The £236 million Starwood European Real Estate Finance fund is looking to broaden its mandate in an effort to become fully invested.
Starwood, which lends to property firms, is seeking shareholders’ permission to make investments in Spain and Italy; it currently only has exposure to the UK, Holland and Finland. The fund also wants to increase its maximum allocation to ‘residential for sale’ properties from 20% to 30%.
‘The occupational real estate markets in Spain and Italy have shown tentative signs of recovery and investment demand has also significantly increased as both opportunistic and core investors have sought exposure,’ Starwood stated.
‘Whilst any investment in Spain or Italy would be approached with caution, the board believes that the company should have the ability on a selective basis to identify balanced risk/return opportunities in these countries if and when they arise.’
Starwood has however told investors that it will not act on any authority to lend in either country until its existing cash is fully deployed.
Since launching in December 2012, Starwood has struggled to use its capital. The portfolio is currently only around 70% invested, with chairman Stephen Smith acknowledging that the pace of investment has been ‘slower than anticipated’.
This left Starwood unable to meet its dividend target during its first year of operation. The trust had aimed to pay 3.5p for 2013, but managed only 1.9p. It is aiming for a 7p dividend this year, equivalent to around a 7% yield at the current share price.