TIDMPSDL
RNS Number : 3502B
Phoenix Spree Deutschland Limited
30 January 2020
30 January 2020
Phoenix Spree Deutschland Limited
(The "Company" or "PSDL")
Investment property valuation as at 31 December 2019
Phoenix Spree Deutschland (LSE: PSDL.LN), the UK listed
investment company specialising in Berlin residential real estate,
announces the valuation for the portfolio of investment properties
held by the Company and its subsidiaries (the "Portfolio") as at 31
December 2019.
Further increase in portfolio value
The total Portfolio was valued at EUR730.2 million by Jones Lang
LaSalle GmbH, the Company's external valuers, an increase of 13.1
per cent over the twelve-month period (31 December 2018: EUR645.7
million). This valuation represents an average value per square
metre of EUR3,741 (31 December 2018: EUR3,527) and a gross
fully-occupied rental yield of 2.9 per cent (31 December 2018: 3.0
per cent).
On a like-for-like basis, after adjusting for the impact of
acquisitions net of disposals, the Portfolio valuation increased by
7.1 per cent in the year to 31 December 2019, and 3.1 per cent in
the second half of the financial year. This reflects the combined
impact of market rental growth and the active management of the
Portfolio.
Based on the Company's year-end Portfolio valuation, it is
expected that the reported EPRA NAV per share as at 31 December
will fall within a range of EUR4.90 - EUR4.96 (GBP4.15 - GBP4.20*)
(31 December 2018: EUR4.58 (GBP4.11)). This represents a Sterling
EPRA NAV per share total return within a range of 2.5 to 3.8 per
cent for the financial year to 31 December 2019.
Update on proposed rent controls
On 26 November 2019, the Berlin Senate (the government of the
federal state of Berlin) passed a draft bill for the Berlin rent
price cap (Mietendeckel). It is expected that this bill will be
adopted by the Berlin House of Representatives (the legislative
chamber of the federal state of Berlin) and come into force in
early February 2020.
The opposition in the Berlin House of Representatives and a
parliamentary faction of the Federal Government have already
announced that they intend to have the proposed legislation
reviewed by Berlin's Regional Constitutional Court and the Federal
Constitutional Court. The Company and its legal advisors remain of
the view that the proposals as currently drafted are
unconstitutional and illegal. In particular, they raise concerns
about whether the state of Berlin is competent to pass local rent
legislation, as the provisions substantially deviate from existing
German federal law.
Given the uncertainty about the legal validity of the proposed
rent controls, it is not yet clear what impact there could be on
future property prices. Jones Lang Lasalle GmbH have, however,
confirmed that, to date, there has been no material adverse effect
on either sale prices or rental levels in the Berlin market. The
portfolio valuation conducted by Jones Lang LaSalle GmbH for year
to 31 December 2019 reflects current Berlin market prices and does
not factor in any additional future impact on property valuations
that may materialise in the event the proposed rent controls are
introduced.
The Company has previously set out how it intends to adapt its
strategy during any period in which the proposed rent controls are
in force to mitigate any short-term impact on the portfolio, while
ensuring it maintains maximum strategic optionality in the event
the proposals are found to be unconstitutional. Good progress has
been made with these plans which include share buybacks,
condominium splitting and sales, as well as selective acquisitions
in areas within Greater Berlin that are not impacted by the rent
control proposals.
Condominium sales at an 18 per cent premium to book value.
During the year to 31 December 2019, a total of 18 apartments
were notarised for sale, with an aggregate value of EUR8.8 million.
The average notarised value per sqm achieved was EUR4,068,
representing a 17.5 per cent premium to book value and an 8.8 per
cent premium to the 31 December 2019 Berlin Portfolio average of
EUR3,741 per sqm. Condominium sales accelerated significantly
during the second half of the financial year, with a total of 14
units notarised with an aggregate value of EUR6.3m, a 23.6 per cent
premium to book value.
Share Buy-backs at an average 24 per cent discount to net asset
value
Following the completion of a new EUR240 million loan facility
on improved terms, the Company announced in September 2019 that it
would consider buying back up to 10 per cent of existing share
capital in issue. The share buy-back programme commenced in
mid-October and, as at 30 January 2019, the Company had purchased a
total of 3.2 million shares (3.2 per cent of the ordinary share
capital) for a total consideration of GBP10.3 million. The average
price paid represented a 23.9 per cent discount to EPRA Net Asset
Value per share as at 30 June 2019.
Acquisitions unaffected by proposed Berlin rent controls
Notwithstanding the uncertain regulatory backdrop in central
Berlin, there remains opportunity to acquire in areas within the
Greater Berlin region that are unaffected by the proposed
Mietendeckel rent controls. In December 2019, the Company completed
the acquisition of an apartment complex in Brandenburg, with a
total asset value of EUR43.5 million, for a net consideration of
EUR24.2 million, excluding acquisition costs. This property meets
the Company's investment criteria and the Board believes there is
significant potential to add value through active asset management
strategies.
Full year results
The Company will publish its full year results in early April
2020.
* Based on Sterling / Euro exchange rate as at 31(st) December
2019 of 1.182
Robert Hingley, Chairman of Phoenix Spree Deutschland
commented:
"I am pleased with the continued performance of the portfolio
and the progress made in mitigating any short-term impact on the
portfolio during the period of uncertainty created by the proposed
rent controls. Supported by our strong balance sheet, we remain
well placed to take advantage of selective acquisition
opportunities and share buy-backs, while maintaining our strategic
optionality in the event the rent control proposals are found to be
unconstitutional."
This announcement contains inside information.
For further information, please contact:
Phoenix Spree Deutschland Limited
Stuart Young +44 (0)20 3937 8760
Numis Securities Limited (Corporate Broker)
David Benda +44 (0)20 3100 2222
Tulchan Communications (Financial PR)
Elizabeth Snow +44 (0)20 7353 4200
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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