Guernsey, 29 November 2017 - Eurocastle Investment Limited (Euronext Amsterdam: ECT) today has released its financial results for the nine months ended 30 September 2017.
Adjusted Net Asset Value ("Adjusted NAV") of €641.0 million, or €10.49 per share, in line with the previous quarter after having paid a second quarter dividend of €0.41 per share2 in August.
Normalised FFO of €68.2 million, or €1.12 per share2, for the third quarter of 2017. €103.3 million, or €1.71 per share2, for the nine months ended 30 September 2017.
Third Quarter 2017 Dividend of €1.13 per share2 declared on 28 November 2017 and to be paid on 11 December 2017 to shareholders of record at close of business on 5 December 2017, with an ex-dividend date of 4 December 2017. This follows €59.9 million of net NFFO received in cash in the quarter, in line with the Company's distribution policy.
Q3 2017 Q2 2016 YTD Q3 2017 YTD Q3 2016
€ million € per share2 € million € per share2 € million € per share2
€ million € per share2
Adjusted NAV1 641.0 10.49 630.6 10.49 641.0 10.494 463.5 7.715
Normalised FFO3 68.2 1.12 9.1 0.15 103.3 1.71 33.5 0.49
Dividends2 59.6 1.13 25.1 0.41 102.1 1.83 24.1 0.375
BUSINESS HIGHLIGHTS FOR THE THIRD QUARTER OF 2017
In July, doBank completed a €704 million IPO (equivalent to approximately 2.5x Eurocastle's value for this investment immediately following its acquisition net of distributions received to date), the largest & highest rated NPL servicing group in Italy.
Eurocastle held a 50% stake prior to the IPO - sold 19.1 million shares (48.8% of its holding) for €9.00 per doBank share generating net proceeds of €145.8 million which were partially distributed back to shareholders through the November share tender with the remainder to be distributed through the Q3 dividend.
The Company, together with Fortress affiliates, retained a joint 51.2% interest in doBank with Eurocastle's remaining 20.0 million shares valued at €10.98 per doBank share as at 30 September 2017, subsequently increasing to €13.16 per share on 28 November 2017.
doBank Financial Performance
Q3 YTD 2017 EBITDA of €42 million, up 4% like-for-like over the same period last year (Q3 2016: €40 million).
Q3 YTD 2017 Net Income After Tax of €27 million, up 16% like-for-like8 over the same period last year (Q3 2016: €23 million).
Q3 YTD 2017 Gross collections of €1.2 billion, up 18% over the same period 2016.
Subsequent to the third quarter, doBank reached a preliminary agreement on a new servicing mandate on €8 billion GBV of NPLs which form part of the portfolio originated by Monte dei Paschi di Siena that is in the process of being securitised. doBank estimates that the contract once in place and fully stabilized would initially add ~€20 million EBITDA per year.
FINO NPL Investment
In July, deployed €43.9 million to acquire, alongside Fortress affiliates, a 50.1% interest in a significant portion of a €16.2 billion GBV NPL portfolio from UniCredit S.p.A ("FINO"), via an investment in two securitisations.
Portfolio collections received since the 30 June 2016 cutoff date up to the July closing were higher than anticipated resulting in less equity to fund the acquisition than originally expected.
A deferred purchase price of €64.7 million is payable over the next few years and currently expected to be funded through collections on the portfolio.
Committed approximately €10 million to acquire a share of a leveraged interest in a performing and sub-performing ("PL/SPL") loan portfolio of €234 million GBV, expected to close in Q4'17.
BUSINESS HIGHLIGHTS SUBSEQUENT TO 30 SEPTEMBER 2017
In November 2017, Eurocastle announced the repurchase of 8.4 million shares (representing 13.75% of the Company's ordinary shares in issue) at a price of €10.00 per share, returning €84 million of capital received following the Company's partial sale of its stake in doBank through the IPO.
The completed repurchase was NAV and earnings accretive, increasing pro forma NFFO per share by approximately 15% and NAV per share by approximately 1%.
RE Fund IV
In October 2017, sold the remaining properties held in the Fund realising estimated net proceeds to Eurocastle of €32 million, approximately €3 million (10%) higher than the investment's Q3 2017 NAV of €29 million.
To date the Company has received €13.1 million, with the remaining proceeds expected by year-end subject to final agreement with the underlying fund on distribution timing. When received in full, the proceeds will include €10 million of undistributed NFFO realised in cash to be considered for the quarterly dividend.
On 20 November 2017, Eurocastle announced a commitment to invest €12 million for a shared interest in a new NPL pool with a GBV of €293 million, expected to close by the end of November.
On 24 November 2017, the Company announced that it had committed €8.4 million to acquire, together with other Fortress affiliates, additional interests in the junior notes of both securitisations that collectively own the FINO NPL portfolio. The transaction is expected to close by the end of January 2018.
Normalised FFO is a non-IFRS financial measure that, with respect to all of the Company's Italian Investments other than the doBank Group, 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 realised. Cash flow receipts are therefore allocated by the Company between income and capital in accordance with this expected yield methodology. With respect to the doBank Group, following the recent IPO, the Company now recognises Normalised FFO based on its share of doBank's reported annual net income after tax together with any gains or losses arising from the sale of its shares. The income cash flow profile of each of the Company's investments may not exactly equal the NFFO recognised by the Company each period but will do so over the life of each investment.
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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