Starwood European Real Estate Finance Ltd on Friday said its loan portfolio made good progress in the latest quarter, although net asset value slightly declined, and declared a stable interim dividend.

The Guernsey-headquartered investment company, which manages and realises high quality senior and mezzanine real estate debt in the UK and Europe, declared a 1.38 pence per share dividend for the second quarter of 2023, unchanged from the first.

Starwood is targeting a 5.5p per share payout, also unchanged from the prior year and equating to a 6.2% annualised yield based on its closing share price on Wednesday.

Starwood’s NAV at June 30 was 103.75p per share, slightly down from 103.82p at March 31.

On Friday around midday in London, its shares were down 1.3% at 87.26p each.

The company reported positive realisation progress during the period, saying £7.6 million was repaid across six investments. This represented 2.0% of its total funded loan portfolio, and included full repayment of an €3.0 million (about £2.6 million) logistics loan. Starwood said it used the proceeds to fund its first capital return of £10.0 million to its shareholders.

Starwood also said its ‘robust’ portfolio’s loan book performed generally in line with expectations, ‘with its defensive qualities reflected in the group’s continued NAV stability.’

Starwood’s portfolio has a 56% weighted average loan to value, giving it a ‘significant equity cushion,’ and 76% of it is contracted at floating interest rates with floors.

‘Despite highly challenging market conditions which are reflected in low equity valuations across the investment company sector, we are reassured by our high quality real estate debt portfolio, which continues to provide a regular and consistent dividend from a robust portfolio which offers substantial protection against inflation,’ commented Chair John Whittle.

Whittle added that Starwood expects to make further capital returns in the second half of the year.

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