Starwood European Real Estate Finance (SWEF)

30/03/2022

Results analysis from Kepler Trust Intelligence

Starwood European Real Estate Finance (SWEF) has reported a strong 11.1% share price total return for the year ending 31/12/2022. During the year SWEF paid dividends of 5.5p in four equal quarterly installments as targeted and the board states it expects to continue to pay at this level going forward.

SWEF lends against European real estate, and despite the uncertainties of the pandemic, SWEF has performed robustly and has reported no writedowns in the value of its loans. All loan interest and scheduled amortization payments were paid on time during the year, and the company expects this to continue.

Kepler View

SWEF's performance through the volatility of the pandemic has been rock solid. No interest payments have been missed and no covenants were breached, with managers recognising no impairments despite the severe impact of the pandemic on some of the tenants of the underlying properties, especially in the retail and leisure sectors. With the peak phase of the pandemic behind us and economies open, the managers report one of their strongest pipelines of potential opportunities in a dislocated market and have plenty of resources to take advantage.

The defensiveness demonstrated by the portfolio could be highly attractive in 2022 as the European economy struggles with the impact of inflationary pressures exacerbated by the war in Ukraine. Equity and bond markets have been volatile year-to-date, and the prospect of significant interest rate hikes as a response to inflation is another risk to bear in mind. This is particularly germane to bond investors, as fixed interest securities would see hit to their capital values with rising interest rates. However, 78% of SWEF's portfolio is in floating rate loans, meaning the majority of the income received will see a pass through from rate hikes and the duration is very low - in fact not being marked to market means there will be no negative impact from rising rates on the carrying values of the loans at all.

CLICK HERE TO READ THE FULL REPORT

Visit http://www.trustintelligence.co.uk/investor for more high quality independent investment trust research.

Important information

This report has been issued by Kepler Partners LLP.  The analyst who has prepared this report is aware that Kepler Partners LLP has a relationship with the company covered in this report and/or a conflict of interest which may impair the objectivity of the research.

Past performance is not a reliable indicator of future results. The value of investments can fall as well as rise and you may get back less than you invested when you decide to sell your investments. It is strongly recommended that if you are a private investor independent financial advice should be taken before making any investment or financial decision.

Kepler Partners is not authorised to make recommendations to retail clients. This report has been issued by Kepler Partners LLP, is based on factual information only, is solely for information purposes only and any views contained in it must not be construed as investment or tax advice or a recommendation to buy, sell or take any action in relation to any investment.

The information provided on this website is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject Kepler Partners LLP to any registration requirement within such jurisdiction or country. In particular, this website is exclusively for non-US Persons. Persons who access this information are required to inform themselves and to comply with any such restrictions.

The information contained in this website is not intended to constitute, and should not be construed as, investment advice. No representation or warranty, express or implied, is given by any person as to the accuracy or completeness of the information and no responsibility or liability is accepted for the accuracy or sufficiency of any of the information, for any errors, omissions or misstatements, negligent or otherwise. Any views and opinions, whilst given in good faith, are subject to change without notice.

This is not an official confirmation of terms and is not a recommendation, offer or solicitation to buy or sell or take any action in relation to any investment mentioned herein. Any prices or quotations contained herein are indicative only.  

Kepler Partners LLP (including its partners, employees and representatives) or a connected person may have positions in or options on the securities detailed in this report, and may buy, sell or offer to purchase or sell such securities from time to time, but will at all times be subject to restrictions imposed by the firm's internal rules. A copy of the firm's Conflict of Interest policy is available on request.

PLEASE SEE ALSO OUR TERMS AND CONDITIONS

Kepler Partners LLP is authorised and regulated by the Financial Conduct Authority (FRN 480590), registered in England and Wales at 70 Conduit Street, London W1S 2GF with registered number OC334771.