Eurocastle Investment Limited and Subsidiaries Financial Results for the half year and quarter ended 30 June 2009

Released: 13/08/2009

Eurocastle Investment Limited today announced its financial results for the half year and quarter ended 30 June 2009. The Company and its subsidiaries (“the Group”) has Euro denominated shares which are currently listed on Euronext Amsterdam, under the symbol “ECT” and on the Frankfurt Stock Exchange, under the symbol “EUI1”. Eurocastle is managed by an affiliate of Fortress Investment Group LLC. For more information regarding Eurocastle and to be added to our email distribution list, please visit www.eurocastleinv.com.

Highlights

Financial

• Normalised FFO* was €8.7 million or €0.14 per share for the quarter ended 30 June 2009 and €21.7 million or €0.36 per share for the half year ended 30 June 2009, compared with €21.5 million or €0.34 per share and €43.4 million or €0.68 per share for the quarter and half year ended 30 June 2008, respectively.
• Fully diluted NAV per share of €2.14 as at 30 June 2009 comprising of (€0.12) for the debt investment business and €2.26 for the commercial property portfolio (31 December 2008: €13.35 comprising €0.27 for the debt investment business and €13.62 for the commercial property portfolio). The fully diluted NAV, adjusted for the full impact of the refinancing of the Mars portfolio (which was completed on 27 May 2009) is €1.79 per share.
• Real estate NAV of €595 million and NAV per fully diluted share of €1.91 adjusted for the full impact of the Mars Portfolio refinancing, reflecting a NOI yield on valuation of 5.9%.
• Net loss after tax was €85.1 million for the quarter ended 30 June 2009 and €247.6 million for the half year ended 30 June 2009, compared with a loss of €31.6 million and €115.7 million for the quarter ended and half year ended 30 June 2008. The losses primarily relate to non-cash valuation adjustments to our portfolio.

* Normalised FFO (Funds from Operations) is a non-IFRS financial measure used to provide investors with information regarding the true underlying performance of the Group and its ability to service debt and make capital expenditure. This measure excludes realised losses, sales related costs (including realised swap losses), impairment losses, foreign exchange movements, and accounting adjustments related to the Mars refinancing.

Business Review

• Sold three properties during the second quarter of 2009, for total sales proceeds of €5.2 million, compared to carrying value of €4.6 million. For the first half of 2009, sold 11 properties for sales proceeds of €105.3 million, compared to carrying value of €108.7 million.
• During the second quarter 2009 the Group signed 71 commercial leases for approximately 39,000 square metres, including new leases for approximately 20,000 square metres. For the first six months of 2009, the Group signed 152 commercial leases for approximately 70,000 square metres, including new leases for approximately 41,000 square metres.
• Total lettable space was 2.1 million square metres at 30 June 2009 with occupancy of 85.8% as compared to occupancy of 85.7% at 31 March 2009 on a like for like basis. Lettable space excluding the Mars portfolio was 1.4 million square metres at 30 June 2009 with occupancy of 91.4%, slightly higher than 91.2% as at 31 March 2009. Mars portfolio lettable space had 720 thousand square metres at 30 June 2009 with occupancy of 75.2%, unchanged on the quarter.

Financing and Liquidity

• As at 30 June 2009, the Company had a corporate cash balance of €8.6 million.
• The Company raised €75 million in perpetual subordinated convertible securities at the end of June 2009. The net proceeds of €73.8 million were used to pay down the Corporate Loan from €115 million to €35 million. The terms of the perpetual subordinated convertible securities are contained in the Note 17 to the Interim Consolidated Financial Statements.
• As at 30 June 2009 the Group has two material short to medium term recourse obligations totalling €65 million comprised as follows:
• A €35 million corporate loan facility maturing on 30 June 2011 with scheduled amortisations of €15 million by 31 December 2010 and €20 million by 30 June 2011, and
• A guarantee obligation limited to €30 million in respect of an acquisition facility which matures on 30 September 2009. The Company is in discussions with the lender of this facility over a potential restructuring.
• The Group repurchased €121.2 million of senior liabilities in CDO V with restricted cash within the CDO at an average price of 56.9, realising a net book gain of €51.1 million.

Conference Call

Management will conduct a conference call today, 13 August 2009, to review the Group's financial results for the half year and quarter ended 30 June 2009. The conference call is scheduled for 1:00 P.M. London time (8:00 A.M. New York time). All interested parties are welcome to participate on the live call. You can access the conference call by dialling +1-877-717-3044 (from within the U.S.) or +1-706-679-1521 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference “Eurocastle Second Quarter Earnings Call.”

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 Thursday, 20 August 2009 by dialing +1-800-642-1687 (from within the U.S.) or +1-706-645-9291 (from outside of the U.S.); please reference access code “24181665.”

Forward-Looking Statements

This release contains statements that constitute forward-looking statements. Such forward-looking statements relate to, among other things, future commitments to acquire real estate and achievement of acquisition targets, availability of attractive investment opportunities, methods of funding portfolios, timing of completion of acquisitions, 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”, “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. Our ability to predict results or the actual effect of future plans or strategies is limited. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our 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 our actual results in future periods to differ materially from forecasted results or stated expectations, including the risk that Eurocastle will be able to achieve its targets regarding asset disposals or reduction in capital expenditure or that Eurocastle will be able to fund its direct recourse liabilities.

View the full Financial Results for the half year and quarter ended 30 June 2009 in PDF format (256 KB, opens in a new window).