Eurocastle's Financial Update for Q3 2024
Contact:
Oak Fund Services (Guernsey) Limited
Company Administrator
Attn: Hannah Crocker
Tel: +44 1481 723450
Eurocastle Investment Limited (Euronext Amsterdam: ECT) has unveiled its interim management statement reflecting its performance for the quarter ending September 30, 2024.
Key Financial Highlights
As of September 30, 2024, Eurocastle reported an IFRS NAV of €21.37 million, or €21.34 per share. This marks a decline from the previous quarter's NAV of €21.59 million, which equated to €21.56 per share.
The Adjusted NAV was recorded at €10.93 million, translating to €10.91 per share, down slightly from €11.08 million or €11.07 per share as of Q2 2024. Should the German tax authorities choose not to contest recent favorable judgments for Eurocastle, the Adjusted NAV could potentially rise to €16.32 per share with the full release of the associated reserve of €5.4 million.
Investment Strategy Progress
Eurocastle’s pro forma assets as of September 30, 2024, are distributed as follows, reflecting recent successful investments under the Company’s New Investment Strategy:
- Net corporate cash of €15.97 million, or €15.95 per share, earmarked for future investments.
- Investment of €5.3 million, or €5.33 per share, in a share of a Luxembourg fund that recently secured a retail complex in Athens.
- Residual stakes in two legacy Italian real estate funds, valued at €0.1 million, or €0.06 per share.
Business Updates
Launch of New Investment Fund
In an exciting expansion, Eurocastle has initiated the European Properties Investment Fund S.C.A., SICAV RAIF (the “Fund”), designed for making strategic real estate investments throughout Southern Europe. This Fund had its first close on August 6, 2024, accumulating €10 million with Eurocastle committing €8 million and its joint venture partner contributing €2 million.
The Fund is expected to generate attractive returns on its investments while also yielding fees from external investors, building a significant foundation for future growth. The Fund’s inaugural acquisition, valued at €5.3 million, involved a boutique retail complex in a prestigious area of Athens. The strategy will focus on maximizing occupancy rates and leveraging market conditions for an eventual sale.
Tax Matters Resolution
On December 5, 2024, Eurocastle successfully won an appeal regarding an additional tax assessment linked to a German property subsidiary covering the period from 2008 to 2012. The outcome has opened the door for potential revisions in tax assessments from the authorities, with outcomes expected in early 2025. The estimated total tax exposure related to this issue stands at approximately €5.4 million.
Reserves Management
During Q3 2024, Eurocastle has focused on optimizing its additional reserves, reducing them from €10.5 million to €10.4 million as the Company realigned costs in line with ongoing operations. The current reserve includes €5.4 million associated with the ongoing German tax matters while allocating the remaining balance for future operational needs as the New Investment Strategy continues to evolve.
Income Statement Overview
For the quarter ending September 30, 2024, Eurocastle reported an overall loss of €222,000, equating to a loss of €0.22 per share. The total income for the quarter was just below breakeven, although the push towards new investments is expected to stabilize finances moving forward.
Balance Sheet Highlights
The balance sheet as of September 30, 2024, reflects total assets of €21.64 million, while liabilities are recorded at €273,000, signifying a robust asset management approach during a period of strategic transition.
Frequently Asked Questions
What is Eurocastle’s current NAV as of Q3 2024?
Eurocastle reported an IFRS NAV of €21.37 million or €21.34 per share as of September 30, 2024.
How is Eurocastle addressing its tax matters?
Eurocastle recently won an appeal regarding a tax assessment and is awaiting further decisions from tax authorities, with an estimated exposure of €5.4 million.
What new investment strategy has Eurocastle implemented?
Eurocastle launched the European Properties Investment Fund aimed at making strategic real estate investments in Southern Europe, specifically beginning with a retail complex in Athens.
What are the expected benefits of the new investment fund?
The Fund is anticipated to yield attractive returns and allow Eurocastle to build a significant base for future investments, enhancing profitability from asset management fees.
What are the Company’s future plans?
Eurocastle plans to continue expanding its investment strategy across Southern Europe while carefully managing its reserves and financial exposures.
