8th Sep 2025 11:43
(Alliance News) - Starwood European Real Estate Finance Ltd on Monday reported a sharp fall in half-year profit as it advanced its orderly wind-down strategy, returning more capital to shareholders but taking a sizeable impairment on its Irish office loan investment.
Starwood European is a Guernsey-based investor that manages high-quality senior and mezzanine real estate debt in the UK and Europe.
The company said pretax profit fell to GBP143,825 in the six months to June 30 from GBP11.0 million a year prior, as total income slipped to GBP7.5 million from GBP12.7 million. Income from loans advanced fell to GBP6.0 million from GBP10.8 million.
Net asset value per share eased to 97.41 pence at June 30 from 100.49 pence at December 31.
The company said GBP256.0 million has now been returned to shareholders, equivalent to 61% of NAV at the start of 2023, with GBP46.0 million returned in the first half alone.
The portfolio has shrunk to just four loan investments, down from 12 at the beginning of 2023, with an average remaining term of 0.5 years.
Three of the loans are classified as stage 1, the lowest risk category, while the Irish office portfolio loan is categorised as stage 3. Based on ongoing sale talks, Starwood said it decided to write down the recoverable value of the loan to EUR4.8 million, taking a further EUR2.2 million impairment.
The company confirmed discussions with an investment vehicle advised by Starwood Capital over a potential sale of its Irish office loan exposure. If a transaction is agreed, it is expected that the transfer value will be "significantly below" its current carrying value.
To assist in assessing options, the board said it has also commissioned an independent report on the portfolio.
Chair John Whittle said: "We are pleased with the good progress we are making in returning capital to shareholders…While three of the remaining loans are classified as stage 1, the lowest risk profile used by the company, one loan investment known as office portfolio, Ireland has been impaired during the period and post-period end.
"The investment adviser will continue to actively manage the position to maximise the opportunity for value recovery and the board continues to closely monitor the position and ongoing developments."
Starwood continues to pay quarterly dividends of 5.5p per share, equivalent to a 6.3% yield on its June 30 share price, supported by cash generation from its remaining portfolio.
Shares in Starwood were down 0.8% at 86.58 pence in London on Monday morning.
By Eva Castanedo, Alliance News reporter
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