TIDMECT
EUROCASTLE INVESTMENT LIMITED
Contact:
Oak Fund Services (Guernsey) Limited
Company Administrator
Attn: Tracy Lewis
Tel: +44 1481 723450
Eurocastle Releases Fourth Quarter and Year End 2021 Financial
Results
Guernsey, 29 April 2022 -- Eurocastle Investment Limited
(Euronext Amsterdam: ECT) today
https://www.globenewswire.com/Tracker?data=8bqY6m5qgjYkuTPOonU3PQlxxG2SroZ55NfqOepgXiGklTAbVqt_GblH1jxPpepe
has released its annual report for the year ended 31 December
2021.
-- Adjusted Net Asset Value ("NAV") of EUR18.2 million1, or EUR9.79 per
share2, up EUR0.03 per share vs. EUR9.76 per share at Q3 2021 (up EUR1.33
per share vs. EUR8.46 per share at YE 2020, after payment of 2020
distribution of EUR0.54 per share in Q1 2021) due to:
1. Valuation movements:
-- EUR0.03 per share, or 1%, increase in Q4 2021 (EUR1.11 per share
increase for the FY 2021) on the real estate fund investments.
-- EUR0.03 per share, or 4%, increase in Q4 2021 (EUR0.32 per share
increase for the FY 2021) on the remaining three NPL and other
loan interests.
2. Reserve and legacy movements of EUR(0.03) per share in Q4 2021 (EUR0.10
per share decrease for the FY 2021).
-- IFRS NAV of EUR32.9 million, or EUR17.73 per share
The tables below summarise the Adjusted NAV by segment:
YE 2021 NAV Q3 2021 NAV YE 2020 NAV
------------------- ------------------- ---------------
EUR EUR EUR
per per EUR per
EUR million share EUR million share million share
Real Estate
Funds(3) 2.8 1.49 5.4 2.91 7.4 4.01
Italian NPLs &
Other Loans 1.3 0.72 1.3 0.70 1.2 0.67
Net Corporate
Cash(3,) (4) 14.1 7.57 11.4 6.15 8.0 4.32
------------ ----- ------- ------
Adjusted NAV 18.2 9.79 18.1 9.76 16.7 9.00
=================== ============ ===== ============ ===== ======= ======
2020 Capital
Distribution (paid
in Q1 2021) - - - - (1.0) (0.54)
------------------- ------------ ----- ------------ ----- ------- ------
Adjusted NAV after
2020 Capital
Distribution 18.2 9.79 18.1 9.76 15.7 8.46
=================== ============ ===== ============ ===== ======= ======
As at 31 December 2021, the Company's remaining assets
comprise:
1. Interests in two fully developed, luxury residential real estate
redevelopment funds in Rome where the apartments in Real Estate Fund
Investment II ("REFI II") are now all sold or under contract to be sold
and 4% of the units in Real Estate Fund Investment V ("REFI V") remain to
be sold.
2. Residual minority interests in two predominantly secured NPL pools where
the underlying assets are under contract to be sold once the underlying
portfolio level financing of each is repaid.
3. Net corporate cash of EUR14.1 million3, comprising corporate cash net of
liabilities and additional reserves.
2021 BUSINESS HIGHLIGHTS
FY 2021 Overview
During the year the Company continued to make significant
progress on realising its remaining assets as part of its
Realisation Plan with 72% of its YE 2020 NAV relating to
investments realised in the period. In particular, sales of
residential units across both of its real estate redevelopment
funds have proved resilient despite the ongoing challenges from
COVID-19. This positive activity in the RE Funds, where results
were achieved above and ahead of what was anticipated, after being
adjusted in 2020 for the projected impact of COVID-19, has been the
primary driver for a 31% valuation increase in the period on all
investments.
In addition, Eurocastle received its last material distribution
from its publicly listed fund investment and sold all underlying
assets in one of the three remaining loan pools the Company has an
interest in. The Company is now left with two RE Fund Investments
and two NPL pools with an NAV of EUR5.1 million, or 28% of the
Company's NAV. In Q1 2022, the Company received a further EUR2.0
million from its RE Fund investments. Taking into account these
distributions, Eurocastle's remaining NAV for all of its
investments would be EUR3.1 million, or 17% of the Company's
Adjusted NAV, which is expected to be realised within the next 18
months.
The board is currently in intensive discussions with the Manager
to analyse potential investment opportunities and expects to
announce the conclusion of the strategic review in conjunction with
the release of the Company's interim management statement for the
first quarter of 2022 on 1 June 2022.
Investment Realisations & Highlights
-- During 2021, the Company realised EUR6.3 million from its investments, of
which EUR5.8 million came from its Real Estate Funds (78% of their YE
2020 NAV) and EUR0.5 million from its minority NPL and Other Loan
holdings (41% of their YE 2020 NAV).
-- RE Redevelopment Funds - REFI II & REFI V:
-- In REFI II, all units have been sold and the fund is now in liquidation.
In REFI V, assuming all units currently under contract successfully close,
only 4% of units will remain to be sold.
-- Eurocastle received EUR5.3 million during the year comprising (i) EUR0.8
million from REFI II (32% of its YE 2020 NAV) and (ii) EUR4.6 million
from REFI V (96% of its YE 2020 NAV). A further EUR2.0 million was
distributed from the investments in Q1 2022; EUR1.0 million from REFI II
in January 2022 and EUR1.0 million from REFI V in March 2022.
-- REFI I: Following the sale of all the assets in Real Estate Fund
Investment I in 2019, in Q1 2021 the Company received its last expected
material distribution of EUR0.4 million, or 143% of its YE 2020 NAV.
-- Italian NPLs & Other Loans: During the year the pools generated and
distributed EUR0.5 million, or 41% of their YE 2020 NAV. The Company
also disposed of all of the underlying assets of one of these 3 pools
which generated EUR0.4 million to the Company (31% of its YE 2020
NAV).
-- Additional Reserves: The Company reduced these reserves from EUR16.2
million to EUR14.8 million during the year. The reduction of EUR1.4
million reflects EUR1.6 million of reserves being utilised, in line with
anticipated costs, and an increase of EUR0.2 million in the existing
reserves in 2021.
SUBSEQUENT EVENTS TO 31 DECEMBER 2021
The Company is exposed to a potential tax risk of up to EUR7.2
million associated with the disposal of a legacy property
subsidiary in prior years. In February 2022, the Company received
revised tax assessments related to this risk covering the period
2008 - 2012 determining a liability of EUR4.6 million, or EUR2.50
per share. In respect of the same legacy property subsidiary, the
years 2013 - 2015 remain subject to ongoing tax audits, the timings
of which are uncertain. The Company estimates that the remaining
financial impact for all these audits, including interest accruals,
is between EUR1.8 million - EUR2.5 million. The Company intends to
appeal the current and any future assessments through the German
tax system and, having taken independent advice, considers it
probable that the matter will finally be determined in the
Company's favour. In light of this, the Company will recognise a
tax asset of EUR4.6m following payment of this amount in March
2022. The Company has been advised that, based on average court
timings for both the German fiscal and federal court systems, this
matter can be expected to be resolved in approximately four years,
but notes that it can take considerably longer and, in rare cases,
up to ten years in total. The total potential liability arising
from this matter had already been fully reflected in the Adjusted
NAV since implementation of the Realisation Plan (see page 5 of the
2021 Annual Report) and remains the case at 31 December 2021.
In early January 2022, the Company received a distribution of
EUR1.0 million from Real Estate Fund Investment II. This represents
70% of its Q4 2021 NAV, leaving a residual value of EUR0.4 million
for this investment and is already reflected in the Company's Q4
2021 Adjusted NAV.
In March 2022, the Company received a distribution of EUR1.0
million from Real Estate Fund Investment V. This represents 42% of
its Q4 2021 NAV and leaves a residual value of EUR1.4 million for
this investment.
Income Statement for the Full Year and Fourth Quarter
2021 FY 2021 Q4 2021
EUR EUR
Thousands Thousands
------------------------------------------------------ ---------- ----------
Portfolio Returns
------------------------------------------------------
Italian NPLs & Other Loans 602 58
Real Estate Funds 2,061 49
------------------------------------------------------ ---------- ----------
Fair value movement on Italian investments 2,663 107
Fair value movements on residual Legacy entities 275 247
Loss on foreign currency translation (5) (3)
----------
Total gain 2,933 351
------------------------------------------------------ ---------- ----------
Operating Expenses
------------------------------------------------------
Interest expense 7 7
Manager base and incentive fees 175 33
Remaining operating expenses 1,687 462
------------------------------------------------------ ---------- ----------
Other Operating expenses 1,862 495
------------------------------------------------------ ---------- ----------
Total expenses 1,869 502
------------------------------------------------------ ---------- ----------
Net profit / (loss) for the period 1,064 (151)
EUR per share 0.57 (0.08)
------------------------------------------------------ ---------- ----------
Balance Sheet and Adjusted NAV Reconciliation as at Italian Investments Corporate Total
31 December 2021 EUR Thousands EUR Thousands EUR Thousands
----------------------------------------------------- ------------------- -------------- --------------
Assets
Cash and cash equivalents - 28,356 28,356
Other assets - 115 115
Investments:
Italian NPLs & Other Loans 1,337 - 1,337
Real Estate Funds 3,725 - 3,725
Total assets 5,062 28,471 33,533
Liabilities
Trade and other payables - 564 564
Manager base and incentive fees - 37 37
Total liabilities - 601 601
IFRS NAV 5,062 27,870 32,932
------------------------------------------------------ ------------------- -------------- --------------
Additional Reserves(5) - (14,752) (14,752)
RE Fund II distribution(6) (950) 950 -
------------------------------------------------------ ------------------- -------------- --------------
Adjusted NAV 4,112 14,068 18,180
Adjusted NAV (EUR per share)(7) 2.21 7.57 9.79
------------------------------------------------------ ------------------- -------------- --------------
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 (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 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 2021 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
2021.
(2) Per share calculations for Eurocastle throughout this
document are based on 1.9 million shares.
(3) In early January 2022, the Company received EUR1.0 million
of cash from RE Fund II. This amount has been reallocated from Real
Estate Funds to Net Corporate Cash.
(4) Reflects corporate cash net of liabilities and additional
reserves.
(5) In light of the Realisation Plan, the Adjusted NAV as at 31
December 2021 reflects the additional reserves for future costs and
potential liabilities of EUR14.8 million which have not been
accounted for under the IFRS NAV.
(6) In early January 2022, the Company received EUR1.0 million
of cash from RE Fund II. This amount has been reallocated from Real
Estate Funds to Net Corporate Cash.
(7) Amounts per share calculated on 1.9 million outstanding
ordinary shares.
(END) Dow Jones Newswires
April 29, 2022 02:00 ET (06:00 GMT)
Copyright (c) 2022 Dow Jones & Company, Inc.
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