Eurocastle publishes its financial results for the first half of 2021

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Eurochâteau Versions Ffirst half 2021 Financial results

Guernsey, August 4, 2021 – Eurocastle Investment Limited (Euronext Amsterdam: ECT) today published its financial report for the six-month period ended June 30, 2021.

  • Adjusted Net asset value (“NAV”) of 17.8 million euros1, i.e. € 9.60 per share2, up € 0.83 per share versus € 8.77 per share in Q1 2021 (up € 1.14 per share3 since Q4 2020) due to:
  1. Valuation movements:
    • € 0.71 per share, or 26%, increase in Q2 2021 (€ 0.98 per share increase in H1 2021) on its investments in real estate funds remaining due to achievements ahead of expectations.
    • € 0.19 per share, or 27%, increase in Q2 2021 (€ 0.23 per share increase in H1 2021) on the three remaining NPLs and other loan interest.
  2. Increase in existing reserves and other movements leading to a decrease of € (0.07) per share in Q2 2021 (decrease of € 0.07 per share in H1 2021).

The tables below summarize the Adjusted NAV by segment:

T1 2021 NAV Q2 VSash Movement Q2 FV movement Q2 2021 NAV
millions of euros € per share millions of euros € per share millions of euros € per share millions of euros € per share
Real estate funds 5.1 2.77 1.3 0.71 6.4 3.47
Italian PNP and other loans 1.3 0.70 (0.0) (0.01) 0.4 0.19 1.6 0.88
Company net cash position4 9.8 5.30 0.0 0.01 (0.1) (0.07) 9.7 5.25
Adjusted NAV 16.3 8.77 1.5 0.83 17.8 9.60

As of June 30, 2021, the remaining assets of the Company include:

  1. Interests in two fully developed luxury residential real estate redevelopment funds in Rome, where all Real Estate Fund Investment II (“REFI II”) apartments are now 100% sold or contracted to sell and less than 20% units of Real Estate Fund Investment V (“REFI V”) remain for sale.
  2. Residual minority interests in three NPL pools and other predominantly secured loans where the underlying assets of one pool are under a binding contract to sell in the third quarter and, as previously announced, the two remaining NPL pools are under contract to sell a once the level of the underlying portfolio reaches everyone’s funding is repaid.
  3. Net social cash of 9.7 million euros, made up of social cash net of liabilities and additional reserves.

H1 2021 HIGHLIGHTS

Preview H1 2021

During the first half of 2021, the Company continued to make significant progress in realizing its remaining assets as part of its Realization Plan. Sales of residential units in its two real estate redevelopment funds have proven to be resilient despite persistent challenges from COVID-19. This positive activity in the RE funds, where results were achieved above and ahead of what was expected, after being adjusted in 2020 for the expected impact of COVID-19, has been the main driver of a 26% valuation increase during the period for these investments.

In addition, Eurocastle received its last major distribution of its investment in publicly traded funds and agreed to the sale of all the underlying assets in one of the three remaining loan pools in which the Company has a stake, representing 19% of the segment’s net asset value in Q2 2021. This activity has enabled the Company to be well positioned as it undertakes its strategic review, announced in March 2021. The strategic options are currently being examined by the Board Directors, with the results of the review to be announced to shareholders before the end of 2021.

Investment achievements & Strong points

  • During the first half of 2021, the Company made 2.9 million euros on its investments, of which 2.8 million euros came from its real estate funds (~ 38% of their NAV YE 2020) and 0.1 million euros from its minority interests in bad debts and other loans. (~ 4% of their NAV YE 2020).
  • D Re-development Fands – REFI II & REFI V:
  • Following the commercial activity of the period and assuming the closing of all units under contract in REFI II and REFI V, only 18% of the units in REFI V as of June 30, 2021 will remain for sale.
  • Cash flow of € 2.4m in Q1 2021 including (i) € 0.5m from REFI II (~ 22% of its ANR YE 2020) and (ii) € 1.9m from REFI V (~ 39% of its ANR YE 2020). The remaining proceeds from concluded sales as well as those under contract for sale should be distributed to Eurocastle in H2 2021 (representing 62% of Q2’21 NAV).
  • REFI I: Following the sale of all the assets of the Real Estate Fund Investment I in 2019, the Company received its last expected material distribution of EUR 0.4 million, or 143% of its net asset value YE 2020, in the first quarter of 2021 .
  • Italian NPLs & other loans: During the year, the pools generated and distributed 0.1 million euros, or ~ 4% of its ANR YE 2020. In June, the underlying assets of one of these 3 pools were lost. ‘subject to a sales contract with expected closing in Q3 2021. The H1 2021 fair value reflects the impact of this offer which should generate ~ 0.3 million euros for the Company (~ 19% of the ANR T2’21).
  • Additional reserves: The Company reduced these reserves from 16.2 million euros to 15.4 million euros during the first half of the year. The decrease of 0.8 million euros reflects the use of 0.9 million euros in reserves, in line with anticipated costs, and an increase of 0.1 million euros in existing reserves in the first half of 2021 .

SUBSEQUENT AN EVENT To 30 JUNE 2021

REFI V signed an additional 8% of units under contract and repaid the financing facility in full, leaving ten% units remaining with closings expected by the end of the year.

Income Sdeclaration for the Six and Quarter ended June 30, 2021 (unaudited) S1 2021 Q2 2021
In thousands of euros In thousands of euros
Portfolio returns
Italian PNP and other loans 437 354
Real estate funds 1,809 1316
Change in fair value of Italian investments 2 246 1,670
Changes in fair value on residual Legacy entities 28
To win / (loss) on foreign currency conversion (1)
Total Gain 2 274 1,669
Operating Expenses
Base fees and incentives for managers 96 50
Remaining operating expenses 867 501
Other operating expenses 963 551
Total expenses 963 551
Report profit for the period 1 311 1.118
€ per share 0.71 0.60

Balance sheet and Adjusted Reconciliation of net asset value like To June 30, 2021 (unaudited)

Italian Investments
In thousands of euros

Company
In thousands of euros

Total
In thousands of euros
Assets
Cash and cash equivalents 26,324 26,324
other assets 48 48
Investments:
Italian PNP and other loans 1630 1630
Real estate funds 6,444 6,444
Total assets 8, 074 26,372 34,446
Liabilities
Suppliers and other creditors 1212 1212
Base fees and incentives for managers 55 55
Total responsibilities 1,267 1.267
IFRS NOTA V 8,074 25 105 33 179
Additional reserves5 (15,356) (15,356)
Adjusted NAV 8,074 9,749 17 824
Adjusted NAV (€ per share)6 4.35 5.25 9.60

1 In light of the Realization Plan announced in November 2019, the Adjusted NAV at June 30, 2021 reflects additional reserves for future costs and potential liabilities, which have not been recognized under the IFRS NAV. There is no commitment for these future costs and potential liabilities as of June 30, 2021. The IFRS NAV, as of June 30, 2021, is 33.2 million euros, or 17.86 euros per share.

2 The per share calculations for Eurocastle in this document are based on 1.9 million shares.
3 After taking into account the payment in Q1 2021 of € 0.54 per 2020 capital distribution share.

4 Reflects the company’s cash flow net of liabilities and additional reserves.

5 In view of the Construction Plan, the adjusted NAV at June 30, 2021 reflects additional reserves for future costs and potential liabilities of € 15.4 million which have not been recognized in the IFRS NAV.
6 Amounts per share calculated on 1.9 million common shares outstanding.

OPINION:

This announcement contains inside information for the purposes of Market Abuse Regulation 596/2014.

FURTHER INFORMATION

For information on the investment portfolio, please refer to the most recent financial report of the Company, which is available on the Company’s website (www.eurocastleinv.com).

ABOUT EUROCASTLE

Eurocastle Investment Limited (“Eurocastle” or the “Company”) is a publicly traded fixed-capital investment company specializing in Italian performing and non-performing loans, Italian loan management platforms and other real estate assets in Italy. On November 18, 2019, the Company announced a plan to realize the majority of its assets with the aim of accelerating the return of value to shareholders. The Company will not currently seek significant new investments from the proceeds of the realization, but will continue to support its existing investments to the extent necessary in order to optimize returns and distribute cash to shareholders when available (the “ Implementation plan ”). For more information on Eurocastle Investment Limited and to be added to our email distribution list, please visit www.eurocastleinv.com.

FORWARD-LOOKING STATEMENTS

This press release contains statements that constitute forward-looking statements. These forward-looking statements may relate to, among other things, future commitments to sell real estate and the achievement of disposal objectives, the availability of investment and divestment opportunities, the timing or certainty of the completion of acquisitions and disposals. , the operational performance of our investments and financing Needs. Forward-looking statements are generally identifiable by the use of forward-looking terminology such as “may”, “will”, “should”, “possible”, “intend”, “expect”, “s ‘strive’, “seek”, “anticipate” “,” estimate “,” overestimate “,” underestimate “,” believe “,” might “,” project “,” predict “,” project “,” continue ” , “plan”, “plan” or other similar words or phrases. Forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, contain projections of operating results or financial condition or state other forward-looking information. The Company’s ability to predict the results or the actual effect of future plans or strategies is limited. Although the Company believes that the expectations reflected in these forward-looking statements are based on reasonable assumptions, its actual results and performance may differ materially from those stated 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 expected results or stated expectations, including risks regarding the ability Eurocastle to declare dividends or to achieve its objectives regarding asset disposals or asset performance.

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