Eurocastle Releases Fourth Quarter And Year End 2020 Financial Results
March 05 2021 - 1:00AM
UK Regulatory
TIDMECT
Contact:
Oak Fund Services (Guernsey) Limited
Company Administrator
Attn: Mark Woodall
Tel: +44 1481 723450
Eurocastle Releases Fourth Quarter and Year End 2020 Financial Results
SHYSHY
Guernsey, 5 March 2021 -- Eurocastle Investment Limited (Euronext
Amsterdam: ECT) today has released its annual report for the year ended
31 December 2020.
Adjusted Net Asset Value ("NAV") of EUR16.7 million(1) , or EUR9.00 per
share(2) up EUR1.54 per share vs. EUR7.46 per share at Q3 2020 (up
EUR0.68 per share vs. EUR8.32 per share at YE 2019) due to:
1. Valuation movements:
-- EUR0.20 per share, or 4%, increase in Q4 2020 (EUR1.03 per share3
decrease for the FY 2020) on the remaining three real estate fund
investments.
-- EUR0.02 per share, or 4%, increase in Q4 2020 (EUR0.05 per share
increase for the FY 2020) on the remaining three NPL and other
loan interests.
2. Positive reserve and legacy movements of EUR1.32 per share in Q4 2020
(EUR1.66 per share increase for the FY 2020)
IFRS NAV of EUR32.9 million, or EUR17.72 per share
2020 Capital Distribution of EUR1.0 million, or EUR0.54 per share
declared on 4 March 2021 and to be paid on 30 March 2021 to shareholders
of record at close of business on 11 March 2021 with an ex-dividend date
of 10 March 2021. This distribution is being treated as a return of
capital because there are no current year or carry-forward profits
available at the Company. It will be reflected in the "Share Capital"
column in the Statement of Changes in Equity in the Company's financial
statements.
The tables below summarise the Adjusted NAV by segment:
YE 2020 NAV YE 2019 NAV Q3 2020 NAV
------------------- ------------------ ------------------
EUR EUR per EUR EUR per EUR EUR per
million share million share million share
Real Estate
Funds 7.4 4.01 13.9 7.52 8.5 4.58
Italian
NPLs &
Other
Loans 1.2 0.67 1.2 0.67 1.2 0.67
Net
Corporate
Cash(4) 8.0 4.32 0.3 0.13 4.1 2.21
---------- ------- -------- --------
Adjusted
NAV 16.7 9.00 15.4 8.32 13.8 7.46
=========== ========== ======= ======== ======== ======== ========
The Company's current assets comprise:
1. Interests in two real estate redevelopment funds where construction is
fully completed. The units are in the process of being sold but
encountering delays due to the COVID-19 outbreak. Both developments offer
luxury residential apartments with high specification furnishings in
Rome.
2. Interest in a public fund which is in the process of being liquidated and
which recently declared its last expected material distribution of EUR0.4
million to be paid to Eurocastle on 10 March 2021.
3. Residual minority interests in three predominantly secured NPL & Other
Loan pools.
4. Net corporate cash of EUR8.0 million, comprising corporate cash net of
liabilities and additional reserves.
2020 BUSINESS HIGHLIGHTS
Overview in light of COVID-19
The Company started 2020 having successfully executed on the first and
largest part of its Realisation Plan by selling its NPL portfolio and
tendering its stake in doValue, via a share for share tender. As part of
this process the Company set aside Additional Reserves determined by the
Board of Directors in order to take into account anticipated future
costs and potential liabilities.
These steps left the Company well capitalised and in a strong position
to weather the extraordinary circumstances that have followed the
outbreak of COVID-19. During the year, the Company reviewed its
underlying cash flow models and adjusted them accordingly by applying
haircuts and extending out the cash flows of its remaining investments
to take into account the anticipated impact of COVID-19, with the
resultant impact reflected in the valuation of the Company's assets at
the end of YE 2020.
Investment Realisations & Highlights
COVID-19 has had an extraordinary impact across all sectors of the
economy. The Company's move to realise the majority of its assets in YE
2019 and its prudent management of cash reserves have left the Company
well placed to maximize the value of its remaining assets. This has been
evidenced in their performance during 2020 where the Company achieved
the following milestones:
-- During the year, the Company realised EUR4.7 million from its investments,
of which EUR4.6 million came from its Real Estate Funds (33% of YE 2019
NAV after asset specific reserves) and EUR0.1 million from its minority
NPL and Other Loan holdings (8% of YE 2019 NAV).
-- RE Redevelopment Funds - REFI II & REFI V: Closed or collected offers
under contract on 50% of the remaining real estate units available for
sale as at 1 January 2020 in Real Estate Fund Investment II and 47% in
Real Estate Fund Investment V, with a significant portion of this
activity occurring in H2 2020, after the initial lockdown. Assuming that
all these offers close, only 13% of units in one building in Real Estate
Fund Investment II (with the second building already fully sold) and 33%
of the units in Real Estate Fund Investment V will remain to be sold. The
renewed interest in the apartments that was evidenced after the end of
the first lockdown in Italy in May 2020 has continued, reflecting the
pent-up demand in the market for quality, semi-central residential real
estate in Rome.
-- REFI I: Following the sale of all of the assets in Real Estate Fund
Investment I in 2019, the Company received EUR2.2 million, or 89% of its
YE 2019 NAV, during 2020. The fund is in the process of being liquidated
with its last expected material distribution of EUR0.4 million to be paid
to Eurocastle on 10 March 2021, EUR0.1 million above Eurocastle's YE 2020
carrying value.
-- Italian NPLs & Other Loans: The residual NPL & Other Loan interests,
which are predominantly secured, have continued to generate cash proceeds,
in spite of the turmoil created by COVID-19. During the year the pools
generated and distributed EUR0.1 million, or 8% of YE 2019 NAV.
-- Legacy Realisations: The Company successfully negotiated the positive
resolution of a claim relating to its legacy debt business. Given the
uncertainty ascribed to the outcome of the claim, the Company did not
attribute any value in its accounts other than reserving for its share of
the associated costs. The Company received approximately EUR2.2 million
and after taking into account costs previously reserved for, the net
positive impact to Eurocastle's Adjusted Net Asset Value is EUR2.3
million.
-- Additional Reserves: The Company reduced its Additional Reserves
(excluding asset specific reserves) from EUR18.7m to EUR16.2m during the
financial year. EUR1.8m of this reduction relates to reserves being
utilised, in line with anticipated costs, along with EUR0.7m of net
reserve savings having been achieved in 2020.
SUBSEQUENT EVENTS TO 31 DECEMBER 2020
-- The market turmoil and global distress caused by the COVID-19 pandemic
has created a number of potentially attractive investment opportunities.
In light of this and the Company's parallel efforts to expedite the
resolution of certain key reserves, the Board has decided to undertake a
review of the Company's strategic options, including use of available
capital.
-- The Company's current strategy was approved by shareholders as part of
the Realisation Plan announced in November 2019. The Board presently
anticipates that the outcome of the current review will be announced to
shareholders during the second half of 2021.
Income Statement for the Full Year and Fourth Quarter
2020 FY 2020 Q4 2020
EUR EUR
Thousands Thousands
------------------------------------------------------ ---------- ----------
Portfolio Returns
------------------------------------------------------
Italian NPLs & Other Loans 99 33
Real Estate Funds (2,233) 371
------------------------------------------------------ ---------- ----------
Fair value movement on Italian investments (2,134) 404
Fair value movements on residual Legacy entities 2,501 2,294
Other income 15 -
Gains on foreign currency translation 2 3
----------
Total gain 384 2,701
------------------------------------------------------ ---------- ----------
Operating Expenses
------------------------------------------------------
Interest expense 43 -
Manager base and incentive fees 111 37
Remaining operating expenses 1,749 316
------------------------------------------------------ ---------- ----------
Other Operating expenses 1,860 353
------------------------------------------------------ ---------- ----------
Total expenses 1,903 353
------------------------------------------------------ ---------- ----------
Net (loss) / profit for the period (1,519) 2,348
EUR per share (0.82) 1.27
------------------------------------------------------ ---------- ----------
Balance Sheet and Adjusted NAV Reconciliation as at Italian Investments Corporate Total
31 December 2020 EUR Thousands EUR Thousands EUR Thousands
------------------------------------------------------ ------------------- --------------- --------------
Assets
Cash and cash equivalents - 25,341 25,341
Other assets - 119 119
Investments:
Italian NPLs & Other Loans 1,248 - 1,248
Real Estate Funds 7,435 - 7,435
Total assets 8,683 25,460 34,143
Liabilities
Trade and other payables - 1,170 1,170
Manager base and incentive fees - 140 140
Total liabilities - 1,274 1,274
IFRS NAV 8,683 24,186 32,869
------------------------------------------------------- ------------------- --------------- --------------
Additional Reserves(5) - (16,183) (16,183)
------------------------------------------------------- ------------------- --------------- --------------
Adjusted NAV 8,683 8,003 16,686
Adjusted NAV (EUR per share)(6) 4.68 4.32 9.00
------------------------------------------------------- ------------------- --------------- --------------
NOTICE:
This announcement contains inside information for the purposes of the
Market Abuse Regulation 596/2014.
ADDITIONAL INFORMATION
For investment portfolio information, please refer to the Company's most
recent Financial Report, which is available on the Company's website (
https://www.globenewswire.com/Tracker?data=D5LzBIXn_BiYtgb_D6fINBmavu8DO_th7k0OkG7DCaamE-0AazzSpPO_jS2lxPK7SyUV900OIv8GurjPWRRYoMhBktDEajYQz7RTY79ptCc=
www.eurocastleinv.com).
ABOUT EUROCASTLE
Eurocastle Investment Limited ("Eurocastle" or the "Company") is a
publicly traded closed-ended investment company, focused on Italian
performing and non-performing loans, Italian loan servicing platforms
and other real estate related assets in Italy. On 18 November 2019, the
Company announced a plan to realise the majority of its assets with the
aim of accelerating the return of value to shareholders. The Company
will not currently seek material new investments from the proceeds of
the realisation but will continue to support its existing investments to
the extent required in order to optimise returns and distribute cash to
shareholders when available (the "Realisation Plan"). For more
information regarding Eurocastle Investment Limited and to be added to
our email distribution list, please visit
https://www.globenewswire.com/Tracker?data=D5LzBIXn_BiYtgb_D6fINBmavu8DO_th7k0OkG7DCaZuJgXrUSQLBz6UW3kbsQG0AKkEfJc4y5x4FHTfLV5sYh9BO5mR3PfWzLtWw4a85ec=
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
or achieve its targets regarding asset disposals or asset performance.
(1) In light of the Realisation Plan announced in November 2019, the
Adjusted NAV as at 31 December 2020 reflects additional reserves for
future costs and potential liabilities, which have not been accounted
for under the IFRS NAV. No commitments for these future costs and
potential liabilities existed as at 31 December 2020.
(2) Per share calculations for Eurocastle throughout this document are
based on 1.9 million shares.
(3) FY 2020 decrease of EUR1.03 per share, includes fair value decrease
on real estate fund investments of EUR1.21 per share net of a release of
additional asset specific reserves of EUR0.18 per share.
(4) Reflects corporate cash net of liabilities and additional reserves.
(5) In light of the Realisation Plan, the Adjusted NAV as at 31 December
2020 reflects the additional reserves for future costs and potential
liabilities of EUR16.2 million which have not been accounted for under
the IFRS NAV.
(6) Amounts per share calculated on 1.9 million outstanding ordinary
shares.
(END) Dow Jones Newswires
March 05, 2021 02:00 ET (07:00 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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