from Starwood European Real Estate Finance Ltd (ETR:GG00B79W)
SWEF: Half Yearly Report 30 June 2025
Starwood European Real Estate Finance Ltd (SWEF) Starwood European Real Estate Finance Limited Half Year Results for the Period Ended 30 June 2025 Return of capital to shareholders now well advanced Starwood European Real Estate Finance Limited (the “Company”) and its subsidiaries (“SEREF” or the “Group”), a leading investor originating, executing and managing a diverse portfolio of high quality real estate debt investments in the UK and Europe, announces Half Year Results for the six months ended 30 June 2025. Following the approval of the Company’s new investment objective and policy as recommended to shareholders by the Board at the Company’s EGM on 27 January 2023, the Company is pursuing a strategy of orderly realisation and the return of capital to shareholders over time and in an orderly fashion. Highlights for the period, six months ended 30 June 2025 • Positive realisation progress:
• All assets are carefully monitored for changes in their risk profile:
• Average remaining loan term of the portfolio as of 30 June 2025 is 0.5 years. The final loan is due to repay in Q3 2026. • Strong cash generation - the portfolio continues to support annual dividend payments of 5.5 pence per Ordinary Share, paid quarterly, and generates an annual dividend yield of 6.3 per cent on the share price as at 30 June 2025. • Regular and consistent dividend - the Company continues to pay regular and consistent dividends, in line with its prevailing target. • Inflation protection – 77.7 per cent of the portfolio is contracted at floating interest rates (with floors). • Significant equity cushion - the weighted average Loan to Value for the portfolio, as at 30 June 2025, is 69.9 per cent. The average weighted Loan to Value for the portfolio excluding the asset classed as Stage 3 is 57.7 per cent as of 30 June 2025.
In line with the Group’s orderly realisation strategy, there have been no new commitments made in the six months to 30 June 2025. Repayments received in the six months to 30 June 2025 are summarised in the highlights above and in the Investment Managers report. During the six months to 30 June 2025, the Group funded £nil in relation to cash loan commitments made in prior years which were unfunded and all unfunded cash loan commitments were cancelled. The Group capitalised £0.6 million of interest on one loan in line with the facility agreement during the period under review. John Whittle, Chairman of the Company commented: “We are pleased with the good progress we are making in returning capital to shareholders, with a further £46.0 million returned in the first half of this year. The Company’s loan portfolio now consists of just four investments, compared with twelve at the beginning of January 2023. “While three of the remaining loans are classified as Stage 1, the lowest risk profile used by the Company, one loan investment known as Office Portfolio, Ireland has been impaired during the period and post-period end. The Investment Adviser will continue to actively manage the position to maximise the opportunity for value recovery and the Board continues to closely monitor the position and ongoing developments.” For further information, please contact:
Apex Fund and Corporate Services (Guernsey) Limited as Company Secretary +44 203 5303 630 Duke Le Prevost
Starwood Capital +44 (0) 20 7016 3655 Duncan MacPherson
Jefferies International Limited +44 (0) 20 7029 8000 Gaudi Le Roux Harry Randall Ollie Nott
Notes: 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 conduct an orderly realisation of the assets of the Group. www.starwoodeuropeanfinance.com.
The Group's assets are managed by Starwood European Finance Partners Limited, an indirect wholly owned subsidiary of the Starwood Capital Group.
Starwood European Real Estate Finance Interim Financial Report and Unaudited Condensed Consolidated Financial Statements for the six-month period from 1 January 2025 to 30 June 2025
Overview
Corporate Summary
PRINCIPAL ACTIVITIES AND INVESTMENT OBJECTIVE Starwood European Real Estate Finance Limited (the “Company”) was established in November 2012 to provide its 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 European Union’s internal market.
The Company made its investments through Starfin Lux S.à.r.l (indirectly wholly-owned via a 100 per cent shareholding in Starfin Public Holdco 1 Limited), Starfin Lux 3 S.à.r.l and Starfin Lux 4 S.à.r.l (both indirectly wholly-owned via a 100 per cent shareholding in Starfin Public Holdco 2 Limited) (collectively the “Group”).
Following the Company’s Extraordinary General Meeting (“EGM”) on 27 January 2023, the Company’s objective changed and is now to conduct an orderly realisation of the assets of the Group and the return of capital to Shareholders. In line with this objective the Board is endeavouring to realise all of the Group’s investments in a manner that achieves a balance between maximising the net value received from those investments and making timely returns to Shareholders. At the time of the change in objective it was anticipated that it would take three to four years to complete this objective. As at the date of issuance of this report the Company is still on track to complete this objective within that time scale.
The Group will not make any new investments going forward save that investments may be made to honour commitments under existing contractual arrangements or to preserve the value of any underlying security.
Cash held by the Group pending distribution will be held in either cash or cash equivalents for the purposes of cash management.
Subject to the above restrictions, the Company retains the ability to seek to enhance the returns of selected loan investments through the economic transfer of the most senior portion of such loan investments. It is anticipated that where this is undertaken it would generate a positive net interest rate spread and enhance returns for the Company.
Full details of the investment objectives and policy post the EGM on 27 January 2023 are set out in the 2023 Annual Report which can be found on the company’s website https://starwoodeuropeanfinance.com.
The Investment Objective and Policy which applied prior to the EGM on 27 January 2023 are set out in the 2021 Annual Report which can also be found on the company’s website https://starwoodeuropeanfinance.com. The Investment Objective applied prior to the EGM on 27 January 2023 was to provide its 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 European Union’s internal market. The Investment Policy applied prior to the EGM on 27 January 2023 was to invest in a diversified portfolio of real estate debt investments in the UK and the European Union’s internal market as the Group had done since its initial public offering (“IPO”) in December 2012.
STRUCTURE The Company was incorporated with limited liability in Guernsey under the Companies (Guernsey) Law, 2008, as amended, on 9 November 2012 with registered number 55836, and registered with the Guernsey Financial Services Commission (“GFSC”) as a closed-ended collective investment scheme. The Company’s ordinary shares were first admitted to the premium segment of the UK’s Financial Conduct Authority’s Official List and to trading on the Main Market of the London Stock Exchange as part of its IPO which completed on 17 December 2012. Further issues took place in March 2013, April 2013, July 2015, September 2015, August 2016 and May 2019. The issued capital during the period comprises the Company’s Ordinary Shares denominated in Sterling.
The Company received authority at the 2020 Annual General Meeting (“AGM”), to purchase up to 14.99 per cent of the Ordinary Shares in issue. This authority was renewed at the 2021, 2022, 2023, 2024 and 2025 AGMs. Between 2020 and 2023 the Company bought back 17,626,702 Ordinary Shares. Shares bought back (which had been held in treasury) were cancelled in June 2023.
During 2023 and 2024 the Company compulsorily redeemed 201,663,063 Ordinary Shares from Shareholders at an average price of 104.14 pence per share.
During the six months to 30 June 2025 the Company compulsorily redeemed a further 45,889,830 Ordinary Shares from Shareholders at an average price of 100.24 pence per share. As at 30 June 2025 and the date of issuance of this report, the Company had 148,039,803 shares in issue and the total number of voting rights was 148,039,803.
The Investment Manager is Starwood European Finance Partners Limited (the “Investment Manager”), a company incorporated in Guernsey with registered number 55819 and regulated by the GFSC. The Investment Manager has appointed Starwood Capital Europe Advisers, LLP (the “Investment Adviser”), an English limited liability partnership authorised and regulated by the Financial Conduct Authority, to provide investment advice, pursuant to an Investment Advisory Agreement.
JOHN WHITTLE | Chairman 5 September 2025
Dear Shareholder,
On behalf of the Board, I present the Interim Financial Report and Unaudited Condensed Consolidated Financial Statements of Starwood European Real Estate Finance Limited (the “Group”) for the period from 1 January 2025 to 30 June 2025.
In the six months ended 30 June 2025 one loan asset has repaid in full and two loan assets have been repaid subsequent to 30 June 2025. This leaves the Group, as of the date of the issuance of this report, with four remaining loan assets. Three of those assets are classified as Stage 1 and one asset (Office Portfolio, Ireland) is classified as Stage 3.
As announced on 1 August 2025, since announcing a £10.8 million (€12.9 million) impairment provision against Office Portfolio, Ireland in October 2024, the Board has continued to evaluate the alternative business plan scenarios available to the Company in relation to this loan investment. Based on that evaluation, and the continuing challenging Dublin office market dynamics, the Board announced their decision to write down the carrying value of the loan investment as of 30 June 2025 to £5.8 million (€6.75 million) by means of providing a further £6.2 million (€7.3 million) impairment provision against it (which equates to a circa 4.2 pence per share impairment as of 30 June 2025).
Further to the announcement made on 1 August 2025 and referred to above, the Board has further announced that it is in discussions with an investment vehicle advised by Starwood Capital Group in connection with the sale of the Office Portfolio, Ireland loan investment. If such transaction is consummated, it is expected that the value of the transfer will be significantly below the current carrying value of the investment announced on 1 August 2025. Based on these non-binding discussions, the Board decided to write down the recoverable value of the loan investment to €4.8 million by means of providing a further £1.9 million (€2.2 million) impairment provision against it (which equates to a circa 1.3 pence per share impairment). This impairment will be reflected in the 31 August NAV when announced. To support any such transaction, the Board has commissioned an independent report on the above portfolio.
The Investment Adviser will continue to actively manage the position to maximise the opportunity for value recovery and the Board will continue to closely monitor the position and ongoing developments. The Company looks forward to providing further updates as appropriate. This loan, along with the other remaining loans, remains under frequent review.
Other than the impact of the additional impairment provision referred to above, the Group’s NAV has remained stable over the last six months as is demonstrated by the NAV reconciliation table below. Against market volatility, the Group has maintained a relatively stable market valuation, met its dividend targets (an annualised 5.5 pence per share to shareholders) and continued the orderly realisation of the Group’s assets started in 2023 and the return of capital to Shareholders. All contractual loan interest have been received on time and underlying valuations continue to provide reassuring headroom (except in the case of Office Portfolio, Ireland as referred to above and as outlined in the Investment Managers Report).
Since the decision was taken to follow a strategy of orderly realisation of the portfolio and return of capital to Shareholders in January 2023, by 30 June 2025 the Company had returned circa £256.0 million to Shareholders (including £46.0 million in the first half of 2025), equating to 61.9 per cent of the Company’s NAV as of 31 January 2023. As of 30 June 2025 and the date of issuance of this report, the Company had 148,039,803 shares in issue and the total number of voting rights was 148,039,803.
HIGHLIGHTS OVER THE SIX MONTHS TO 30 JUNE 2025
INVESTMENT MOMENTUM In line with the new strategic direction of the Group (i.e. the orderly realisation and return of capital to shareholders) there has been no new commitments made in the six months to 30 June 2025.
Repayments received in the six months to 30 June 2025 are summarised in the highlights section above and in the Investment Managers report.
During the six months to 30 June 2025, the Group funded £nil in relation to cash loan commitments made in prior years which were unfunded and all unfunded cash loan commitments were cancelled. The Group capitalised £0.6 million of interest on one loan in line with the facility agreement during the period under review.
The table below shows the funded and unfunded cash commitments of the Group at the end of each month shown.
NAV PERFORMANCE The table below shows the NAV per share movements over the 6 months to 30 June 2025 (in pence).
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