TIDMPSDL
RNS Number : 4713H
Phoenix Spree Deutschland Limited
04 August 2021
4 August 2021
Phoenix Spree Deutschland Limited
("PSD" or the "Company")
Investment property valuation and business update
Phoenix Spree Deutschland Limited (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 30
June 2021.
Further increase in portfolio value
The Berlin residential property market has remained stable in
the first half of the financial year and, although transaction
volumes remained below peak levels, investment demand observed by
Jones Lang LaSalle GmbH, the Company's independent valuers,
continues to support current pricing.
As at 30 June 2021, the Portfolio was valued at EUR777.7 million
(31 December 2020: EUR768.3 million). This represents a 1.2 per
cent increase over the six-month period. On a like-for-like basis,
excluding the impact of disposals, the Portfolio value increased by
2.5 per cent. This increase reflects an increase in market rents
following the removal of the Mietendeckel, further progress in
condominium splitting and improvements in the micro locations of
certain Portfolio assets.
The valuation represents an average value per square metre of
EUR4,075 (31 December 2020: EUR3,977), at a gross fully occupied
yield of 2.9 per cent (31 December 2020: 2.4 per cent). Included
within the Portfolio valuation are eight properties valued as
condominiums, with an aggregate value of EUR43.4 million (31
December 2020: nine properties, aggregate value EUR52.4
million).
The December 2020 Portfolio valuation undertaken by JLL had
assumed that the Mietendeckel would be fully implemented for its
entire five-year lifespan and incorporated the associated impact on
rental income. Following the ruling of the German Federal Court on
15 April 2021 that the Mietendeckel was not legal and thus void,
the interim Portfolio valuation undertaken by JLL for the half-year
ended 30 June 2021 now assumes market (as opposed to Mietendeckel)
rents for the full DCF period. As with previous periods, the
valuation is consistent with current comparable transaction
values.
Collection of back-dated Mietendeckel rents progressing
well.
Prior to the Federal Court ruling, all rental agreements had
been structured to allow for the back-payment of higher rents now
legally due for the period during which the Mietendeckel was in
place. Tenants had been advised by the Berlin government to set
aside appropriate reserves for this eventuality.
The Company estimates that the amount of back-dated rent which
could be claimed from tenants is approximately EUR2.1 million. As
at 3 August, in excess of 89 per cent of this amount had already
been collected. The Company will continue to work on a case-by-case
basis with any tenants suffering hardship as it collects the
remainder of back-dated rents due.
Condominium notarisations increase 45.1 per cent, and at a 25.4
per cent premium to book value.
During the first half of 2021, 13 condominiums units were
notarised for sale for an aggregate value of EUR4.3 million,
representing a 45.1 per cent increase versus the first half of the
prior year (H1 2020: EUR3.0 million). The average achieved
notarised value per sqm for the residential units was EUR4,821,
representing a 25.4 per cent premium to book value and a 15.9 per
cent premium to the average Berlin residential portfolio value as
at 30 June 2021.
As at 30 June 2021, 74 per cent of the Portfolio had been
registered as condominiums, providing opportunities for the
implementation of further projects where appropriate. A further 11
per cent are in application, over half of which are in the final
stages of the process.
Condominium notarisations during the second quarter of 2021 were
impacted by COVID-19 restrictions which made the viewing of
occupied apartments more difficult. The Mietendeckel caused record
low vacancy rates in Berlin, reducing the number of vacant
apartments available for sale. As the German COVID vaccination
programme continues to progress, and the effects of the
Mietendeckel on vacancy begin to unwind, it is anticipated that the
pace of condominium sales will recover.
Interim results
The Company intends to publish its interim results for the six
months to 30 June 2021 on 24 September 2021.
Robert Hingley, Chairman of Phoenix Spree Deutschland
commented:
"The first six months of the financial year were characterised
by significant market disruption caused by the combined effects of
COVID-19, the Mietendeckel and its subsequent reversal. It is
therefore pleasing that the Portfolio was able to deliver further
valuation gains.
Berlin market dynamics remain attractive, particularly in the
light of the recent legal ruling against the Mietendeckel, and
affordability comparisons with other German cities are still
favourable. It is expected that Berlin demographic trends,
particularly net inward migration, will further strengthen when
restrictions associated with COVID-19 are permanently removed,
providing further support for PSD's reversionary strategies which
have historically served investors well."
Legal Entity Identifier: 213800OR6IIJPG98AG39
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
Oliver Norgate +44 (0)20 7353 4200
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