Starwood European Real Estate Finance has said it will provide investors with a “exceptionally defensive” position against rising inflation.
In its quarterly trading update this morning, SEREF said it had a “strong performance” for the quarter, allowing it to offer a 5.5p annual dividend, a yield of 6% on its share price.
Chair John Whittle said: “SEREF offers a valuable source of income uncorrelated to equity market movements and an exceptionally defensive instrument for portfolio diversification in inflationary times.”
SEREF, which has 19 investments with a net asset value of £422.9m, has an LTV of 60% and a market cap of £375m. Just under 80% of the portfolio is invested in floating rate investments. These, it said, will provide an increase in revenue as higher inflation results in higher interest rates.
It said: “With global inflation set to continue as a trend, along with likely interest rate rises from central banks, the asset-backed element of the portfolio’s loans… should provide enduring strong relative performance. We are starting to benefit from increased income from the portfolio from interest rate rises to date and can expect this to continue with further potential interest rate rises.”
SEREF announced the origination of one new loan in the quarter, with £19.5m of capital deployed across office and industrial assets in the Netherlands and the UK. A total of £14.3m was repaid in the quarter. The portfolio remains fully invested.
SEREF said the group’s key sectors – hospitality, which accounts for 40% of the total invested, offices at 25% and retail at 11% – all continued to perform in line with expectations.
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