Eurocastle
Releases First Quarter 2018 Financial Results,
Announces First Quarter Distribution of €0.33 per
share and Annual General Meeting on 20 June 2018
Guernsey, 17 May 2018 - Eurocastle
Investment Limited (Euronext Amsterdam: ECT) today has released its
financial results for the first quarter ended 31 March
2018.
-
Net Asset Value ("NAV") of
€505.1 million[1], or €9.58
per share[2].
-
Normalised FFO[3]of €7.3
million, or €0.14 per share2, for the
first quarter of 2018.
-
First Quarter 2018
Distribution of €0.33 per share2, consisting
of the regular quarterly dividend of €0.15 per share and an
additional €0.18 per share capital distribution representing an
acceleration of capital that would have otherwise been distributed
in August 2018 under the Company's distribution policy. The
dividend and capital distribution were declared on 16 May 2018 and
will be paid on 31 May 2018 to shareholders of record at close of
business on 23 May 2018, with an ex-dividend date of 22 May
2018.
|
|
Q1 2018 |
|
|
Q4 2017 |
|
|
|
€
million |
€ per
share2 |
|
|
€
million |
€ per
share2 |
|
NAV1 |
|
505.1 |
9.58 |
|
|
556.5 |
10.56 |
|
Normalised FFO3 |
|
7.3 |
0.14 |
|
|
7.8 |
0.14 |
|
Distributions2 |
|
17.4 |
0.33 |
|
|
14.2 |
0.27 |
|
-
Annual General Meeting The
Company further announces that it will hold its Annual General
Meeting on Wednesday, 20 June 2018, at the Company's registered
office at 2:00 pm Guernsey time (3:00 pm CET).
FIRST QUARTER
2018 BUSINESS HIGHLIGHTS
Sale of Senior
Notes of FINO 1 Securitisation
-
In January 2018, the Company received €48.6
million of net proceeds through the sale of its share of the senior
notes of FINO 1 Securitisation S.r.l., one of the two
securitisations that collectively own the FINO NPL portfolio that
the Company acquired from UniCredit S.p.A. The senior notes are
guaranteed by the Italian state under the "GACS" program and the
sale of these notes is therefore seen as an extremely attractive
form of financing.
-
Eurocastle's value of its investment in the FINO
portfolio appreciated by 10% during the quarter net of these
proceeds and other distributions received in the period.
Follow-on Investment in FINO NPL Portfolio
-
In January 2018, the Company closed on a €8.4
million follow-on investment to acquire, together with other
Fortress affiliates, additional interests in the mezzanine and
junior notes of the two securitisations that collectively own the
FINO NPL portfolio.
doBank Financial
Performance
-
For the first quarter of 2018, the doBank Group
reported EBITDA of €11.0 million, up 12% over the same period last
year (Q1 2017: €9.9 million) driven by increased revenues following
the onboarding of €12 billion GBV of new mandates and more
efficient cost controls increasing the EBITDA margin by 2%.
-
Net profit for the first quarter was €6.6
million, up 23% over the same period last year (Q1 2017: €5.3
million).
-
In April 2018, doBank declared a 2017 full year
dividend of €31.5 million (of which Eurocastle's share is €7.9
million) payable on 23 May 2018.
-
Eurocastle's holding of 20 million shares,
representing 25.6% of doBank's outstanding shares, was valued at
€11.45 per doBank share as at 31 March 2018.
NPL portfolio
financing
-
In March 2018, the Company, alongside other
Fortress affiliate co-investors, completed on a financing of the
€293 million GBV NPL portfolio acquired in November 2017. As a
result, the Company received net proceeds of €7.6 million equating
to 63% of the equity invested.
BUSINESS
HIGHLIGHTS SUBSEQUENT TO 31 MARCH 2018
Investment in New
Single Name Loan Transaction
-
In May 2018, the Company closed on a €7.7
million investment to acquire a shared interest, alongside other
Fortress affiliates, in a portfolio of Italian distressed loans to
a single borrower with a gross book value of ~€81 million. The
loans are secured by 1st lien ship
mortgages.
NORMALISED FFO
Normalised FFO ("NFFO") is a
non-IFRS financial measure that, with respect to all of the
Company's Italian Investments other than the doBank Group,
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 realised. Cash
flow receipts are therefore allocated by the Company between income
and capital in accordance with this expected yield methodology.
With respect to the doBank Group, following the IPO, the Company
now recognises NFFO based on its share of doBank's reported annual
net income after tax together with any gains or losses arising from
the sale of its shares. The income cash flow profile of each of the
Company's investments may not exactly equal the NFFO recognised by
the Company each period but will do so over the life of each
investment.
Normalised FFO
for the Three Months Ended 31 March 2018 |
Average Net Invested Capital[4] |
|
|
Total NFFO |
|
€ Thousands |
Yield |
|
€ Thousands |
doBank Group |
81,151 |
18% |
|
3,628 |
Italian NPLs |
104,653 |
28% |
|
7,412 |
Real Estate Fund Investments |
32,443 |
4% |
|
354 |
Italian Investments NFFO before expenses |
218,247 |
21% |
|
11,394 |
Legacy portfolios |
|
|
|
(30) |
Manager base & incentive fees[5] |
|
|
|
(2,884) |
Other
operating expenses |
|
|
|
(1,202) |
Normalised FFO |
|
|
|
7,278 |
Per Share |
|
|
|
0.14 |
As announced in the 2017 annual report, the Board
of Directors came to the conclusion, that as of 1 July 2017, the
Company met the requirements to be classified as an investment
entity as defined under IFRS 10. Following this change, the Company
does not consolidate the entities it controls and therefore fair
values all of its investments (whether through subsidiaries, joint
ventures or associates).
Income Statement for the Three
Months ended 31 March 2018 (Unaudited) |
Income
Statement |
|
€ Thousands |
Portfolio
Returns |
|
doBank Group |
(42,028) |
Romeo NPLs |
2,228 |
FINO NPLs |
4,875 |
Other NPL Pools |
1,082 |
Real Estate Fund Investment I |
22 |
Real Estate Fund Investment II |
393 |
Real Estate Fund Investment IV |
(39) |
Real Estate
Fund Investment V |
344 |
Fair value movement on Italian
investments |
(33,123) |
Fair value movements on residual
Legacy entities |
(30) |
Other income - Gains on foreign
currency translation and other derivatives |
2 |
Total income |
(33,151) |
|
|
Operating
Expenses |
|
Interest expense |
76 |
Manager base and incentive fees |
2,884 |
Remaining operating expenses |
1,066 |
Other Operating expenses |
3,950 |
Total expenses |
4,026 |
|
|
Net loss for the period |
(37,177) |
€ per share |
(0.71) |
For the quarter ended 31 March
2018, the total net loss reported was (€37.2) million, or (€0.71)
per share. Excluding the €42.0 million loss which arose from the
revaluation of the doBank investment which is marked-to-market
based on doBank's closing share price, Eurocastle recognised a €4.8
million profit or €0.09 per share.
Balance Sheet and NAV Reconciliation as at 31
March 2018 (Unaudited) |
|
Italian Investments € Thousands |
Corporate € Thousands |
Total € Thousands |
Assets |
|
|
|
|
Cash and cash equivalents |
|
- |
174,443 |
174,443 |
Other assets |
|
- |
74 |
74 |
Investments: |
|
|
|
|
doBank Group |
|
229,814 |
- |
229,814 |
Romeo NPLs |
|
49,091 |
- |
49,091 |
FINO NPLs |
|
4,913 |
- |
4,913 |
Other NPL Pools |
|
37,605 |
- |
37,605 |
Real Estate Fund Investment I |
|
11,140 |
- |
11,140 |
Real Estate Fund Investment II |
|
13,340 |
- |
13,340 |
Real Estate Fund Investment IV |
|
186 |
- |
186 |
Real Estate Fund Investment V |
|
5,857 |
- |
5,857 |
Other net assets of subsidiaries (residual
legacy entities) |
|
- |
248 |
248 |
Total assets |
|
351,946 |
174,765 |
526,711 |
|
|
|
|
|
Liabilities |
|
|
|
|
Trade and other payables |
|
- |
18,717 |
18,717 |
Manager base and incentive fees |
|
- |
2,884 |
2,884 |
Total liabilities |
|
- |
21,601 |
21,601 |
|
|
|
|
|
Net Asset Value |
|
351,946 |
153,164 |
505,110 |
|
|
|
|
|
FINO deferred purchase price commitment |
|
64,680 |
(64,680) |
- |
New distressed loan investment |
|
7,722 |
(7,722) |
- |
RE Fund Investment V remaining unfunded
commitment |
|
794 |
(794) |
- |
|
|
|
|
|
NAV (segments adjusted for outstanding
commitments)[6] |
|
425,142 |
79,968 |
505,110 |
NAV (€ per
share) |
|
8.06 |
1.52 |
9.58 |
Taking into account the Q1 2018
distribution of €17.4 million (€0.33 per share) declared after the
quarter end, the net Corporate NAV (after adjusting for outstanding
commitments) would be €62.6 million (€1.19 per share) and the net
total Company NAV would be €487.7m (€9.25 per share). The dividend
and capital distribution were declared on 16 May 2018 and will be
paid on 31 May 2018 to shareholders of record at close of business
on 23 May 2018, with an ex-dividend date of 22 May 2018.
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 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 2018 Earnings Call" or "conference ID number 1685298".
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 Sunday, 17 June 2018 by dialling
+1-855-859-2056 (from within the U.S.) or +1-404-537-3406 (from
outside of the U.S.); please reference access code "1685298".
ANNUAL GENERAL
MEETING
The Company will hold its Annual
General Meeting on Wednesday, 20 June 2018, at the Company's
registered office at 2:00 pm Guernsey time (3:00 pm CET). Notices
and proxy statements will be posted on 30 May 2018 to shareholders
of record at close of business on 29 May 2018.
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",
"endeavor", "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
Company's ability to predict results or the actual effect of future
plans or strategies is limited. Although the Company 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 Company'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 Company's
debts, renegotiate the Company's credit facilities, make new
investments, or achieve its targets regarding asset disposals or
asset performance.
[1] NAV for Q1
2018 is before deducting the first quarter 2018 distribution of
€0.33 per share declared and to be paid in May 2018.
[2]Amounts per
share are based on the weighted average or outstanding voting
shares and therefore exclude shares held in treasury. As at 31
March 2018, a total of 66.1 million shares were in issue of which
52.7 million were voting shares and 13.4 million were held in
treasury. Amounts per share are therefore calculated on the
following basis: Q1 2018 Net Asset Value per share ("NAV per
share") - 52.7 million voting shares in issue; Q4 2017 NAV per
share - 52.7 million voting shares in issue; Q1 2018 NFFO per
share- 52.7 million weighted average voting shares; Q4 2017 NFFO
per share - 57.5 million weighted average voting shares. Q1 2018
& Q4 2017 dividends paid on 52.7 million voting shares.
[3] Normalised
FFO ("NFFO") is a non-IFRS measure used to explain the financial
performance of the Company, as outlined on page 9 of the Q1 2018
Interim Report.
[4]Time
weighted average of invested capital (net of any capital returned)
over the relevant period.
[5]Manager base
fees are equal to the sum of (i) 1.5% of the Company's Net Asset
Value excluding Net Corporate Cash and (ii) 0.75% of the Company's
Net Corporate Cash (including cash committed to investments but not
yet deployed) calculated and paid monthly in arrears. Incentive
fees are equal to 25% of the euro amount by which the Company's
NFFO derived from Italian Investments (net of allocable fees and
expenses) exceeds the net amount invested in such investments
multiplied by a simple interest rate of 8% per annum (calculated on
a cumulative but not compounding basis).
[6]NAV adjusted
for outstanding commitments. NAV of Italian NPLs includes (i) €64.7
million of deferred purchase price on FINO payable over the next
few years and (ii) an additional €7.7 million in the ~€81 million
GBV single name loan transaction funded in May 2018. NAV of Real
Estate Funds includes a remaining unfunded commitment estimated at
€0.8 million in RE Fund Investment V. NAV of Net Corporate Cash
deducts outstanding commitments listed above.
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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