TIDMECT
Contact:
Oak Fund Services (Guernsey) Limited
Company Administrator
Attn: Hannah Crocker
Tel: +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
https://www.globenewswire.com/Tracker?data=LQXPrkXNZHcj98uvgG3Ue135qU8D8qx5vqt1-IjAe9yv_Ckv8vUJ-3f2rO0Uw_LJ
has released its interim management statement for the quarter ended
30 September 2023.
-- ADJUSTED NET ASSET VALUE ("NAV")1 of EUR11.1 million, or EUR11.14 per
share2, up EUR0.89 per share vs. Q2 2023 mainly due to the release of
EUR0.9 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 EUR21.9 million, or EUR21.89 per share (EUR22.0 million, or
EUR21.99 per share as at Q2 2023).
Q3 Cash
Q2 2023 Movement Q3 FV Movement Q3 2023 NAV
---------------- -------------- -------------- ----------------
EUR EUR EUR EUR
EUR'm p.s. EUR'm p.s. EUR'm p.s. EUR'm p.s.
Real Estate Funds 0.08 0.08 - - 0.00 0.00 0.08 0.08
Net Corporate
Cash(3) 17.06 17.08 1.09 1.10 (0.10) (0.10) 18.05 18.08
Legacy German Tax
Asset 4.82 4.83 (1,09) (1.10) - - 3.73 3.73
-------------------- ------- ------- ------ ------ ------ ------ ------- -------
IFRS NAV 21.96 21.99 - - (0.10) (0.10) 21.86 21.89
==================== ======= ======= ====== ====== ====== ====== ======= =======
Additional
Reserves(4) (11.73) (11.74) - - 0.99 0.99 (10.74) (10.75)
Adjusted NAV 10.23 10.25 - - 0.89 0.89 11.12 11.14
==================== ======= ======= ====== ====== ====== ====== ======= =======
Ordinary shares
outstanding 998,555 998,555
As at 30 September 2023, the Company's assets comprise:
1. EUR18.1 million, or EUR18.08 per share, of net corporate cash3 which is
primarily available to fund new investments under the New Investment
Strategy.
2. A tax asset of EUR3.7 million, or EUR3.73 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.
3. Residual interests in two legacy Italian Real Estate Fund Investments
with an NAV of EUR0.08 million, or EUR0.08 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 EUR1.1 million of the EUR4.8
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 EUR6.5 million. and now estimates its total
maximum potential liability to be EUR5.6 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 EUR0.1
million, or EUR0.08 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 EUR11.7 million to EUR10.7 million, or
EUR10.75 per share, mainly due to the release of EUR0.9 million
reflecting reserves linked the legacy German tax matter. As at 30
September 2023, of the total Additional Reserves of EUR10.7 million,
EUR5.6 million related to the legacy German tax matter with the balance
of approximately EUR5.1 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 EUR6.3 million, of which
Eurocastle's share is approximately EUR5.0 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 EUR18 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 Income
Statement Statement
9 months 2023 Q3 2023
EUR Thousands EUR 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
-------------------------------------- ------------- -----------------------
Operating Expenses
--------------------------------------
Manager base and incentive fees 73 20
Remaining operating expenses 775 251
-------------------------------------- ------------- -----------------------
Other operating expenses 848 271
-------------------------------------- ------------- -----------------------
Total expenses 848 271
-------------------------------------- ------------- -----------------------
(Loss) for the period (517) (104)
EUR per share (0.52) (0.10)
-------------------------------------- ------------- -----------------------
Balance Sheet and Adjusted NAV Reconciliation as at 30 September
2023
Total
EUR Thousands
-------------------------------------------------
Assets
Other assets 150
Legacy German tax asset 3,727
Investments - Real Estate Funds 83
Cash, cash equivalents and treasury investments:
Cash and cash equivalents 14,100
Treasury Investments 4,223
Total assets 22,283
Liabilities
Trade and other payables 404
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 (EUR 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.
(END) Dow Jones Newswires
November 30, 2023 02:00 ET (07:00 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
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