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Thursday, 18 May 2017

Eurocastle Releases First Quarter 2017 Financial Results, Announces Supplemental Dividend of €0.14 per share and Annual General Meeting on 21 June 2017

     

Published: 08:00 CEST 18-05-2017 /GlobeNewswire /Source: Eurocastle Investment Limited / : ECT /ISIN: GB00B94QM994

Eurocastle Releases First Quarter 2017 Financial Results, Announces Supplemental Dividend of €0.14 per share and Annual General Meeting on 21 June 2017

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

 

 

 

  • Annual General Meeting
    • The Company further announces that it 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).

 

 

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.

 

 

  • BUSINESS HIGHLIGHTS SUBSEQUENT TO 31 MARCH 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 (One Liberty Plaza, 165 Broadway, New York, NY 10006. Tel: +1 212 401 8700. www.nasdaqomx.com) on behalf of NASDAQ OMX Corporate Solutions clients. Source: Eurocastle Investment Limited, Regency Court, Glategny Esplanade, St Peter Port GY1 1WW GBR, Guernsey
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