Yahoo Finance Eurocastle Releases Fourth Quarter and Year End 2014 Financial Results and Announces Dividend of €0.125 per share
Tel: +44 1481 723450 EUROCASTLE INVESTMENT LIMITED
FOR IMMEDIATE RELEASE
International Administration Group (Guernsey) Limited
Company Administrator
Attn: Mark Woodall
Eurocastle Releases Fourth Quarter and Year End 2014 Financial Results
Announces Dividend of €0.125 per share
Guernsey. 25 March 2015 - Eurocastle Investment Limited (Euronext Amsterdam: ECT) today has released the annual report for the twelve months ended 31 December 2014.
FOURTH QUARTER & FULL YEAR 2014 FINANCIAL HIGHLIGHTS
Normalised FFO - €9.4 million, or €0.29 per share, for the full year of which €4.4 million, or €0.13 per share, was generated in the fourth quarter.
New Investments alone generated €8.6 million, or €0.26 per share of Normalised FFO for the full year, resulting in a return on average net invested capital[1] of 24%.
Adjusted Net Asset Value[2] - €258.4 million, or €7.92 per share, decrease of €70 million, or €2.14 per share for the full year (€30.3 million, or €0.93 per share for the fourth quarter), primarily due to revaluations of Legacy Assets.
Annual Dividend - In 2014 Eurocastle paid an annual dividend of €16.3 million, or €0.50 per share.
In addition, the Board of Directors has since declared a first quarter dividend of €0.125 per share payable on 30 April 2015 to shareholders of record at close of business on 2 April 2015, with ex-dividend date of 1 April 2015.
FY 2014 | FY 2013 | Q4 2014 | Q4 2013 | |||||||||||
€ million | € per share | € million | € per share | € million | € per share | € million | € per share | |||||||
Normalised FFO | 9.4 | 0.29 | 15.8 | 0.48 | 4.4 | 0.13 | 1.1 | 0.03 | ||||||
Legacy Cash Flow Realised | 39.8 | 1.22 | 37.0 | 1.13 | 2.9 | 0.09 | 6.3 | 0.19 | ||||||
Adjusted NAV2 | 258.4 | 7.92 | 328.4 | 10.06 | 258.4 | 7.92 | 354.4 | 10.86 | ||||||
FOURTH QUARTER & FULL YEAR 2014 BUSINESS HIGHLIGHTS
New Investments - In 2014 invested or committed €67.6 million at an average targeted yield of 18% in Italian non-performing loans ("NPLs") and real estate fund units, including €9 million in three new NPL transactions in the fourth quarter of 2014.
Legacy Business Realisations - During 2014 received €39.8 million of cash flow from the Legacy Business with €22.5 million primarily from the sale of the remaining CDO IV securities in January 2014. This includes €2.9 million realised in the fourth quarter of 2014.
HIGHLIGHTS SUBSEQUENT TO YEAR END 2014
In February 2015, together with Fortress affiliates, the Company reached an agreement with UniCredit to acquire a portfolio of Italian NPLs with gross book value ("GBV") of €2.4 billion along with UniCredit Credit Management Bank S.p.A. ("UCCMB"). The opportunity also includes:
A servicing contract on €34.1 billion GBV of existing NPLs.
A contract to service all UniCredit`s future NPLs with balances below €1 million generated in the next 10 years.
The acquisition is expected to result in an investment by Eurocastle of approximately €200 million.
In the first quarter of 2015, Eurocastle realised approximately a further €29 million from its Legacy Business following the sale of three of its German retail portfolios and the sale of a loan position.
In March 2015, Eurocastle reached an agreement with its Manager, effective 1 January 2015, to reduce its annual management fee by an estimated initial €3 million and restructure how incentive compensation is calculated by focusing on the returns generated from its New Investments.[3]
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 Annual Report, which is available on the Company`s website (www.eurocastleinv.com).
EARNINGS CALL INFORMATION
Eurocastle`s management will host an earnings conference call on Wednesday, 25 March 2015 at 2:00 P.M. London time (10:00 A.M. New York time). All interested parties are welcome to participate on the live call. You can access the conference call by dialing 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 2014 Earnings Call or conference ID number 10249700."
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 Saturday, 25 April 2015 by dialing +1-855-859-2056 (from within the U.S.) or +1-404-537-3406 (from outside of the U.S.); please reference access code "10249700"
NORMALISED FFO
Normalised FFO is a non-IFRS financial measure that, with respect to Eurocastle`s Legacy Business, provides investors with additional information regarding the underlying performance of its Legacy Assets and their ability to service debt and make capital expenditure. The measure excludes realised gains and losses, sales related costs (including realised swap losses), impairment losses and foreign exchange movements. On the Company`s New Investments income is recognised on an expected yield basis allowing Eurocastle to report the run rate earnings from these investments in line with their projected annualised returns.
Eurocastle believes that, given the strategy of seeking to monetise the existing value of the Legacy Business, focusing on the Normalised FFO of the Company`s New Investments will further enable the investor to understand current and future earnings given annualised returns achieved and the average net invested capital over the relevant period.
Looking back at 2014, Eurocastle generated Normalised FFO of €9.4 million, or €0.29 per share, of which €8.6 million, or €0.26 per share related to New Investments before corporate costs. Given the average net invested capital in 2014 was approximately €36 million, this equates to a yield of 24%.
In March 2015, in line with the Company`s strategy and the related metric, Eurocastle`s Board of Directors reached an agreement with the Manager to amend the terms of its Management Agreement with effect from 1 January 2015. These amendments include (i) resetting the capital base upon which the management fee is calculated from the current amount of €404 million to the Group`s Adjusted NAV reported quarterly, (ii) reducing the fee upon which the management fee is paid from 1.5% to 0.75% on the share of Adjusted NAV relating to net corporate cash, and (iii) resetting the base upon which the Manager`s entitlement to receive incentive compensation is calculated so that it is equal to the net invested capital in its New Investments and calculated against the Normalised FFO for New Investments after allocated corporate costs.
The Directors believe the new fee structure better incentivises the Manager to monetise the Legacy Business and deploy the resulting capital at higher returns, along with any additional available cash. Applying these amendments to the Groups`s Adjusted NAV of €258.4 million as at 31 December 2014, the new terms will initially reduce the annual management fee by approximately €3 million with potential additional fees should the Manager exceed the required 8% return hurdle on the net invested capital in each calendar year.
A reconciliation of Normalised FFO to the IFRS based net profit or loss after tax for the year ended 31 December 2014 can be found below:
INCOME STATEMENT RECONCILIATION
New | Corporate[4] | Legacy | Total | ||
Net Income / (loss) after tax & Non-controlling interest | 2.3 | (14.1) | (97.5) | (109.3) | |
Net Income / (loss) (€ per Share) | 0.07 | (0.43) | (2.99) | (3.35) | |
Mars Floating Portfolio Losses | - | - | 15.4 | 15.4 | |
Non-controlling interest | 0.4 | - | - | 0.4 | |
Fair Value to Effective Adjustments | 5.9 | - | - | 5.9 | |
Legacy Real Estate Revaluations | - | - | 50.3 | 50.3 | |
Legacy Bridge Ptf Deconsolidation Loss | - | - | 26.1 | 26.1 | |
Legacy Debt Impairments | - | - | 20.4 | 20.4 | |
Transaction Costs, G/L on FX & Other Adjustments | - | 0.4 | (0.2) | 0.2 | |
Normalised FFO | 8.6 | (13.7) | 14.5 | 9.4 | |
Normalised FFO (€ per Share) | 0.26 | (0.42) | 0.45 | 0.29 |
ADJUSTED NAV RECONCILIATION
New | Corporate1 | Legacy | Total | ||
Assets | 67.9 | 97.0 | 1,369.0 | 1,533.9 | |
Liabilities | (2.8) | (8.4) | (1,314.0) | (1,325.2) | |
NAV before Non-controlling interest | 65.1 | 88.6 | 55.0 | 208.7 | |
Non-controlling interest | (2.3) | - | - | (2.3) | |
NAV after Non-controlling interest | 62.8 | 88.6 | 55.0 | 206.4 | |
New Investments Commitment Reallocations | 13.4 | (13.4) | - | - | |
Legacy Debt Business Reallocation | 4.0 | - | (4.0) | - | |
Mars Floating Negative NAV Add-back | - | - | 46.6 | 46.6 | |
Retail Portfolios Sale Impact in Q1 2015 | - | 25.0 | (19.5) | 5.5 | |
Legacy Debt Portfolio Realisations in Q1 2015 | - | 3.9 | (3.9) | - | |
Other Roundings | 0.1 | (0.1) | (0.1) | (0.1) | |
Adjusted NAV | 80.3 | 104.0 | 74.1 | 258.4 | |
Adjusted NAV (€ per Share) | 2.46 | 3.19 | 2.27 | 7.92 |
ABOUT EUROCASTLE
Eurocastle Investment Limited is a closed-ended investment company that owns Italian loans and real estate related assets, German commercial real estate and European real estate securities and loans. 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] Time weighted average of investments made (net of any capital returned) over the relevant period.
[2] Adjusted NAV for 2014 excludes the negative net asset value of the Mars Floating portfolio and reflects the impact of the sale of 3 retail portfolios in Q1 2015.
[3] Please refer to page 3 for further details
[4] Corporate includes uninvested cash and fees payable to the Manager.
This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX 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
HUG#1906018
