Eurocastle Releases Third Quarter 2023 Interim Management Statement
November 30 2023 - 2:00AM
Eurocastle Releases Third Quarter 2023 Interim Management Statement
Contact: Oak Fund
Services (Guernsey) LimitedCompany AdministratorAttn: Hannah
CrockerTel: +44 1481
723450
Eurocastle Releases Third Quarter 2023
Interim Management Statement
Guernsey, 30 November 2023 – Eurocastle
Investment Limited (Euronext Amsterdam: ECT) (“Eurocastle” or the
“Company”) today has released its interim management statement for
the quarter ended 30 September 2023.
- ADJUSTED
NET ASSET VALUE (“NAV”)1 of €11.1 million, or €11.14 per
share2, up €0.89 per share vs. Q2 2023 mainly due to the release of
€0.9 million of reserves linked to the legacy German tax matter
following a partial reimbursement received in July as a result of
an appeal made by the Company.
- IFRS
NAV of €21.9 million, or €21.89 per share (€22.0 million,
or €21.99 per share as at Q2 2023).
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Q2 2023 |
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Q3 Cash Movement |
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Q3 FV Movement |
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Q3 2023 NAV |
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€’m |
€ p.s. |
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€’m |
€ p.s. |
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€’m |
€ p.s. |
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€’m |
€ p.s. |
Real Estate
Funds |
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0.08 |
0.08 |
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- |
- |
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0.00 |
0.00 |
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0.08 |
0.08 |
Net Corporate
Cash3 |
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17.06 |
17.08 |
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1.09 |
1.10 |
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(0.10) |
(0.10) |
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18.05 |
18.08 |
Legacy
German Tax Asset |
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4.82 |
4.83 |
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(1,09) |
(1.10) |
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- |
- |
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3.73 |
3.73 |
IFRS NAV |
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21.96 |
21.99 |
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- |
- |
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(0.10) |
(0.10) |
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21.86 |
21.89 |
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Additional
Reserves4 |
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(11.73) |
(11.74) |
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- |
- |
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0.99 |
0.99 |
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(10.74) |
(10.75) |
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Adjusted NAV |
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10.23 |
10.25 |
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- |
- |
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0.89 |
0.89 |
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11.12 |
11.14 |
Ordinary shares outstanding |
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998,555 |
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998,555 |
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As at 30
September 2023, the Company’s assets comprise:
- €18.1 million, or €18.08 per share,
of net corporate cash3 which is primarily available to fund new
investments under the New Investment Strategy.
- A tax asset of €3.7 million, or
€3.73 per share, representing amounts paid in relation to
additional tax assessed against a German property subsidiary. The
Company is currently appealing the assessment through the German
fiscal court and expects the matter will eventually be resolved in
the Company’s favour.
- Residual interests in two legacy
Italian Real Estate Fund Investments with an NAV of €0.08 million,
or €0.08 per share, where the underlying apartments are now all
sold with both funds currently in liquidation.
BUSINESS HIGHLIGHTS
- Legacy German Tax Matter
– In July, the Company received revised tax assessments in
relation to the legacy German tax matter which resulted in a total
reimbursement to the Company of €1.1 million of the €4.8 million of
additional tax paid by Eurocastle in 2022 and 2023. This follows an
appeal by the Company against the additional tax assessed in
relation to a property subsidiary for the period
2008 to 2012. The revised tax assessments represent a full reversal
of the additional tax for 2008 as well as part of the amount for
2009. The years 2013 - 2015 remain subject to ongoing tax audits.
Prior to the appeal, the Company estimated its total exposure to
the tax matter, which relates to the period 2008 – 2015, at up to
€6.5 million. and now estimates its total maximum potential
liability to be €5.6 million. Eurocastle has paid all additional
tax assessed to date to avoid interest charges and reserved for the
estimated additional potential liability in respect of the
2013-2015 audit. However, the Company continues to believe that
none of the additional tax assessed or reserved for is due. While
it plans to continue to hold reserves until the matter is finally
resolved, Eurocastle intends to pursue all available legal means to
appeal the findings of the German tax authorities and to be
reimbursed (with accrued interest) all amounts paid in connection
with these tax audits.
- Real Estate Funds
–The remaining NAV for these investments of €0.1 million,
or €0.08 per share, reflects cash currently reserved in the funds
that is expected to be released once the fund manager resolves
certain potential liabilities and liquidates each fund.
- Additional Reserves
– The Company reduced these reserves during the third
quarter of the year from €11.7 million to €10.7 million, or €10.75
per share, mainly due to the release of €0.9 million reflecting
reserves linked the legacy German tax matter. As at 30 September
2023, of the total Additional Reserves of €10.7 million, €5.6
million related to the legacy German tax matter with the balance of
approximately €5.1 million in place to cover future costs and
potential liabilities while the Company pursues in parallel the New
Investment Strategy.
SUBSEQUENT EVENTS TO 30 SEPTEMBER
2023
New Investment Strategy
update
In mid-November 2023, Eurocastle agreed to
acquire the first investment under its new strategy, being part of
a boutique retail complex in an affluent part of Athens, Greece.
The asset is being purchased from one of the largest Greek banks
out of a distressed situation where the main leaseholder is in
default. Eurocastle’s strategy is to lease-up the last 20% of the
building which is currently vacant and then seek an exit in the
open market.
Eurocastle is acquiring the asset alongside a
local partner who is anticipated to take a 20% interest in the
asset. The total expected investment is approximately €6.3 million,
of which Eurocastle’s share is approximately €5.0 million with a
closing targeted before the end of 2023, subject to certain
conditions precedent.
As previously announced, Eurocastle intends to
leverage the relationship of the Company’s investment manager with
a local partner in Greece to source investment opportunities. In
parallel with executing this first investment, the Company has been
underwriting a number of additional opportunities.
In order to support its new investment program,
Eurocastle has been working on establishing an investment structure
through which it expects to invest the majority of its current net
corporate cash of over €18 million alongside selected external
co-investors. In addition to generating attractive risk adjusted
returns on its share of any investments made through the platform,
Eurocastle anticipates also receiving market standard management
and incentive fees from the external investors.
Income Statement for the Nine Months and Quarter ended
30 September 2023 (unaudited)
|
Income Statement |
Income Statement |
|
9 months 2023 |
Q3 2023 |
|
€ Thousands |
€ Thousands |
Portfolio
Returns |
|
|
Italian NPLs & Other Loans realised gain |
2 |
- |
Real Estate Funds unrealised fair value movement |
(49) |
1 |
Fair value movement on
Italian investments |
(47) |
1 |
Other
income |
- |
(2) |
Interest
income |
378 |
168 |
Total income |
331 |
167 |
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Operating
Expenses |
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Manager base and incentive
fees |
73 |
20 |
Remaining operating expenses |
775 |
251 |
Other operating expenses |
848 |
271 |
Total expenses |
848 |
271 |
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|
|
(Loss) for the period |
(517) |
(104) |
€ per share |
(0.52) |
(0.10) |
Balance Sheet and Adjusted NAV Reconciliation as at 30
September 2023
|
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Total€ Thousands |
Assets |
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Other assets |
150 |
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Legacy German tax asset |
3,727 |
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Investments - Real Estate
Funds |
83 |
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Cash, cash equivalents and
treasury investments: |
|
|
Cash and cash equivalents |
14,100 |
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Treasury Investments |
4,223 |
Total assets |
22,283 |
Liabilities |
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Trade and other payables |
404 |
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Manager
base and incentive fees |
20 |
Total liabilities |
424 |
IFRS Net Asset Value |
21,859 |
Liquidation cash
reserve |
(5,163) |
Legacy German tax
cash reserve |
(1,850) |
Legacy German tax
asset reserve |
(3,727) |
Adjusted NAV |
11,119 |
Adjusted NAV (€ per Share) |
11.14 |
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).
Terms not otherwise defined in this announcement
shall have the meaning given to them in the Circular.
ABOUT EUROCASTLE
Eurocastle Investment Limited (“Eurocastle” or
the “Company”) is a publicly traded closed-ended investment
company. On 8 July 2022, the Company announced the relaunch of its
investment activity and is currently in the early stages of
pursuing its new strategy by initially focusing on opportunistic
real estate in Greece with a plan to expand across Southern Europe.
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
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 2019, the
Adjusted NAV as at 30 September 2023 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 30 September 2023.2
Per share calculations for Eurocastle throughout this document are
based on 998,555 shares, unless otherwise stated.3 Reflects
corporate cash and treasury investments net of accrued liabilities
and other assets. Treasury investments mainly comprise notice
accounts and short term Italian Government Bonds.4 Reserves that
were put in place when the Company realised the majority of its
investment assets in 2019 in order for the Company to continue in
operation and fund its future costs and potential liabilities.
These reserves are not accounted for under IFRS.
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