million participation in the financing of the Salesforce Tower in the same month.

As at 31 December 2016, the investments and commitments stood at £363.4 million, with an average maturity of 3.3 years, and £31 million of cash and £60 million of liquidity lines available to be invested. The gross annualised total return of the invested loan portfolio was 8.5 percent and the net asset value was £381 million.

“We achieved our gross return and dividend objectives and continued to deliver on our investment strategy through an increased volume of lending, notwithstanding the greater than usual volume of loan repayments,” Smith said.

Since the end of the reporting period, Starwood provided a €18.85 million whole loan for the acquisition and conversion by a local investor of an office building to a premium international school in south Dublin, Ireland. The floating rate facility has a term of three years.

SEREFL said that the strategy to grow the overall size of the company by equity issuance and a corresponding growth of the loan book will continue, with a view to minimising cash drag from any potential repayments. The group said that the repayments during 2016 were substantially reinvested, as well as £71.5 million of proceeds from a share placing last August being invested.

During 2016, the group extended its £60 million revolving credit facility from the existing maturity of 4 December 2016 to 31 March 2017 and plans to extend the facility further during the first half of 2017.