Eurocastle Releases Fourth Quarter and Year End 2016 Financial Results Announces Quarterly Dividend of ?0.15 per share and New Distribution Policy
(Thomson Reuters ONE) -
Guernsey, 16 March 2017 - Eurocastle Investment Limited (Euronext Amsterdam:
ECT) today has released its annual report for the twelve months ended 31
December 2016.
* Normalised FFO[1]of ?46.0 million or ?0.70 per share[2] for the full year of
which ?12.5 million, or ?0.212 per share for the fourth quarter of 2016.
* Before costs, Italian Investments[3]alone generated ?55.4 million of
Normalised FFO in 2016, resulting in a return on average net invested
capital[4] of 17.7%.
* Adjusted Net Asset Value[5] of ?550.6 million, or ?9.16 per share2, an
increase of ?1.81 per share (25%) over the year, reflecting:
* An increase of ?0.36 per share for the first three quarters following
valuation increases of Italian Investments, the ?75 million share
repurchase and dividends of ?0.375 per share.
* An increase of ?1.45 per share for the fourth quarter after the dividend
of ?0.15 per share, following revaluation gains on doBank and Real
Estate Fund Investment III.
* Annual Dividend of ?33.1 million, or ?0.525 per share reflecting the
increased fourth quarter dividend of ?0.15 per share.
* In addition, the Board of Directors has declared a first quarter 2017
dividend of ?0.15 per share payable on 31 May 2017 to shareholders of
record at close of business on 23 March 2017, with an ex-dividend date
of 22 March 2017.
FY 2016 FY 2015 Q4 2016 Q3 2016
------------------ ------------------ ------------------ -----------------
? ? per ? ? per ? ? per ? ? per
million share(2) million share(2) million share(2) million share(2)
------------ ------------------ ------------------ ------------------ -----------------
Normalised 46.0 0.70 17.1 0.29 12.5 0.21 11.9 0.20
FFO(1)
Legacy
Business[6] 11.6 0.17 77.8 1.31 4.7 0.07 2.1 0.04
Cash Flow
Received
Adjusted 550.6 9.16 532.5 7.35 550.6 9.16 463.5 7.71
NAV(5)
------------ ------------------ ------------------ ------------------ -----------------
FULL YEAR & FOURTH QUARTER 2016 BUSINESS HIGHLIGHTS
* Capital Activity - In 2016, the Company deployed substantially all of its
available capital through:
1. A ?75 million repurchase of 12.3 million, or 17.0%, of ordinary shares
at a price of ?6.10 per share increasing Normalised FFO per share by
20%, or ?0.03 per share, and NAV per share by 3%, or ?0.25 per share;
2. Investments of ?17 million and commitments estimated at up to a further
?76 million across six transactions through:
i. A commitment to acquire, alongside other affiliates of FIG LLC, a
significant portion of a ?17.7 billion portfolio of Italian non-
performing loans from UniCredit S.p.A. in a project known as
"FINO". The transaction entails an anticipated equity investment
for Eurocastle of between ?50 million and ?70 million.
ii. A 25% share of three NPL portfolios with a total combined gross
book value ("GBV") of approximately ?86 million for ?4.4 million.
iii. A ?12.1 million investment in the units and senior debt of a newly
established unlisted Italian real estate fund ("RE Fund Investment
IV"), set up to restructure and monetise real estate properties
owned by an over-levered real estate fund.
iv. A ?6.6 million expected commitment in the Company's second
investment in an Italian real estate redevelopment fund ("RE Fund
Investment V"). In December 2016, an initial ?0.3 million was
funded with the majority of the remaining commitment expected to
be deployed during 2017.
* doBank - In October 2016, doBank (50% owned by Eurocastle) completed its
strategic acquisition of Italfondiario S.p.A. ("Italfondiario") to form the
largest independent servicing group in Italy (the "doBank Group"),
specialising in the credit management and collection of performing and non-
performing loans with over ?81 billion GBV of loans under management as at
31 December 2016, more than six times larger than its nearest competitor.
The companies have since reported a combined EBITDA of ?61.6 million[7] for
the year ended 31 December 2016. In March 2017, the board of doBank approved
a dividend of ?52.3 million expected to be paid in May 2017 (of which
Eurocastle's share is ?26.2 million).
* Legacy Business - The Company achieved its goal of fully disposing of the
legacy real estate assets in Germany with all assets sold or under binding
sales agreement by the end of 2016. This resulted in ?11.6 million of
proceeds in 2016 with a further ?2.4 million to be collected upon closing of
those assets under binding agreements. The sales have resulted in a write
back of all losses on the relevant legacy real estate portfolios which
previously were reported with negative net asset values in the Group's
accounts as reported under IFRS. As at 31 December 2016, the Legacy Business
has a remaining Adjusted NAV of ?0.4 million, or ?0.01 per share.
BUSINESS HIGHLIGHTS SUBSEQUENT TO 31 DECEMBER 2016
* Italian Real Estate Fund Investment III sale - In February 2017, Eurocastle
sold its interest in the units of Real Estate Fund Investment III. The
transaction, together with other distributions received in Q1 2017, has
resulted in total proceeds of ?20.9 million, or ?0.35 per share. The units
were acquired in September 2015 for a total consideration of ?10.7 million.
Taking into account ?7.8 million of prior distributions from the investment,
this represents a total profit of ?18.0 million and an IRR of 137%. As at
31 December 2016, the investment's fair value was ?19.5 million, or ?0.33
per share, reflecting an offer received at the time, an increase of ?7.4
million or ?0.12 per share to the previous quarter.
NEW DISTRIBUTION POLICY
i. The Company is pleased to announce the adoption of a new policy with the
goal of generating substantial liquidity to shareholders by accelerating
distributions of Normalised FFO ("NFFO") and surplus capital.
ii. The policy will see the establishment of a new three part program whereby
going forward the Company intends to:
iii. continue to pay a regular quarterly dividend, currently set at ?0.15 per
share;
iv. supplement this on a quarterly basis with undistributed NFFO realised in
cash; and
v. supplement this on a semi-annual basis with 50% of the capital held by the
Company at the previous half-year end that has not been invested or
designated for investment in an opportunity being actively pursued at the
time,
in each case subject to the applicable legal requirements and reserves for
working capital, distributions and expenses.
* The supplemental distributions will take the form considered by the
Directors to be in the best interests of the Company at the relevant time,
and may be made in any manner available to the Board, including, among
others, by way of increased dividends, returns of capital or share buybacks.
* In connection with this new policy, the Board of Directors will review any
supplemental amount for the first quarter of 2017 in alignment with the
announcement of the Company's results for that quarter.
NORMALISED FFO
Normalised FFO is a non-IFRS financial measure that, with respect to the
Company's Italian Investments, recognises income on an expected yield basis
allowing Eurocastle to report the run rate earnings from these investments in
line with their expected annualised returns. 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, given the strategy of seeking to monetise the residual
value of the Legacy Business, focusing on the Normalised FFO of the Company's
Italian Investments[8] 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 Year Average Net
Ended 31 Invested Italian
December 2016 Capital2 Investments1 Legacy Total
?Thousands Yield ? Thousands ? Thousands ? Thousands
-------------------------------------- -----------------------------------------
doBank 246,031 14% 34,483 - 34,483
Investment
Italian NPLs[10] 22,608 21% 4,714 - 4,714
Real Estate Fund 44,839 36% 16,173 - 16,173
Investments
-------------------------------------- -----------------------------------------
Italian
Investments NFFO 313,478 18% 55,370 - 55,370
before expenses
Legacy
Portfolios NFFO - 10,290 10,290
before expenses
Manager Base & (11,970) (100) (12,070)
Incentive Fees
Other operating (4,386) (3,231) (7,617)
expenses
-------------------------------------- -----------------------------------------
Normalised FFO 39,014 6,959 45,973
Per Share[11] 0.59 0.11 0.70
-------------------------------------- -----------------------------------------
Segmental
Normalised FFO Average Net
for the Fourth Invested Italian
Quarter 2016 Capital2 Investments1 Legacy Total
?Thousands Yield ? Thousands ? Thousands ? Thousands
-------------------------------------- -----------------------------------------
doBank 246,031 14% 8,853 - 8,853
Investment
Italian NPLs3 23,032 23% 1,315 - 1,315
Real Estate Fund 47,737 41% 4,838 - 4,838
Investments
-------------------------------------- -----------------------------------------
Italian
Investments NFFO 316,800 19% 15,006 - 15,006
before expenses
Legacy
Portfolios NFFO - 2,505 2,505
before expenses
Manager Base & (3,349) (1) (3,350)
Incentive Fees
Other operating (1,261) (382) (1,643)
expenses
-------------------------------------- -----------------------------------------
Normalised FFO 10,396 2,122 12,518
Per Share4 0.17 0.04 0.21
-------------------------------------- -----------------------------------------
During 2016, Eurocastle generated Normalised FFO of ?46.0 million, or ?0.70 per
share compared to a dividend of ?33.1 million, or ?0.525 per share. Before
corporate costs, Italian Investments generated ?55.4 million, or ?0.84 per
share. Given the average net invested capital in the period was approximately
?313 million, this equates to a yield of 18%.
In the fourth quarter of 2016, Eurocastle generated Normalised FFO of ?12.5
million, or ?0.21 per share. Before corporate costs, Italian Investments
generated ?15.0 million, or ?0.25 per share. Given the average net invested
capital in the period was approximately ?317 million, this equates to a yield of
19%.
Income Statement for the Year Ended Italian Investments Legacy Total
31 December 2016 ? Thousands ? Thousands ? Thousands
--------------------------------------------------------------------------------
Portfolio Returns
Fair value movements on joint
ventures:
doBank Group 107,008 - 107,008
Romeo NPLs 14,832 - 14,832
Share of post-tax profits / (loss)
from joint ventures:
NPLs - Pool 6 235 - 235
Real Estate Fund Investment II (1,520) - (1,520)
Fair value movements on
associates:
Real Estate Fund Investment III 12,206 - 12,206
Real Estate Fund Investment IV 11,664 2,111 13,775
Share of post-tax profits from
associates:
NPLs - Pools 7-18 3,574 - 3,574
Fair value movements on other
investments:
NPLs/PL - Pools 1-5 1,660 - 1,660
Real Estate Fund Investment I 1,431 - 1,431
Other Income
Other income - 542 542
Interest income 22 778 800
Gains on foreign currency - (2,092) (2,092)
contracts, translation and swaps
Gain on paydown of loans and - 1,046 1,046
receivables
--------------------------------------------------------------------------------
Total operating income 151,112 2,385 153,497
Operating expenses
Interest expense 188 2,364 2,552
Other operating expenses - 992 247 1,239
transaction costs
Other operating expenses 15,009 488 15,497
Other expenses
Impairment losses - 30,960 30,960
--------------------------------------------------------------------------------
Total operating expenses 16,189 34,059 50,248
--------------------------------------------------------------------------------
Net operating profit / (loss) before 134,923 (31,674) 103,249
taxation
--------------------------------------------------------------------------------
Total tax expense 273 3 276
--------------------------------------------------------------------------------
Net profit / (loss) after taxation 134,650 (31,677) 102,973
from continuing operations
--------------------------------------------------------------------------------
Net Profit after taxation from - 72,417 72,417
discontinued operations
--------------------------------------------------------------------------------
Profit after taxation for the year 134,650 40,740 175,390
Per Share[12] 2.04 0.61 2.65
--------------------------------------------------------------------------------
Attributable to:
Ordinary equity holders of the 134,337 40,740 175,077
Company
Non-controlling interest 313 - 313
For the year ended 31 December 2016, the total profit after taxation and non-
controlling interests as reported under IFRS was ?175.1 million, or ?2.65 per
share. Within the Group's Italian Investments, where the majority of these
assets are accounted for at fair value, net income after taxation and non-
controlling interest for 2016 was ?134.3 million, or ?2.03 per share.
Italian Investments Legacy Total
? Thousands ? Thousands ? Thousands
--------------------------------------------------------------------------------
Net profit attributable to ordinary 134,337 40,740 175,077
shareholders after taxation
Reversal of Net profit attributed to - (43,634) (43,634)
negative NAV portfolios[13]
--------------------------------------------------------------------------------
Adjusted net profit / (loss) 134,337 (2,894) 131,443
Per Share(1) 2.03 (0.04) 1.99
--------------------------------------------------------------------------------
Excluding i) the net gains that have resulted from the resolution of those
legacy portfolios that previously had a negative NAV and ii) losses from CDO V,
the Groups remaining legacy investment with a negative NAV, the Group generated
a net profit after taxation of ?131.4 million or ?1.99 per share. As at 31
December 2016, the remaining Adjusted NAV of the legacy portfolios was ?0.4
million, or ?0.01 per share which represents less than 0.1% of the Company's
Adjusted NAV.
Balance Sheet and
Adjusted NAV Corporate
Reconciliation as at 31 Italian Investments ? Thousands Legacy Total
December 2016 ? Thousands ? Thousands ? Thousands
--------------------------------------------------------------------------------
Assets
Cash and cash 4,553 99,440 5,085 109,078
equivalents
Other assets 20 1,009 3,535 4,564
Investment properties - - 1,970 1,970
held for sale
Available for sale 5,482 - - 5,482
Investments in joint
ventures
doBank Group 264,741 - - 264,741
Romeo NPLs 106,090 - - 106,090
NPLs - Pool 6 1,711 - - 1,711
Real Estate Fund 10,640 - - 10,640
Investment II
Real Estate Fund 300 - - 300
Investment V
Investments in
associates
NPLs - Pools 7 - 18 24,624 - - 24,624
Real Estate Fund 19,546 - - 19,546
Investment III
Real Estate Fund 17,747 - 2,059 19,806
Investment IV
Other fair value
investments
NPLs/PL - Pools 1-5 3,943 - - 3,943
Real Estate Fund 14,279 - - 14,279
Investment I
Loans and receivables - - 11,207 11,207
Derivative assets - - 2,144 2,144
--------------------------------------------------------------------------------
Total assets 473,676 100,449 26,000 600,125
Liabilities
Trade and other payables 2,796 15,476 8,048 26,320
Current taxation payable 17 4,649 110 4,776
CDO bonds payable - - 60,454 60,454
--------------------------------------------------------------------------------
Total liabilities 2,813 20,125 68,612 91,550
--------------------------------------------------------------------------------
Net Asset Value 470,863 80,324 (42,612) 508,575
--------------------------------------------------------------------------------
Non-controlling interest (1,058) - - (1,058)
--------------------------------------------------------------------------------
Net Asset Value after 469,805 80,324 (42,612) 507,517
Non-controlling interest
--------------------------------------------------------------------------------
Negative NAV - - 43,080 43,080
Addbacks[14]
Committed 66,250 (66,250) - -
Investments[15]
--------------------------------------------------------------------------------
Adjusted NAV 536,055 14,074 468 550,597
Adjusted NAV (? per 8.92 0.23 0.01 9.16
Share)[16]
--------------------------------------------------------------------------------
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 (10:00 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 Fourth Quarter 2016 Earnings Call" or conference ID
number "4446819".
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, 16 April 2017 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 "4446819".
ABOUT EUROCASTLE
Eurocastle Investment Limited is a publicly traded closed-ended investment
company that primarily focuses on investing in Italian performing and non-
performing loans, Italian NPL servicing platforms and other real estate related
assets 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 in
note 30 of the Annual Report.
[2] Amounts per share are calculated on the following basis for the relevant
period: FY 2016 NFFO and Legacy cash flow - 66.1 million of weighted average
shares. FY 2016, Q4 2016 and Q3 2016 Adjusted Net Asset Value ("Adjusted NAV") -
60.1 million ordinary shares in issue (net of 6.0 million shares held in
treasury). FY 2015 NFFO and Legacy cash flow - 59.5 million of weighted average
shares. FY 2015 Adjusted NAV - 72.4 million ordinary shares in issue. Q3 2016
NFFO and Legacy cash flow - 60.1 million of weighted average shares.
[3] All investments acquired by the Group since the establishment of its new
strategy in April 2013, previously labelled as "New Investments".
[4] Time weighted average of investments made (net of any capital returned) over
the relevant period.
[5] Adjusted Net Asset Value excludes the net asset value ("NAV") of those
Legacy portfolios with negative NAV whose debt is non-recourse to Eurocastle.
[6] All investments owned by the Group prior to April 2013.
[7] Unaudited management data. Consolidated EBITDA for doBank, Italfondiario and
their subsidiaries pro forma for the full year 2016. Consolidated 2016 EBITDA in
accordance with IFRS for the doBank Group is ?58.1 million reflecting the EBITDA
generated from Italfondiario and its subsidiaries from the date of acquisition
in October 2016.
[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] Normalised FFO per share based on 66.1 million weighted average ordinary
shares for 2016.
[12] Earnings per share based on 66.1 million weighted average ordinary shares
for the year ended 31 December 2016.
[13] Reverses gains and losses arising from portfolios with a negative net asset
value net of any cash distributions or fees received by the Company.
[14] Adjusts to exclude the Group's remaining Legacy portfolio with negative NAV
(CDO V) whose debt is non-recourse to Eurocastle.
[15] Adjusted NAV of Italian Investments includes ?60 million of equity
allocated against the FINO transaction (reflecting the mid-point of the expected
equity requirement of ?50 to ?70 million) and a ?6.3 million expected commitment
allocated against RE Fund Investment V.
[16] Adjusted NAV per share based on 60.1 million ordinary shares in issue.
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
Unternehmensinformation / Kurzprofil:
Datum: 16.03.2017 - 08:00 Uhr
Sprache: Deutsch
News-ID 530575
Anzahl Zeichen: 31855
contact information:
Town:
St Peter Port
Kategorie:
Business News
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"Eurocastle Releases Fourth Quarter and Year End 2016 Financial Results Announces Quarterly Dividend of ?0.15 per share and New Distribution Policy"
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