Eurocastle Releases First Quarter 2017 Financial Results, Announces Supplemental Dividend of €0.14 per share and Annual Gen...
May 18 2017 - 2:00AM
Guernsey, 18 May 2017 - Eurocastle
Investment Limited (Euronext Amsterdam: ECT) today has released its
financial results for the first quarter ended 31 March
2017.
-
Normalised FFO[1]of €26.0
million, or €0.43 per share[2], for the
first quarter of 2017 including one-off impacts from sales and the
remaining realisations from the Legacy Business.
-
Adjusted Net Asset
Value[3] of €548.9
million, or €9.13 per share2, after the declaration of the regular
quarterly dividend of €0.15 per share2.
-
First Quarter 2017
Dividend
-
€9.0 million, or €0.15 per share2, of regular
quarterly dividend declared in March 2017 and to be paid on 31 May
2017.
-
In addition, and in line with the new
distribution policy announced in March 2017, the Board of Directors
has declared a supplemental dividend for the period of €8.4
million, or €0.14 per share2, also payable on 31 May 2017 to
shareholders of record at close of business on 23 May 2017, with an
ex-dividend date of 22 May 2017[4].
-
In aggregate, this has resulted in a total
dividend of €17.4 million, or €0.29 per share, for the first
quarter of 2017.
|
|
Q1 2017 |
|
Q4 2016 |
|
|
|
€
million |
€ per
share2 |
|
€
million |
€ per
share2 |
|
Normalised FFO1 |
|
26.0 |
0.43 |
|
12.5 |
0.21 |
|
Dividends[5] |
|
17.4 |
0.29 |
|
9.0 |
0.15 |
|
Adjusted NAV3 |
|
548.9 |
9.13 |
|
550.6 |
9.16 |
|
BUSINESS
HIGHLIGHTS
-
Investment Realisations -
During the first quarter of 2017, Eurocastle sold its interest in
the units of Real Estate Fund Investment III. The sale resulted in
total proceeds of €20.9 million, or €0.35 per share, realising a
total lifetime gross profit of €18.0 million, an IRR of 137% and
2.7x multiple on equity invested. The sale was achieved two years
ahead of business plan. In addition, the Company realised a gross
profit of €7.2 million from the resolution of a debt claim it had
acquired in the period.
-
doBank - In March 2017, the
board of doBank approved a dividend of €52.3 million (of which
Eurocastle's share is €26.2 million) for the year ended 31 December
2016 which is expected to be paid by the end of May 2017. For the
first quarter of 2017 the doBank Group reported EBITDA of €9.9
million; 44% higher than the same period last year on a
like-for-like basis[6]; a period
that is typically the lowest in the year given the seasonality of
NPL collections.
-
Legacy Business[7]- In the
first quarter of 2017, the Group received €2.4 million of cash flow
upon completion of German real estate sales that were previously
under binding contracts. In addition, the Company received €0.6
million from the resolution of a Legacy debt investment. The
Company intends to unwind its remaining Legacy levered portfolio
(CDO V) during the remainder of 2017.
-
Romeo NPL Portfolio
Financing - on the 3rd of May 2017, the Company announced the
successful completion of a €75 million financing on the secured
portion of its Romeo NPL portfolio. As a result, Eurocastle
received approximately €36 million or 50% of the net proceeds after
costs and reserves. At the same time, Eurocastle received over €18
million of previously undistributed cash from the portfolio,
resulting in total proceeds to the Company of approximately €54
million.
-
Italian Real Estate Fund
Investment V- In April 2017 the Company closed on its
previously committed investment in Real Estate Fund V, deploying an
additional €4.0 million. This brings the total equity deployed to
date to €4.4 million with an expected further €1.4 million to be
deployed predominantly over the next 12 months.
-
Italian Real Estate Fund
Investment I Realisation - In May 2017, the Company received a
distribution of €4.8 million primarily from sales made by the fund
in 2016.
NORMALISED FFO
Normalised FFO is a non-IFRS
financial measure that, with respect to the Company's Italian
Investments[8], recognises
i) income on an expected yield basis updated periodically, allowing
Eurocastle to report the run rate earnings from these investments
in line with their expected annualised returns and ii) any
additional gains or losses not previously recognised through NFFO
at the point investments are fully realised. On Eurocastle's Legacy
Business, the measure excludes realised gains and losses, sales
related costs (including realised swap losses), impairment losses,
foreign exchange movements and any movements on portfolios with a
negative NAV other than sales or asset management fees
realised.
Eurocastle believes that focusing
on the Normalised FFO of the Company's Italian Investments will
enhance investors' understanding of current and future earnings
given annualised returns achieved and the average net invested
capital[9] over the
relevant period.
Segmental
Normalised FFO for the Three Months Ended 31 March 2017 |
Average Net
Invested Capital3 |
|
|
Italian Investments2 |
Legacy |
Total |
|
€ Thousands |
Yield |
|
€ Thousands |
€ Thousands |
€ Thousands |
doBank Investment |
246,033 |
15% |
|
8,975 |
- |
8,975 |
Italian NPLs[10] |
24,432 |
15% |
|
939 |
- |
939 |
Real Estate Fund Investments |
46,002 |
130% |
|
15,021 |
- |
15,021 |
Other[11] |
n/a |
n/a |
|
7,247 |
- |
7,247 |
Italian Investments NFFO before
expenses |
316,467 |
41% |
|
32,182 |
- |
32,182 |
Legacy Portfolios NFFO before expenses |
|
|
|
- |
2,826 |
2,826 |
Manager Base & Incentive Fees |
|
|
|
(7,728) |
- |
(7,728) |
Other
operating expenses |
|
|
|
(1,082) |
(219) |
(1,301) |
Normalised FFO |
|
|
|
23,372 |
2,607 |
25,979 |
Per Share6 |
|
|
|
0.39 |
0.04 |
0.43 |
Income Statement for the Three Months
Ended 31 March 2017 |
Italian Investments € Thousands |
Legacy
€ Thousands |
Total € Thousands |
Portfolio Returns |
|
|
|
Fair value movements on joint
ventures: |
|
|
|
doBank Group[12] |
(93) |
- |
(93) |
Romeo NPLs1 |
2,359 |
- |
2,359 |
Share of post-tax profit from joint
ventures: |
|
|
|
NPLs - Pool 6 |
8 |
- |
8 |
Real Estate Fund Investment II |
495 |
- |
495 |
Fair value movements on associates: |
|
|
|
Real Estate Fund Investment III |
1,444 |
- |
1,444 |
Real Estate Fund Investment IV |
1,414 |
- |
1,414 |
Share of post-tax profits from associates: |
|
|
|
NPLs - Pools 7-18 |
340 |
- |
340 |
Fair value movements on other investments: |
|
|
|
NPLs/PL - Pools 1-5 |
105 |
- |
105 |
Real Estate Fund Investment I |
155 |
- |
155 |
Other Income |
|
|
|
Other income |
- |
2,351 |
2,351 |
Gains on foreign currency translations and
swaps |
7,255 |
- |
7,255 |
Total operating income |
13,482 |
2,351 |
15,833 |
|
|
|
|
Operating expenses |
|
|
|
Interest expense |
42 |
- |
42 |
Other operating expenses |
|
|
|
Transaction costs |
134 |
- |
134 |
Manager Base Incentive fees |
7,728 |
- |
7,728 |
Remaining operating expenses |
892 |
- |
892 |
Total operating expenses |
8,796 |
- |
8,796 |
|
|
|
|
Net operating profit before taxation |
4,686 |
2,351 |
7,037 |
|
|
|
|
Total tax expense |
14 |
- |
14 |
Net profit after taxation from continuing
operations |
4,672 |
2,351 |
7,023 |
|
|
|
|
Net
Loss after taxation from discontinued operations |
- |
(153) |
(153) |
Profit after taxation for the
period |
4,672 |
2,198 |
6,870 |
Per Share[13] |
0.08 |
0.03 |
0.11 |
|
|
|
|
Non-controlling interest |
20 |
- |
20 |
Net profit attributable to
ordinary shareholders after taxation |
4,652 |
2,198 |
6,850 |
Per Share2 |
0.08 |
0.03 |
0.11 |
|
|
|
|
Reversal of Loss attributed to negative NAV portfolios[14] |
- |
226 |
226 |
Adjusted net profit |
4,652 |
2,424 |
7,076 |
Per Share2 |
0.08 |
0.04 |
0.12 |
Excluding losses from CDO V (the
Group's remaining Legacy investment with a negative NAV) the Group
generated a net profit after taxation of €7.1 million, or €0.12 per
share. As at 31 March 2017, the Group had an Adjusted NAV of nil
for its remaining Legacy interest (CDO V) and does not expect any
further material cash flows from this investment.
Balance Sheet and Adjusted NAV
Reconciliation as at 31 March 2017 |
Italian Investments € Thousands |
Corporate € Thousands |
Legacy
€ Thousands |
Total € Thousands |
Assets |
|
|
|
|
Cash and cash equivalents |
4,958 |
119,302 |
5,082 |
129,342 |
Other assets |
22 |
1,145 |
510 |
1,677 |
Available for sale securities |
5,653 |
- |
- |
5,653 |
Investments in joint ventures |
|
|
|
|
doBank Group[15] |
269,953 |
- |
- |
269,953 |
Romeo NPLs1 |
103,144 |
- |
- |
103,144 |
NPLs - Pool 6 |
1,629 |
- |
- |
1,629 |
Real Estate Fund Investment II |
10,744 |
- |
- |
10,744 |
Real Estate Fund Investment V |
400 |
- |
- |
400 |
Investments in associates |
|
|
|
|
NPLs - Pools 7 - 18 |
23,291 |
- |
- |
23,291 |
Real Estate Fund Investment IV |
19,028 |
- |
2,208 |
21,236 |
Other fair value investments |
|
|
|
|
NPLs/PL - Pools 1-5 |
3,736 |
- |
- |
3,736 |
Real Estate Fund Investment I |
14,434 |
- |
- |
14,434 |
Loans and receivables held for sale |
- |
- |
5,341 |
5,341 |
Derivative
assets |
- |
- |
1,190 |
1,190 |
Total assets |
456,992 |
120,447 |
14,331 |
591,770 |
|
|
|
|
|
Liabilities |
|
|
|
|
Trade and other payables |
4,385 |
21,388 |
3,044 |
28,817 |
Current taxation payable |
22 |
1,975 |
113 |
2,110 |
CDO bonds
payable |
- |
- |
54,471 |
54,471 |
Total liabilities |
4,407 |
23,363 |
57,628 |
85,398 |
|
|
|
|
|
Net Asset Value |
452,585 |
97,084 |
(43,297) |
506,372 |
|
|
|
|
|
Non-controlling interest |
(806) |
- |
- |
(806) |
Net Asset Value after Non-controlling interest |
451,779 |
97,084 |
(43,297) |
505,566 |
|
|
|
|
|
Negative NAV Addbacks2 |
- |
- |
43,297 |
43,297 |
Committed
Investments3 |
65,357 |
(65,357) |
- |
- |
Adjusted NAV |
517,136 |
31,727 |
- |
548,863 |
Adjusted NAV (€ per Share)4 |
8.60 |
0.53 |
- |
9.13 |
ADDITIONAL
INFORMATION
For additional information that
management believes to be useful for investors, please refer to the
latest presentation posted on the Investor Relations section of the
Company's website, www.eurocastleinv.com. For consolidated
investment portfolio information, please refer to the Company's
most recent Financial Report, which is available on the Company's
website (www.eurocastleinv.com).
EARNINGS CALL
INFORMATION
Eurocastle's management will host
an earnings conference call at 2:00 P.M. London time (9:00 A.M. New
York time) later today. All interested parties are welcome to
participate on the live call. You can access the conference call by
dialling first +1- 800-215-5243 (from within the U.S.) or
+1-330-863-8154 (from outside of the U.S.) ten minutes prior to the
scheduled start of the call; please reference "Eurocastle First
Quarter 2017 Earnings Call" or "conference ID number 21936653".
A webcast of the conference call
will be available to the public on a listen-only basis at
www.eurocastleinv.com. Please allow extra time prior to the call to
visit the site and download the necessary software required to
listen to the internet broadcast. A replay of the webcast will be
available for three months following the call.
For those who are not available to
listen to the live call, a replay will be available until 11:59
P.M. New York time on Thursday, 01 June 2017 by dialing
+1-855-859-2056 (from within the U.S.) or +1-404- 537-3406 (from
outside of the U.S.); please reference access code "21936653"
ANNUAL GENERAL
MEETING
The Company will hold its Annual
General Meeting on Wednesday, 21 June 2017, at the Company's
registered office at 2:00 pm London time (3:00 pm CET). Notices and
proxy statements will be mailed out to all holders on record as of
Thursday, 18 May 2017. In addition, the Company has posted the
Annual General Meeting notice on its website under Periodic Reports
and Shareholder Communications in the Investor Relations
Section.
ABOUT
EUROCASTLE
Eurocastle Investment Limited is a
publicly traded closed-ended investment company that focuses on
investing in performing and non-performing loans and other real
estate related assets primarily in Italy. The Company is Euro
denominated and is listed on Euronext Amsterdam under the symbol
"ECT". Eurocastle is managed by an affiliate of Fortress Investment
Group LLC, a leading global investment manager. For more
information regarding Eurocastle Investment Limited and to be added
to our email distribution list, please visit
www.eurocastleinv.com.
FORWARD LOOKING
STATEMENTS
This release contains statements
that constitute forward-looking statements. Such forward-looking
statements may relate to, among other things, future commitments to
sell real estate and achievement of disposal targets, availability
of investment and divestment opportunities, timing or certainty of
completion of acquisitions and disposals, the operating performance
of our investments and financing needs. Forward-looking statements
are generally identifiable by use of forward-looking terminology
such as "may", "will", "should", "potential", "intend", "expect",
"endeavour", "seek", "anticipate", "estimate", "overestimate",
"underestimate", "believe", "could", "project", "predict",
"project", "continue", "plan", "forecast" or other similar words or
expressions. Forward-looking statements are based on certain
assumptions, discuss future expectations, describe future plans and
strategies, contain projections of results of operations or of
financial condition or state other forward-looking information. The
Group's ability to predict results or the actual effect of future
plans or strategies is limited. Although the Group believes that
the expectations reflected in such forward-looking statements are
based on reasonable assumptions, its actual results and performance
may differ materially from those set forth in the forward-looking
statements. These forward-looking statements are subject to risks,
uncertainties and other factors that may cause the Group's actual
results in future periods to differ materially from forecasted
results or stated expectations including the risks regarding
Eurocastle's ability to declare dividends, amortise the Group's
debts, renegotiate the Group's credit facilities, make new
investments, or achieve its targets regarding asset disposals or
asset performance.
[1] Normalised
FFO ("NFFO") is a non-IFRS measure used to provide additional
information regarding the underlying performance of the Company, as
outlined on page 13 of the Q1 2017 Interim Report.
[2] Amounts per
share are calculated on the following basis for the relevant
period: Q1 2017 and Q4 2016 NFFO - 60.1 million of weighted average
shares. Q1 2017 and Q4 2016 dividends and Adjusted Net Asset Value
("Adjusted NAV") - 60.1 million ordinary shares in issue (net of
6.0 million shares held in treasury).
[3] Adjusted
Net Asset Value accounts for the €9.0 million, or €0.15 per share,
dividend declared in March 2017 but not the €8.4 million, or €0.14
per share, supplemental dividend declared in May 2017. Adjusted Net
Asset Value also excludes the Group's remaining Legacy portfolio
with negative NAV (CDO V) whose debt is non-recourse to
Eurocastle.
[4] Please
refer to page 15 of the Q1 2017 Interim Report for further detail
with regards to the Company's distribution policy and composition
of the total dividend declared for the period.
[5] Q1 2017
dividend represents both the dividend declared in March 2017 of
€9.0 million, or €0.15 per share, and a supplemental dividend of
€8.4 million, or €0.14 per share, declared in May 2017.
[6]
Like-for-like Q1 2016 EBITDA is pro forma for doBank, Italfondiario
and their subsidiaries and adjusted to exclude the net impact of
the Romeo NPL portfolio (spun-off by the Group in September
2016).
[7] All
investments owned by the Group prior to April 2013.
[8] All
investments acquired by the Group since the establishment of its
new strategy in April 2013, previously labelled as "New
Investments".
[9] Time
weighted average of invested capital (net of any capital returned)
over the relevant period.
[10] Excludes
the Romeo NPL pool which is included under the doBank
Investment.
[11]Fully
realised investment.
6 Normalised
FFO per share based on 60.1 million weighted average ordinary
shares for Q1 2017.
[12] doBank
Group fair value movement includes €0.1 million movement from the
5% interest in the Romeo NPL pool acquired as part of the doBank
investment and spun-off in September 2016. Conversely, the Romeo
NPL pool fair value movement reflects the movement on the remaining
95% interest of the NPL pool.
[13] Earnings
per share based on 60.1 million weighted average ordinary shares
for the three months ended 31 March 2017.
[14] Reverses
gains and losses arising from portfolios with a negative net asset
value net of any cash distributions or fees received by the
Company.
[15] doBank
Group value includes €5.4 million representing the 5% interest in
the Romeo NPL pool acquired as part of the doBank investment and
spun-off in September 2016. Conversely, the Romeo NPL pool value
reflects the remaining 95% interest in the NPL pool acquired as
part of the doBank investment and spun-off in September
2016.
2 Adjusts to
exclude the Group's remaining Legacy portfolio with negative NAV
(CDO V) whose debt is non-recourse to Eurocastle.
3 Adjusted NAV
of Italian Investments includes €60 million of equity allocated
against the FINO transaction (reflecting the midpoint of the
expected equity requirement of €50 to €70 million) and a €5.4
million estimated remaining commitment allocated against RE Fund
Investment V.
4 Adjusted NAV
per share based on 60.1 million ordinary shares in issue.
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Eurocastle Investment Limited via
Globenewswire
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