Eurocastle Releases First Quarter 2018 Financial Results,
Announces First Quarter Distribution of EUR0.33 per share and Annual General Meeting on 20 June 2018
Guernsey, 17 May 2018 - Eurocastle Investment Limited (Euronext Amsterdam: ECT) today has released its financial results for the first quarter ended 31 March 2018.
|Q1 2018||Q4 2017|
|EUR million||EUR per share2||EUR million||EUR per share2|
FIRST QUARTER 2018 BUSINESS HIGHLIGHTS
Sale of Senior Notes of FINO 1 Securitisation
Follow-on Investment in FINO NPL Portfolio
doBank Financial Performance
NPL portfolio financing
BUSINESS HIGHLIGHTS SUBSEQUENT TO 31 MARCH 2018
Investment in New Single Name Loan Transaction
Normalised FFO ("NFFO") 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 IPO, the Company now recognises NFFO 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.
|Normalised FFO for the Three Months Ended 31 March 2018||Average Net Invested Capital||Total NFFO|
|EUR Thousands||Yield||EUR Thousands|
|Real Estate Fund Investments||32,443||4%||354|
|Italian Investments NFFO before expenses||218,247||21%||11,394|
|Manager base & incentive fees||(2,884)|
|Other operating expenses||(1,202)|
As announced in the 2017 annual report, the Board of Directors came to the conclusion, that as of 1 July 2017, the Company met the requirements to be classified as an investment entity as defined under IFRS 10. Following this change, the Company does not consolidate the entities it controls and therefore fair values all of its investments (whether through subsidiaries, joint ventures or associates).
|Income Statement for the Three Months ended 31 March 2018 (Unaudited)||Income Statement|
|Other NPL Pools||1,082|
|Real Estate Fund Investment I||22|
|Real Estate Fund Investment II||393|
|Real Estate Fund Investment IV||(39)|
|Real Estate Fund Investment V||344|
|Fair value movement on Italian investments||(33,123)|
|Fair value movements on residual Legacy entities||(30)|
|Other income - Gains on foreign currency translation and other derivatives||2|
|Manager base and incentive fees||2,884|
|Remaining operating expenses||1,066|
|Other Operating expenses||3,950|
|Net loss for the period||(37,177)|
|EUR per share||(0.71)|
For the quarter ended 31 March 2018, the total net loss reported was (EUR37.2) million, or (EUR0.71) per share. Excluding the EUR42.0 million loss which arose from the revaluation of the doBank investment which is marked-to-market based on doBank`s closing share price, Eurocastle recognised a EUR4.8 million profit or EUR0.09 per share.
Balance Sheet and NAV Reconciliation as at 31 March 2018 (Unaudited)
| Italian Investments|
|Cash and cash equivalents||-||174,443||174,443|
|Other NPL Pools||37,605||-||37,605|
|Real Estate Fund Investment I||11,140||-||11,140|
|Real Estate Fund Investment II||13,340||-||13,340|
|Real Estate Fund Investment IV||186||-||186|
|Real Estate Fund Investment V||5,857||-||5,857|
|Other net assets of subsidiaries (residual legacy entities)||-||248||248|
|Trade and other payables||-||18,717||18,717|
|Manager base and incentive fees||-||2,884||2,884|
|Net Asset Value||351,946||153,164||505,110|
|FINO deferred purchase price commitment||64,680||(64,680)||-|
|New distressed loan investment||7,722||(7,722)||-|
|RE Fund Investment V remaining unfunded commitment||794||(794)||-|
|NAV (segments adjusted for outstanding commitments)||425,142||79,968||505,110|
|NAV (EUR per share)||8.06||1.52||9.58|
Taking into account the Q1 2018 distribution of EUR17.4 million (EUR0.33 per share) declared after the quarter end, the net Corporate NAV (after adjusting for outstanding commitments) would be EUR62.6 million (EUR1.19 per share) and the net total Company NAV would be EUR487.7m (EUR9.25 per share). The dividend and capital distribution were declared on 16 May 2018 and will be paid on 31 May 2018 to shareholders of record at close of business on 23 May 2018, with an ex-dividend date of 22 May 2018.
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 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 2018 Earnings Call" or "conference ID number 1685298".
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, 17 June 2018 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 "1685298".
ANNUAL GENERAL MEETING
The Company will hold its Annual General Meeting on Wednesday, 20 June 2018, at the Company`s registered office at 2:00 pm Guernsey time (3:00 pm CET). Notices and proxy statements will be posted on 30 May 2018 to shareholders of record at close of business on 29 May 2018.
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", "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, amortise the Company`s debts, renegotiate the Company`s credit facilities, make new investments, or achieve its targets regarding asset disposals or asset performance.
 NAV for Q1 2018 is before deducting the first quarter 2018 distribution of EUR0.33 per share declared and to be paid in May 2018.
Amounts per share are based on the weighted average or outstanding voting shares and therefore exclude shares held in treasury. As at 31 March 2018, a total of 66.1 million shares were in issue of which 52.7 million were voting shares and 13.4 million were held in treasury. Amounts per share are therefore calculated on the following basis: Q1 2018 Net Asset Value per share ("NAV per share") - 52.7 million voting shares in issue; Q4 2017 NAV per share - 52.7 million voting shares in issue; Q1 2018 NFFO per share- 52.7 million weighted average voting shares; Q4 2017 NFFO per share - 57.5 million weighted average voting shares. Q1 2018 & Q4 2017 dividends paid on 52.7 million voting shares.
 Normalised FFO ("NFFO") is a non-IFRS measure used to explain the financial performance of the Company, as outlined on page 9 of the Q1 2018 Interim Report.
Time weighted average of invested capital (net of any capital returned) over the relevant period.
Manager base fees are equal to the sum of (i) 1.5% of the Company`s Net Asset Value excluding Net Corporate Cash and (ii) 0.75% of the Company`s Net Corporate Cash (including cash committed to investments but not yet deployed) calculated and paid monthly in arrears. Incentive fees are equal to 25% of the euro amount by which the Company`s NFFO derived from Italian Investments (net of allocable fees and expenses) exceeds the net amount invested in such investments multiplied by a simple interest rate of 8% per annum (calculated on a cumulative but not compounding basis).
NAV adjusted for outstanding commitments. NAV of Italian NPLs includes (i) EUR64.7 million of deferred purchase price on FINO payable over the next few years and (ii) an additional EUR7.7 million in the ~EUR81 million GBV single name loan transaction funded in May 2018. NAV of Real Estate Funds includes a remaining unfunded commitment estimated at EUR0.8 million in RE Fund Investment V. NAV of Net Corporate Cash deducts outstanding commitments listed above.