TIDMPSDL
RNS Number : 1261I
Phoenix Spree Deutschland Limited
03 August 2023
03 August 2023
Phoenix Spree Deutschland Limited
(the "Company", the "Group" or "PSD")
Portfolio valuation and business update for the six months ended
30 June 2023
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 30
June 2023 and an update on business activity.
Financial Summary:
Financial metric: 30 June 30 June 31 December
2023 2022 2022
Portfolio Valuation, as at (EUR
million) EUR714.3 EUR812.4 EUR775.9
--------- --------- ------------
Valuation per square metre, as
at (EUR) EUR3,808 EUR4,318 EUR4,082
--------- --------- ------------
Condominium notarisations during
period (EUR million) EUR2.0 EUR3.0 EUR4.7
--------- --------- ------------
Portfolio valuation impacted by interest rate rises and yield
expansion
During the first half of the financial year, buyer sentiment and
transaction volumes within the Berlin residential market continued
to be affected by historically high inflation and interest rates.
These weaker market conditions have negatively impacted the
valuation of the Portfolio.
As at 30 June 2023, the Portfolio, including investment
properties under construction valued at EUR4.3m, was valued at
EUR714.3 million. This valuation represents an average value per
square metre of EUR3,808 and a gross fully occupied yield of 3.3
per cent. Included within the Portfolio are seven multi-family
properties valued as condominiums, with an aggregate value of
EUR39.2 million (30 June 2022: six properties; EUR32.3
million).
On a like-for-like basis, after adjusting for the impact of
acquisitions net of disposals, the Portfolio valuation declined by
6.9 per cent during the half year to 30 June 2023.
Rental market remains robust
Rental market conditions remain strong. During the first half of
the financial year, supply-demand imbalances within the Berlin PRS
market have widened. Further net inward migration and higher home
ownership costs, which have forced potential buyers to remain
within the rental system for longer, continue to increase demand.
At the same time, supply continues to be constrained by higher
funding and construction costs. Against this backdrop, new lettings
in Berlin were signed at an average premium of 31 per cent to
passing rents.
The Company welcomed the release by The Senate Department for
Urban Development, Building and Housing of a new transitional
Berlin Mietspiegel (rent index). Announced on 15 June 2023, this
replaces the previous rent index of 2021 and applies until a new
qualified rent index is published in the first half of 2024. On
average, the new index permits an increase in rental values of 5.4
per cent versus 2021.
Where applicable, the Company has notified qualifying tenants of
any adjustments to future monthly rental payments, which will
become effective from October 2023. Although this is not the
primary driver of PSD's rent growth, it is anticipated that it will
be accretive to rental income in the second half of the financial
year.
Upturn in condominium buyer interest
During the six months to 30 June 2023, eight condominium units
were notarised for sale for an aggregate value of EUR2.0 million
(H1 2022: EUR 3.0 million). The average achieved notarised value
per sqm for the residential units was EUR5,715, representing an
average 68 per cent premium to 31 December 2022 carry value.
Since the half year end, the Company has notarised a further
three condominiums for EUR1.0m. The valuation represents a 2.2 per
cent premium to 31 December 2022 carry value, reflecting the fact
that these units were occupied. June 2023 book values have been
adjusted to reflect the agreed sales prices.
Reservations on a further seven units have been received and are
pending notarisation. Combined, these have a value of EUR2.6
million, representing a gross premium of 5.1% per cent to carry
value as at 30 June 2023. Of the seven reservations, three units
are currently occupied and therefore carry lower premiums.
Outlook
Against a backdrop of higher inflation and interest rates,
rental yields in the Berlin residential market have risen and
values of rental properties have correspondingly fallen. However,
condominium values remain well supported, as evidenced by the
premia to carry values that the Company continues to achieve on
sales. Although 93 per cent of the Company's portfolio is currently
valued on a rental property basis, it has over 78 per cent of its
properties split as condominiums.
The Property Advisor has produced a detailed analysis of the
entire Portfolio of assets to identify individual properties,
portfolios as well as additional condominiums for sale and
continues to actively market a wide range of properties. Given that
the Company's share price remains at a material discount to NTA,
disposals at a discount to current carry value are under
consideration. Any surplus cash generated over amounts required to
reinstate dividends on a sustainable basis will be returned to
shareholders or used to reduce debt levels.
Buyer interest in the condominium market has shown early signs
of recovery and supply-demand imbalances within the Berlin PRS
market remain firmly supportive of rental values. Given the strong
rental market backdrop and the positive effect of the new
Mietspiegel , it is anticipated that annualised like-for-like
rental growth will accelerate from 5.5 per cent as a 30 June 2023
to approximately 6.5 per cent over the next 12 months.
Interim results
The Company intends to publish its interim results for the six
months to 30 June 2023 at the end of Septembe r 2023.
Legal Entity Identifier: 213800OR6IIJPG98AG39
For Further Information, Please Contact:
Phoenix Spree Deutschland Limited +44 (0) 20 3937 8760
Stuart Young
Numis Securities Limited (Corporate Broker) +44 (0) 20 7260 1000
David Benda
Teneo (Financial PR) +44 (0) 20 7353 4200
Olivia Peters
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END
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