TIDMPSDL
RNS Number : 2961Q
Phoenix Spree Deutschland Limited
17 October 2023
Phoenix Spree Deutschland Limited
(the "Company" or "PSD")
17 October 2023
2023 Interim Financial Report Correction: EPRA Net Tangible
Assets and EPRA Net Tangible Assets Per Share
Shareholders are referred to the announcement of the Company's
Interim results for the six months ended 30 June 2023 (released on
27 September 2023 at 7:00 under RNS No 7386N).
In accordance with EPRA Best Practice, EPRA NTA is calculated
after adjusting for deferred tax assets and liabilities, fair value
of financial instruments and share-based payment reserves. However,
whilst the Net Asset Value in the interim financial statements is
correct, in Note 23 the derivative financial instrument asset had
erroneously not been excluded from the IFRS NAV to derive the EPRA
NTA.
Note 23 to the Company's Condensed Consolidated Financial
Statements for the period from 1 January 2023 to 30 June 2023 (the
"2023 Interim Financial Statements") - Net Asset Value per share
and EPRA Net Tangible Assets (NTA), should have been reported as
follows:
-- Add back deferred tax assets and liabilities, derivative
financial instruments and share-based payment reserves (EUR'000) of
59,799 should have been reported as 43,414.
-- EPRA NTA (EUR'000) of 426,364 should have been reported as
409,979.
-- EPRA NTA per share (EUR) of 4.64 should have been reported as
4.46
IFRS Net Asset Value and Net Asset Value per share figures
remain unchanged.
The 2023 Interim report quoted EPRA NTA per share (GBP) as 3.99
and EPRA NTA per share total return (EUR %) as (9.0) for the six
months to 30 June 2023. These should have been reported as 3.83 and
(12.5) respectively. EPRA NTA per share total return (GBP %) was
reported as (11.8) and should have been (15.2)
All other details remain unchanged. The full amended text of the
interim results is shown below:
Phoenix Spree Deutschland Limited
(the "Company" or "PSD")
Interim Results for the half-year to 30 June 2023
Phoenix Spree Deutschland (LSE: PSDL.LN), the specialist
investor in Berlin residential real estate, announces its Interim
Results for the six months ended 30 June 2023.
Financial Summary
EUR million (unless otherwise Six months Six months 12 months 12 months
stated) to June to June to December to December
2023 2022 2022 2021
Gross rental income 13.8 13.0 25.9 25.8
---------- ----------- ------------ ------------
(Loss) / Profit before tax (58.0) 17.0 (17.5) 45.3
---------- ----------- ------------ ------------
Dividend per share in respect of - 2.35 (2.09) 2.35 (2.09) 7.50 (6.38)
the period
(EUR cents (GBP pence))
---------- ----------- ------------ ------------
Portfolio valuation (1) 714.3 820.1 775.9 801.5
---------- ----------- ------------ ------------
Like-for-like valuation (decline
) / growth (%) (6.9) 2.2 (3.1) 6.3
---------- ----------- ------------ ------------
EPRA NTA per share (EUR) 4.46 5.72 5.10 5.65
---------- ----------- ------------ ------------
EPRA NTA per share (GBP)(2) 3.83 4.92 4.52 4.74
---------- ----------- ------------ ------------
EPRA NTA per share total return
(EUR %) (12.5) 2.2 (8.4) 8.4
---------- ----------- ------------ ------------
Net LTV (%)(3) 42.7 36.0 39.1 34.7
---------- ----------- ------------ ------------
Portfolio valuation per sqm (EUR) 3,808 4,318 4,082 4,225
---------- ----------- ------------ ------------
Annual like-for-like rent per sqm
growth (%) 3.8 3.7 3.9 3.9
---------- ----------- ------------ ------------
Like-for-like rent growth (%) 5.6 4.3 6.1 1.3
---------- ----------- ------------ ------------
EPRA vacancy (%) 2.7 2.5 2.4 3.1
---------- ----------- ------------ ------------
Condominium sales notarised 2.0 3.0 4.7 15.2
---------- ----------- ------------ ------------
(1 -Portfolio valuation includes investment properties under
construction.)
(2-GBP:EUR FX rate 1:1.164 as at 30 June 2023.)
(3- Net LTV uses nominal loan balances as per note 17 rather
than the loan balance on the Consolidated Statement of Financial
Position which consider Capitalised Finance Arrangement Fees in the
balance.)
Rental growth accelerating
-- High net inward migration and declining construction levels
are significantly increasing the supply-demand imbalance for Berlin
residential rental property.
-- Rental growth remains strong, and it is expected that
annualised like-for-like rental growth will accelerate from the
current rate of 5.6 per cent as at 30 June 2023.
-- New PSD leases were signed at an average 31.2 per cent
premium to passing rents in H1 2023. New letting rental values are
expected to continue to be at a significant premium to average
in-place rents across the Portfolio.
-- EPRA vacancy of 2.7 per cent as at 30 June 2023 remains at a
historically low level, reflecting ongoing structural undersupply
of available rental property.
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).
-- Average achieved notarised value per sqm for residential
units sold was EUR5,708, representing an average 68 per cent
premium to 31 December 2022 carrying value.
-- Since 30 June 2023, the Company has notarised a further six
condominiums for EUR2.1 million. Additionally, reservations on a
further three units, with a combined value of EUR0.8 million, have
been received and are pending notarisation.
-- Although 95 per cent of the Company's Portfolio is currently
valued on a rental property basis, it has over 78 per cent of its
properties legally split as condominiums, providing significant
future optionality.
Portfolio management
-- Two rental buildings are currently under offer with completion expected at the start of 2024.
-- Several new condominium projects are being brought to market,
resulting in a significant increase in apartments being offered for
sale.
-- Material reduction in capex spend from EUR16.4million in
2022, with EUR4.6 million spent in H1 (H1 2022: EUR6.2 million) and
a budget of EUR7.6 million for the full year.
Portfolio valuation impacted by interest rate rises and yield
expansion
-- Like-for-like Portfolio value, after adjusting for the impact
of acquisitions and disposals , declined by 6.9 per cent during the
half-year to 30 June 2023 , reflecting an increase in market
yields, partially offset by rental growth.
-- Including investment properties under construction valued at
EUR4.3 million, the Portfolio was valued at EUR714.3 million as at
30 June 2023, compared to EUR775.9 million as at 31 December
2022.
Regulatory backdrop more supportive
-- The new Berlin Mietspiegel (rent index) announced on 15 June
2023 permits, on average, an increase in industry-wide rental
values of 5.4 per cent versus 2021.
-- The Company has notified all qualifying Mietspiegel tenants
of rental increases, and these will become effective from October
2023 onwards.
-- Following removal of the Mietendeckel rent cap, political
sentiment is shifting from rent control towards increasing the
supply of new homes.
Outlook and strategy
-- Supply-demand imbalances and recent regulatory developments
will continue to positively impact rental growth.
-- Higher interest rates continue to weigh on buyer sentiment
and transaction volumes and further increases in market yields and,
correspondingly, continuing pressure on sales prices, cannot be
ruled out.
-- Reflecting current uncertainty over the duration of the
interest rate cycle, the Company has adopted a conservative
business plan, which will seek to reduce overall debt levels and,
where feasible and appropriate, return capital to shareholders.
-- Given the material difference between condominium values (for
which, during the past 12 months, the Company has achieved sales
prices, on average, of EUR5,545 per square metre) and the current
share price (which, on an EPRA basis, implies a value per square
metre across the entire portfolio of approximately EUR2,600), plans
for future condominium sales have been accelerated, with three
additional properties being brought to market.
-- A significant part of the rental portfolio has been
identified for disposal and is being actively marketed. Disposals
at discounts to current carrying value are likely, although at a
premium to the value implied by the share price as at 30 June
2023.
-- The Company has no near-term refinancing requirements, with
its first loan maturity not due until September 2026.
Robert Hingley, Chairman of Phoenix Spree Deutschland
commented:
" It is pleasing that our core rental business continues to
prosper, with rental values and growth well supported by the
positive trends that continue to exist within the Berlin
residential property market. Higher interest rates have affected
property values across Europe and, against this backdrop, our
enhanced disposal programme and, where feasible, returning proceeds
to shareholders, remain a key focus during the current stage of the
real estate cycle."
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)
Olivia Peters +44 (0)20 7353 4200
CHAIRMAN'S STATEMENT
The past three years have seen major changes in the geopolitical
and economic landscape. The emergence from Covid-19 lockdowns
strained supply chains, leading to inflation, which has since been
exacerbated by the ongoing conflict in Ukraine. Against this
backdrop, the period of inexpensive borrowing which characterised
much of the previous decade came to an end, with central banks
hiking interest rates in response. While rental growth has
continued due to structural supply shortages, rising rates have
negatively impacted buyer sentiment, with a consequential impact on
sales values and transaction volumes for both rental properties and
condominiums.
Our core rental business continues to prosper. A combination of
higher costs of home ownership, declining construction levels and
high net inward migration is significantly increasing the
supply-demand imbalance for Berlin residential rental property.
Consequently, rental growth remains strongly underpinned and is
expected to accelerate during the year ahead.
Higher interest rates have, however, affected global bond and
equity markets, as well as property values across Europe, where
values have fallen as rental yields rise. It is against this
backdrop that the Company has reported a decline in the value of
its properties during the first six months of the financial year.
As at 30 June 2023, the Portfolio was valued at EUR714.3 million, a
like-for-like decline of 6.9 per cent since the financial year-end.
Reflecting this decline, the Euro EPRA NTA total return per share
was (12.5) per cent over the six-month period and the sterling
return was (15.2) per cent.
Further details relating to the Company's financial and
operating performance can be found in the Report of the Property
Advisor.
Adapting to a more challenging environment
To maintain the Company's financial resilience and avoid
pressure to dispose of assets at prices that the Board considers
not to be in shareholders' interests, the difficult decision was
taken last year to suspend dividend payments until such time as
condominium and other asset sales saw a sustainable recovery.
In addition, the Board and the Property Advisor, with
shareholders' approval, have agreed to change the fees payable to
the Property Advisor to align their incentives with the Company's
short-term strategic priorities. The key element of the new
agreement is to further incentivise the Property Advisor to
evaluate and implement a variety of disposal strategies, while
reducing the level of annual management fee paid.
A significant part of the Portfolio has now been identified for
disposal and a number of new condominium projects are being brought
to market, resulting in an increase in apartments offered for sale.
Given that the Company's share price remains at a material discount
to EPRA NTA, disposals at discounts to current carrying values are
under consideration.
Our tenants
The topic of affordable housing has dominated public debate in
Germany in recent years and we remain committed to maintaining a
portfolio of homes for our tenants that are comfortable as well as,
of course, compliant with all health and safety standards . During
the first half of the financial year, over one third of the
Company's gross revenues were reinvested into the Portfolio as we
continued to make improvements to our buildings.
Our latest tenant satisfaction survey, completed in the first
half of 2023, demonstrated high tenant satisfaction levels with
both the quality of their apartment and the rental process.
Protecting our environment
We acknowledge that the German property sector needs to play a
major role in Germany achieving its target of climate neutrality by
2045. Our Environment Policy sets guidance as to how PSD, our
Property Advisor (QSix) and other key suppliers should operate to
help achieve this. We continue to develop the environmental
measurement and reporting of our Portfolio, in line with EPRA's
sBPR framework.
Our most recent EPRA Sustainability report, for which the
Company achieved a Gold Award, can be viewed on the Company
website.
Our charities
The Company has continued its financial support programme to two
Berlin-focused charities, The Intercultural Initiative and Laughing
Hearts. The Intercultural Initiative is a Berlin refuge that helps
women and children affected by domestic violence. Laughing Hearts
supports children living in children's homes and social care.
Our Property Advisor has also continued to support two
London-based homeless charities, SPEAR and SHP. Funding is given to
SPEAR to run an outreach service, providing accommodation to rough
sleepers and helping with their health and wider social care
problems. SHP supports an employability programme that assists
homeless people, or those at high risk of becoming homeless, with
finding a job and securing a sustainable income. QSix additionally
supports Home-Start, a UK community network of trained volunteers
and expert support helping families with young children.
Our Board
Following the death of Greg Branch in August 2022, the Board was
pleased to announce the appointment of Steven Wilderspin as a
non-executive Director of the Company with effect from 10 January
2023. Steven, a Jersey resident, is a fellow of the Institute of
Chartered Accountants of England and Wales and has acted as an
independent director of several public and private investment funds
and commercial companies since 2007. His experience and insight add
a valuable perspective to complement and enhance the skill set of
the Board.
Outlook
At present, it remains too early to predict when the real estate
cycle will reach its inflexion point. Reflecting current
uncertainty in economic and capital market conditions, the enhanced
disposal activity outlined above will be the primary focus of the
Company's strategy for the foreseeable future. In the meantime, our
core rental business continues to thrive, with rental values and
growth well supported by the positive trends that continue to exist
within the Berlin residential property market.
REPORT OF THE PROPERTY ADVISOR
Financial results
Table: Financial highlights for the six-month period to 30 June
2023
EUR million (unless otherwise 6 months 6 months Year Year to
stated) to 30-Jun-23 to 30-Jun-22 to 31-Dec-21
31-Dec-22
Gross rental income 13.8 13.0 25.9 25.8
-------------- -------------- ----------- -----------
Investment property fair value
(loss) / gain (57.3) 11.4 (42.2) 38.0
-------------- -------------- ----------- -----------
(Loss) /gain before tax (PBT) (58.0) 17.0 (17.5) 45.3
-------------- -------------- ----------- -----------
Reported EPS (EUR) (0.51) 0.15 (0.17) 0.39
-------------- -------------- ----------- -----------
Investment property value 714.3 820.1 775.9 801.5
-------------- -------------- ----------- -----------
Net debt (Nominal balances)(1) 305.0 295.6 303.3 278.0
-------------- -------------- ----------- -----------
Net LTV (%)(1) 42.7 36.0 39.1 34.7
-------------- -------------- ----------- -----------
IFRS NAV per share (EUR) 3.99 4.84 4.50 4.74
-------------- -------------- ----------- -----------
IFRS NAV per share (GBP)(2) 3.43 4.17 3.99 3.98
-------------- -------------- ----------- -----------
EPRA NTA per share (EUR) 4.46 5.72 5.10 5.65
-------------- -------------- ----------- -----------
EPRA NTA per share (GBP)(2) 3.83 4.92 4.52 4.74
-------------- -------------- ----------- -----------
Dividend per share (EUR cents) - 2.35 2.35 7.50
-------------- -------------- ----------- -----------
Dividend per share (GBP pence) - 2.09 2.09 6.38
-------------- -------------- ----------- -----------
EUR EPRA NTA per share total
return for period (%) (12.5) 2.2 (8.4) 8.4
-------------- -------------- ----------- -----------
GBP EPRA NTA per share total
return for period (%) (15.2) 4.8 (3.2) 1.0
-------------- -------------- ----------- -----------
(1 - Net LTV and net debt uses nominal loan balances as per note
17 rather than the loan balances on the Consolidated Statement of
Financial Position which consider Capitalised Finance Arrangement
Fees in the balance as per IAS 23.)
(2 - GBP:EUR FX rate 1:1.164 as at 30 June 2023)
Revenue for the six-month period was EUR13.8 million (six months
to 30 June 2022: EUR13.0 million). The Company recorded a loss
before tax of EUR58.0 million (six months to 30 June 2022: profit
before tax EUR17.0 million), reflecting the non-cash impact of a
revaluation loss of EUR57.3 million ( six months to 30 June 2022 :
revaluation gain of EUR11.4 million).
Property expenses rose by 8.2 per cent over the year. The
primary driver of this was a 23.2 per cent increase in service
charges paid on behalf of tenants in relation to energy and utility
price movements, partially offset by a 9.9 per cent decline in the
Property Advisor's fees and expenses. Reported earnings per share
for the period were (EUR0.51) cents (30 June 2022: EUR0.15
cents).
Reported EPRA NTA per share declined by 12.5 per cent in the
first half of 2023 to EUR4.46 (GBP3.83) (31 December 2022: EUR5.10
(GBP4.52)). The EUR EPRA NTA total return in the first half of 2023
was (12.5) per cent (H1 2022: 2.2 per cent). The GBP EPRA NTA total
return for the same period was (15.2) per cent, reflecting a
strengthening of the GBP against the EUR during the first six
months of the year.
Like-for-like Portfolio value decline of 6.9 per cent
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 EUR4.3 million, was valued
at EUR714.3 million (31 December 2022: EUR775.9 million). On a
like-for-like basis, after adjusting for the impact of acquisitions
and disposals, the Portfolio valuation declined by 6.9 per cent
during the half-year to 30 June 2023 and 11.6 per cent versus the
first half of the prior year.
The like-for-like valuation decrease in the year has been
substantially driven by the increase in risk-free yields which
reflect movements in market interest rate expectations and the
subsequent impact on all real estate asset classes.
Table: Portfolio valuation and breakdown
30-Jun-23 30-Jun-22 31-Dec-22 31-Dec-21
Total sqm ('000) 186.5 188.1 188.8 189.7
---------- ---------- ---------- ----------
Valuation (EURm) 714.3 820.1 775.9 801.5
---------- ---------- ---------- ----------
Like-for-like valuation (decline)
/ growth (%) (6.9) 2.2 (3.1) 6.3
---------- ---------- ---------- ----------
Value per sqm (EUR) (1) 3,808 4,318 4,082 4,225
---------- ---------- ---------- ----------
Fully occupied gross yield
(%) 3.3 2.8 3.0 2.8
---------- ---------- ---------- ----------
Number of buildings 94 95 96 97
---------- ---------- ---------- ----------
Residential units 2,477 2,554 2,553 2,569
---------- ---------- ---------- ----------
Commercial units 137 136 135 138
---------- ---------- ---------- ----------
Total units 2,614 2,690 2,688 2,707
---------- ---------- ---------- ----------
(1 - Excludes Investment property under construction.)
The valuation represents an average value per square metre of
EUR3,808 (31 December 2022: EUR4,082), and a gross fully occupied
yield of 3.3 per cent (31 December 2022: 3.0 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; EUR32.8 million).
Rental income per square metre growth of 3.8 per cent
Net rental income grew by 4.3 per cent in the twelve months
period to EUR21.7 million annualised. Adjusting for acquisitions
and disposals, like-for-like rental income grew by 5.6 per cent,
driven by like-for-like rental income per square metre growth of
3.8 per cent to EUR10.2 (30 June 2022: 3.7 per cent), and a
reduction in vacancy, driven by the letting of 39 renovated units
in our project in Brandenburg.
The new transitional Berlin Mietspiegel, announced on 15 June
2023, provides an additional tailwind to rental values. This
replaces the previous rent index of 2021 and applies until a new
qualified rent index is published, expected to be in the first half
of 2024. On average, the new index represents an increase in rental
values of 5.4 per cent versus 2021. Although this is not the
primary driver of PSD's rental growth, it is expected that it will
be accretive to rental income in the second half of the financial
year.
Notwithstanding current cost-of-living pressures, rent
collection levels have remained stable. The Company continues to
manage rent-to-income affordability multiples for new tenants
conservatively and expects rent collection levels to remain
resilient.
Table: Rental income and vacancy rate
30-Jun-23 30-Jun-22 31-Dec-22 31-Dec-21
Total sqm ('000) 186.5 188.1 188.8 189.7
---------- ---------- ---------- ----------
Annualised Net Rental
Income (EURm)(1) 21.7 20.8 21.4 20.3
---------- ---------- ---------- ----------
Net Cold Rent per sqm
(EUR) 10.2 9.8 10.0 9.6
---------- ---------- ---------- ----------
Like-for-like rent growth
(%) 5.6 4.3 6.1 1.3
---------- ---------- ---------- ----------
Like-for-like rent per
sqm growth (%) 3.8 3.7 3.9 3.9
---------- ---------- ---------- ----------
Vacancy (%) 5.2 7.0 6.2 8.4
---------- ---------- ---------- ----------
EPRA Vacancy (%) 2.7 2.5 2.4 3.1
---------- ---------- ---------- ----------
(1 - Net Rental Income excludes heating and service costs.)
EPRA vacancy remains at historically low levels
Reported vacancy as at 30 June 2023 was 5.2 per cent (30 June
2022: 7.0 per cent). On an EPRA basis, which adjusts for units
undergoing development and made available for sale, the vacancy
rate was 2.7 per cent (30 June 2022: 2.5 per cent). EPRA vacancy is
expected to remain at historically low levels given the ongoing
supply-demand imbalance for rental property in Berlin.
Reversionary re-letting premium of 31.2 per cent
During the six months to 30 June 2023, 148 new leases were
signed, representing a letting rate of approximately 6.2 per cent
of occupied units. The average rent achieved on all new lettings
was EUR13.39 per sqm, a 5.7 per cent increase on the prior year,
and an average premium of 31.2 per cent to passing rents. This
compares to a 28.4 per cent premium in the six-month period to 30
June 2022. The unit churn rate for the 12-month period to 30 June
2023 was 8.4 per cent (30 June 2022: 10.6 per cent).
Historically, the reversionary premium for the Portfolio overall
has been negatively impacted by the inclusion of re-lettings from
the acquisition in Brandenburg in 2020, where rents were lower than
those achieved in central Berlin. However, during the first six
months of the current financial year, both rental values and the
reversionary premium in Brandenburg matched those recorded in
central Berlin.
Table: EPRA Net Initial Yield (NIY)
(All figures in EUR million unless otherwise stated)
30-Jun-23 30-Jun-22 31 Dec 31 Dec
2022 2021
Investment property 714.3 820.1 775.9 801.5
---------- ---------- ------- -------
Reduction for NCI share and
property under development (5.7) (12.9) (12.3) (12.8)
---------- ---------- ------- -------
Completed property portfolio 708.7 807.2 763.6 788.7
---------- ---------- ------- -------
Estimated purchasers' costs 57.8 67.9 63.2 65.1
---------- ---------- ------- -------
Gross up completed property
portfolio valuation 766.5 875.1 826.8 853.8
---------- ---------- ------- -------
Annualised cash passing collected
rental income 21.7 20.8 21.4 20.3
---------- ---------- ------- -------
Property outgoings (3.7) (3.5) (3.6) (3.4)
---------- ---------- ------- -------
Annualised collected net
rents 18.0 17.2 17.8 16.8
---------- ---------- ------- -------
EPRA NIY (%) 2.3 2.0 2.1 2.0
---------- ---------- ------- -------
Investment in the Portfolio
During the first half of 2023, a total of EUR4.6 million was
invested across the Portfolio (H1 2022: EUR6.2 million). These
items are recorded as capital expenditure in the Financial
Statements. A further EUR0.9 million (H1 2022: EUR0.9 million) was
spent on maintaining the assets and is expensed through the profit
and loss account. The Company will continue to carefully consider
all elements of discretionary capital expenditure and it is
expecting a material year-on-year decline for the full financial
year, reflecting the Company's stated intention to conserve cash at
the current stage of the real estate cycle.
Table: EPRA Capital Expenditure
(All figures in EUR'million unless otherwise stated)
30-Jun-23 30-Jun-22 31-Dec-22 31-Dec-21
Acquisitions - - 11.6 -
---------- ---------- ---------- ----------
Like-for-like portfolio 2.2 1.8 7.4 4.7
---------- ---------- ---------- ----------
Development 2.2 4.3 8.5 4.4
---------- ---------- ---------- ----------
Other 0.2 0.2 0.5 0.4
---------- ---------- ---------- ----------
Total Capital Expenditure 4.6 6.2 28.0 9.5
---------- ---------- ---------- ----------
Disposals and acquisitions
The Property Advisor has undertaken a detailed analysis of the
entire Portfolio of assets to identify individual apartment blocks,
portfolios of apartment blocks and additional condominiums units
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 discounts to current
carrying values are under consideration. Any surplus cash generated
will be returned to shareholders or used to reduce debt levels.
Since the financial year end, the Company has completed the sale
of two properties for EUR7.3 million. These buildings were acquired
in 2008 for EUR2.3 million and, prior to notarisation, had a
carrying value of EUR7.9 million. Excluding condominium sales, the
combined value of disposals completed during the past 12 months is
EUR12.1 million. Since 30 June 2023, the Company has accepted
offers on two additional properties and discussions are ongoing on
a range of other assets however there can be no guarantee that
sales will complete.
The Company has previously stated that it will not seek to
undertake further acquisitions at this point in the real estate
cycle. In August 2023 the Company completed on an acquisition which
was notarised in September 2022 for a purchase price of EUR4.9
million, representing a price per sqm of EUR2,312. No further
payments are expected to be made during 2023 in relation to the
development project in Erkner.
Upturn in Condominium volumes in Q3 2023.
PSD's condominium strategy involves the division and resale of
selected properties as single apartments. This is subject to
regulatory approval and involves the legal splitting of the
freeholds in properties that have been identified as being suitable
for condominium conversion.
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: EUR3.0 million). The average achieved notarised value per
sqm for the residential units was EUR5,708, representing an average
68 per cent premium to 31 December 2022 carrying value. The premium
achieved on these buildings reflects the fact that they were fully
renovated and unoccupied.
Although condominium sales volumes were impacted by higher
borrowing costs during the first half of the financial year, buyer
interest has since shown tentative signs of recovery, with the
volume of properties notarised or reserved for notarisation having
increased since the half year end. Since 30 June 2023, the Company
has notarised a further six condominiums for EUR2.1 million. The
majority of these units were occupied, with a combined sales value
representing a 2.9 per cent discount to 31 December 2022 carrying
value.
Reservations on a further three occupied units with a combined
value of EUR0.8 million have been received and are pending
notarisation.
Asking prices of condominiums are regularly reviewed and
benchmarked to market comparables, particularly for tenanted units,
where sales conditions remain challenging. Following recent price
revisions, the Company expects condominium sales to accelerate in
H2 2023 and H1 2024, reflecting revised sales price expectations
and a greater stock of renovated vacant units which are currently
work in progress. Moreover, several new projects are in preparation
and expected to be brought to market by the year-end. It is
expected that the greater availability of units for sale will
further support sales activities in 2024.
As at 30 June 2023, 78 per cent of the Portfolio was registered
as condominiums, providing opportunities for the implementation of
future sales projects. Although a further 6 per cent of the
Portfolio is currently in application for splitting, the Federal
Government has implemented strict regulations that limit landlords'
ability to split their properties into condominiums in the future.
Due to this, it cannot be guaranteed that ongoing applications will
be completed. Importantly, however, this legislation only applies
to current and future applications and does not affect properties
that have already been split. Moreover, these regulations are
likely to result in a reduced supply of condominiums for sale in
the future.
Debt and gearing
As at 30 June 2023, PSD had total borrowings of EUR318.1 million
(31 December 2022: EUR315.8 million) and cash balances of EUR13.1
million (31 December 2022: EUR12.5 million), resulting in net debt
of EUR305.0 million (31 December 2022: EUR303.3 million) and a net
loan to value on the Portfolio of 42.7 per cent (31 December 2022:
39.1 per cent).
The small change in gross debt in the period results from an
additional drawdown from the Natixis facility, which includes
borrowings to fund historic capital expenditure. Partly offsetting
these drawdowns were repayments of debt following the sale of
properties and condominiums, alongside amortisation of debt held
with Berliner Sparkasse.
The interest rate on 88.3 per cent of PSD's debt is fixed or
hedged with swaps. As at 30 June 2023, the blended interest rate of
PSD's loan book was 2.49 per cent (31 December 2022: 2.23 per
cent).
The average remaining duration of the loan book at 30 June 2023
had decreased to 3.3 years (31 December 2022: 3.8 years).
Market conditions and outlook
Economic backdrop
The decade leading up to mid-2022 was characterised by a
sustained period of low interest rates and cheap money and these
tailwinds led to steady increases in real estate prices. However,
government support measures during the Covid-19 pandemic and supply
shortages created by the ongoing conflict in Ukraine have created
significant inflationary pressures. The response from global
central banks has been a significant tightening in monetary policy
to combat inflation, with the ECB lending rate rising from zero in
2019 to 4.5 per cent currently. With prime yields for German
residential real estate having fallen to little above 2 per cent in
2021, significantly lower than in most of continental Europe and
the UK, the speed of the upward correction in residential yields
across Germany has been significant.
Although the rate of inflation in Germany is now in decline, the
German manufacturing sector in particular, has been significantly
impacted by energy price shocks linked to the war in Ukraine. The
International Monetary Fund currently predicts that Germany will be
the only major advanced economy to shrink in 2023. The city of
Berlin, which has a significantly higher reliance on the service,
technology and education sectors, is less exposed to the economic
impact of a downturn in manufacturing.
Rental growth
Higher interest rates have meant that in Berlin it is usually
less expensive to rent versus the debt servicing costs of buying an
equivalent apartment. Demand for rental properties therefore
continues to rise as a higher cost of home ownership encourages
potential buyers to remain within the rental system for longer.
Rental demand has been further increased by inward migration of
more than 1.5 million refugees into Germany from Ukraine during
2022 and 2023, placing further pressure on residential vacancy
levels, which are already at historically low levels. The bulk of
net inward migration has been in major urban areas, including
Berlin. The Berlin Senate currently estimates that over 60,000 have
settled in the city since the onset of the war.
At the same time, higher funding, labour, and construction costs
have continued to present significant headwinds to new-build
construction, limiting the future supply of rental accommodation.
According to JLL, construction costs in aggregate increased by 17
per cent during 2022 and this, coupled with sharply increased
borrowing costs now being incurred by developers, has meant that
fewer construction projects are economically viable. The most
recent prediction from GdW, a trade body representing housing
associations, is for residential completions to fall from 295,300
in 2022 to 242,000 in 2023 and 214,000 in 2024. This compares with
an annual average of 405,000 between 1950 and 2022 and is well
below the annual forward target set by the German Government of
400,000. Moreover, the number of building permits granted in
Germany during the first half of 2023 is approaching a 10-year low,
which suggests that future construction will be significantly
constrained.
The combination of rising demand and supply shortage is
providing a tailwind for PSD's rental business, and it is expected
that annualised like-for-like rental growth will accelerate from
its current level of 5.6 per cent as at 30 June 2023, helped by the
Company's modernisation and renovation programme.
Asset values
Although higher interest rates are positively affecting rental
values, they have weakened transaction volumes and asset values.
CBRE estimates that transaction volumes of over 50 units in the
German multi-family market totalled approximately EUR3.1 billion in
the first half of 2023 - more than 60 per cent less than in the
same period of the previous year, with the second quarter being the
weakest in terms of sales since 2011.
Whilst there is evidence to suggest that there is a substantial
amount of capital that has been earmarked to invest in German
residential property, uncertainty about the extent and duration of
the interest rate cycle and associated correction in property
values continues to weigh on deployment decisions. In instances
where portfolios of properties are being placed on the market,
either pricing is not matching vendor expectations, with no
transaction occurring, or transaction values have been at
distressed levels. This risk continues to be reflected in the share
prices of listed German residential companies, all of which are
trading at a c.50-70 per cent discount to most recently published
EPRA net asset value.
Positioning the Company
In common with its German residential listed peers, PSD has not
been immune from these trends. Since 30 June 2022, the gross yield
on the Portfolio has risen from 2.8 to 3.3 per cent, leading to a
decline in the value of the Portfolio of 12.1 per cent after taking
into account a 3.8 per cent increase in portfolio rents.
Although it is still difficult to assess the future development
of interest rates, volatility has decreased significantly,
reflecting the fact that inflation is now in decline. However,
inflation across Europe is proving to be more stubborn than in the
US, and the monetary response is therefore likely to be more
protracted. Further declines in property values therefore cannot be
ruled out.
Against this backdrop, the Company will continue to focus on
conserving cash through careful monitoring of capex, reducing debt
and returning capital to shareholders, where feasible and
appropriate. To this end, a significant part of the Portfolio has
been identified for disposal. Given the material difference between
condominium values (for which, during the past 12 months, the
Company has achieved average sales prices of EUR5,545 per square
metre) and the current share price (which, on an EPRA basis,
implies a value square metre across the entire Portfolio of
approximately EUR2,600), plans for future condominium sales have
also been accelerated.
Key Performance Indicators
PSD has chosen a number of Key Performance Indicators (KPIs),
which the Board believes will help investors understand the
performance of PSD and the underlying property Portfolio.
-- The value of the Portfolio declined by 6.9 per cent on a
like-for-like for basis for the first half of the year (H1 2022:
2.2 per cent increase).
-- Like-for-like Portfolio rent per sqm increased by 3.8 per
cent in the half-year to 30 June 2023 (H1 2022: 3.7 per cent).
-- The EPRA vacancy of the Portfolio as at 30 June 2023 stood at
2.7 per cent (31 December 2022: 2.4 per cent).
-- The Group continued with its targeted condominium sales
programme, notarising sales of EUR2.0 million in the half year to
30 June 2023 (H1 2022: EUR3.0 million).
-- EPRA NTA per share declined by 12.5 per cent to EUR4.46 as at
30 June 2023 (31 December 2022: EUR5.10).
-- No dividend was declared for H1 2023 (H1 2022 2.35 EUR cents per share).
Statement of Directors' responsibilities
The important events that have occurred during the period under
review, the key factors influencing the condensed consolidated
financial statements and the principal factors that could impact
the remaining six months of the financial year are set out in the
Chairman's Statement and the Property Advisor Report.
Since the date of the Annual Report for the year ended 31
December 2022, capital and investment markets have continued to
react negatively to inflationary pressures, rising interest rates
and economic uncertainty more generally.
As stated above, sentiment in the Berlin real estate market
remains poor. Other principal risks considered are substantially
unchanged since the date of the Annual Report for the year ended 31
December 2022, and continue to be as set out in that report. These
include, but are not limited to:
-- Financial and economic risk
-- Market risk
-- Inflationary and interest rate risk
-- Tenant, letting and political risk
-- Outsourcing risk
-- IT and Cyber Security risk
-- Regulatory risk
The Directors confirm that, to the best of their knowledge:
-- The condensed set of financial statements contained within
this half yearly financial report have been prepared in accordance
with International Accounting Standard ("IAS") 34 'Interim
Financial Reporting' and give a true and fair view of the assets,
liabilities, financial position and profit of the Group; and
-- The half yearly financial report includes a fair review of
the information required by the FCA's Disclosure and Transparency
Rule 4.2.7R being disclosure of important events that have occurred
during the first six months of the financial year, their impact on
the condensed set of financial statements and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
-- The half yearly financial report includes a fair review of
the information required by the Disclosure and Transparency Rule
4.2.8R being disclosure of related party transactions during the
first six months of the financial year, how they have materially
affected the financial position of the Group during the period and
any changes therein.
The half yearly financial report was approved by the Board on 26
September 2023 and the above responsibility statement was signed on
its behalf by:
Director
26 September 2023
Condensed Consolidated
Statement
of Comprehensive Income
For the period from 1 January
2023 to 30 June 2023
Six Six
months months Year
ended ended ended
Notes 30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Continuing
operations
Revenue 13,827 12,972 25,934
Property expenses 5 (9,455) (8,737) (17,119)
Gross profit 4,372 4,235 8,815
Administrative
expenses 6 (1,467) (1,306) (3,264)
Gain / (loss) on disposal of investment
property (including investment property
held for sale) 7 516 88 (185)
Investment property
fair
value (loss) /gain 10 (57,340) 11,395 (42,241)
Performance fee due
to
Property Advisor 20 - 343 343
Operating (loss) /
profit (53,919) 14,755 (36,532)
Net finance charge
(before
gain on interest
rate
swaps) 8 (4,470) (3,892) (7,937)
Gain on interest
rate
swaps 8 349 6,089 26,920
(Loss) / profit
before
taxation (58,040) 16,952 (17,549)
Income tax credit /
(expense) 9 11,012 (2,981) 1,739
(Loss) / profit
after
taxation (47,028) 13,971 (15,810)
Other - - -
comprehensive
income
Total comprehensive (loss)
/ income for the period (47,028) 13,971 (15,810)
======================================= ======================================= =======================================
Total
comprehensive
income
attributable to:
Owners of the parent (46,614) 13,891 (15,435)
Non-controlling
interests (414) 80 (375)
---------------------------------------
(47,028) 13,971 (15,810)
======================================= ======================================= =======================================
Earnings per share
attributable
to the owners of the parent:
From continuing
operations
Basic (EUR) 22 (0.51) 0.15 (0.17)
Diluted (EUR) 22 (0.51) 0.15 (0.17)
======================================= ======================================= =======================================
Condensed Consolidated
Statement
of Financial Position
At 30 June 2023
As at As at As at
Notes 30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
ASSETS
Non-current assets
Investment
properties 12,14 704,644 779,290 761,377
Property, plant
and equipment 11 18 12
Other financial
assets
at amortised cost 15 816 938 828
Derivative
financial
instruments 19 16,385 - 16,036
Deferred tax asset 9 - 759 -
721,856 781,005 778,253
Current assets
Investment
properties
- held for sale 13 9,705 40,804 14,527
Trade and other
receivables 16 13,714 11,775 10,068
Cash and cash
equivalents 13,059 9,550 12,485
36,478 62,129 37,080
Total assets 758,334 843,134 815,333
======================================= ======================================= =======================================
EQUITY AND
LIABILITIES
Current
liabilities
Borrowings 17 1,029 835 820
Trade and other
payables 18 13,568 10,962 15,130
Current tax 9 760 1,296 808
15,357 13,093 16,758
Non-current
liabilities
Borrowings 17 313,815 300,270 311,264
Derivative
financial
instruments 19 - 4,795 -
Deferred tax
liability 9 59,799 76,413 70,920
373,614 381,478 382,184
Total liabilities 388,971 394,571 398,942
======================================= ======================================= =======================================
Equity
Stated capital 21 196,578 196,578 196,578
Treasury shares (37,448) (37,111) (37,448)
Share based 20 - - -
payment reserve
Retained earnings 207,435 285,429 254,049
Equity
attributable to
owners of the
parent 366,565 444,896 413,179
Non-controlling
interest 2,798 3,667 3,212
Total equity 369,363 448,563 416,391
--------------------------------------- --------------------------------------- ---------------------------------------
Total equity and
liabilities 758,334 843,134 815,333
======================================= ======================================= =======================================
Condensed Consolidated
Statement
of Changes in Equity
For the period from 1 January
2023 to 30 June 2023
Attributable to
the owners of the
parent
Stated Treasury Share Retained Total Non-controlling Total
capital Shares based earnings interest equity
payment
reserve
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance at 1 January
2022 196,578 (33,275) 343 276,394 440,040 3,587 443,627
Comprehensive
income:
Profit for the
period - - - 13,891 13,891 80 13,971
Other - - - - - - -
comprehensive
income
Total comprehensive
income
for the period - - - 13,891 13,891 80 13,971
Transactions with
owners
-
recognised
directly in
equity:
Dividends paid - - - (4,856) (4,856) - (4,856)
Performance fee - - (343) - (343) - (343)
Acquisition of
treasury
shares - (3,836) - - (3,836) - (3,836)
Balance at 30 June
2022
(unaudited) 196,578 (37,111) - 285,429 444,896 3,667 448,563
Comprehensive
income:
Loss for the period - - - (29,326) (29,326) (455) (29,781)
Other - - - - - - -
comprehensive
income
Total comprehensive
income
for the period - - - (29,326) (29,326) (455) (29,781)
Transactions with
owners
-
recognised
directly in
equity:
Dividends paid - - - (2,054) (2,054) - (2,054)
Acquisition of
treasury
shares - (337) - - (337) - (337)
Balance at 31
December
2022 (audited) 196,578 (37,448) - 254,049 413,179 3,212 416,391
Comprehensive
income:
Loss for the period - - - (46,614) (46,614) (414) (47,028)
Other - - - - - - -
comprehensive
income
Total comprehensive
income
for the period - - - (46,614) (46,614) (414) (47,028)
Balance at 30 June
2023
(unaudited) 196,578 (37,448) - 207,435 366,565 2,798 369,363
======== ======== ======= ============ ======================================= ======================================= =======================================
The share based payment reserve had been established in relation
to the issue of shares for the payment of the performance fee of
the property advisor.
Treasury shares comprise the accumulated cost of shares acquired
on-market.
Condensed Consolidated
Statement
of Cash Flows
For the period from 1 January
2023 to 30 June 2023
Notes Six Six Year
months months ended
ended ended
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Profit / (loss)
before
taxation (58,040) 16,952 (17,549)
Adjustments for:
Net finance charge 4,121 (2,197) (18,983)
(Gain) / loss on
disposal
of investment
property (516) (88) 185
Investment property
revaluation
loss / (gain) 57,340 (11,395) 42,241
Depreciation 31 8 8
Performance fee due
to
property advisor - (343) (343)
---------------------------------------
Operating cash flows before
movements in working capital 2,936 2,937 5,559
Increase in
receivables (3,646) (4,424) (2,882)
Decrease in payables (1,562) (931) (463)
---------------------------------------
Cash (used in) / generated
from operating activities (2,272) (2,418) 2,214
Income tax paid (157) (19) (521)
---------------------------------------
Net cash (used in) / generated
from operating activities (2,429) (2,437) 1,693
Cash flow from
investing
activities
Proceeds on disposal of
investment
property (net of disposal
costs) 9,380 11,244 21,010
Interest received 2,829 2 474
Capital expenditure
on
investment property (4,649) (6,234) (16,437)
Property additions - (7,724) (13,229)
(Acquisition) / disposals of
property, plant and equipment (30) (6) -
Net cash generated from /
(used in) investing
activities 7,530 (2,718) (8,182)
Cash flow from
financing
activities
Interest paid on
bank
loans (6,572) (3,687) (7,296)
Loan arrangement
fees
paid - - (499)
Repayment of bank
loans (4,821) (3,281) (6,354)
Drawdown on bank
loan
facilities 6,866 20,012 33,765
Dividends paid - (4,856) (6,910)
Acquisition of
treasury
shares - (4,001) (4,173)
Net cash (used in) / generated
from financing activities (4,527) 4,187 8,533
Net increase / (decrease)
in cash and cash equivalents 574 (968) 2,044
Cash and cash equivalents
at beginning of period/year 12,485 10,441 10,441
Exchange gains on - - -
cash
and cash
equivalents
Cash and cash equivalents
at end of period/year 13,059 9,550 12,485
======================================= ======================================= =======================================
Reconciliation of Net Cash
Flow to Movement in Debt
For the period from 1 January
2023 to 30 June 2023
Six Six Year
months months ended
ended ended
30 June 30 June 31 December
2023 2022 2022
EUR'000 EUR'000 EUR'000
Cashflow from
increase
in debt financing 2,045 16,731 27,411
Loan arrangement
fees
paid - - (499)
Non-cash changes
from
increase in debt
financing 715 219 1,017
Change in net debt
resulting
from cash flows 2,760 16,950 27,929
--------------------------------------- --------------------------------------- ---------------------------------------
Movement in debt in
the period/year 2,760 16,950 27,929
Debt at the start of
the period/year 312,084 284,155 284,155
Debt at the end of
the
period/year 17 314,844 301,105 312,084
======================================= ======================================= =======================================
Notes to the Condensed
Consolidated
Financial Statements
For the period from 1 January
2023 to 30 June 2023
1. General information
The Group consists of a Parent Company, Phoenix Spree Deutschland
Limited ('the Company'), incorporated in Jersey, Channel Islands
and all its subsidiaries ('the Group') which are incorporated and
domiciled in and operate out of Jersey and Germany. Phoenix Spree
Deutschland Limited is listed on the premium segment of the Main
Market of the London Stock Exchange.
The Group invests in residential and commercial property in Germany.
The registered office is at IFC 5, St Helier, Jersey, JE1 1ST, Channel
Islands.
2. Basis of
preparation
The interim set of condensed consolidated financial statements has
been prepared in accordance with the Disclosure and Transparency
Rules of the Financial Conduct Authority and with IAS 34 Interim
Financial Reporting as adopted by the European Union and the United
Kingdom.
The interim condensed consolidated financial statements do not include
all the information and disclosures required in the annual financial
statements, and should be read in conjunction with the Group's annual
financial statements for the year ended 31 December 2022.
As required by the Disclosure and Transparency Rules of the Financial
Conduct Authority, the financial statements have been prepared applying
the accounting policies and presentation that were applied in the
preparation of the Company's published consolidated financial statements
for the year ended 31 December 2022.
The comparative figures for the financial year ended 31 December
2022 are extracted from but do not comprise, the Group's annual
consolidated financial statements for that financial year.
The interim condensed consolidated financial statements were authorised
and approved for issue on 27 September 2023.
The interim condensed consolidated financial statements are neither
reviewed nor audited, and do not constitute statutory accounts within
the meaning of Section 105 of the Companies (Jersey) Law 1991.
2.1 Going concern
The interim condensed consolidated financial statements have been
prepared on a going concern basis which assumes the Group will be
able to meet its liabilities as they fall due for the foreseeable
future. The Directors have prepared forecasts for the Company in
the light of the continuing global inflationary pressures and rising
interest rates, the conclusion of which was that there were no concerns.
These condensed consolidated financial statements have therefore
been prepared on a going concern basis.
2.2 New standards
and
interpretations
There are currently no new standards, amendments or interpretations
effective for annual periods beginning on or after 1 January 2023
that are required to be adopted by the Group.
3. Critical accounting estimates and judgements
The preparation of condensed consolidated financial statements in
conformity with IFRS requires the Group to make certain critical
accounting estimates and judgements. In the process of applying
the Group's accounting policies, management has decided the following
estimates and assumptions have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within
the financial period;
i) Estimate of fair value of investment properties
The valuation of the Group's property portfolio is inherently subjective
due to, among other factors, the individual nature of each property,
its location and condition, and expected future rentals. The valuation
as at 30 June 2023, which has been used to prepare these financial
statements is based on the rules, regulations and market as at that
date. The fair value estimates of investments properties are detailed
in note 12.
The best evidence of fair value is current prices in an active market
of investment properties with similar leases and other contracts.
In the absence of such information, the Group determines the amount
within a range of reasonable fair value estimates. In making its
estimate, the Group considers information from a variety of sources,
including:
a) Discounted cash flow projections based on reliable estimates
of future cash flows, derived from the terms of any existing lease
and other contracts, and (where possible) from external evidence
such as current market rents for similar properties in the same
location and condition, and using discount rates that reflect current
market assessments of the uncertainty in the amount and timing of
the cash flows.
b) Current prices in an active market for properties of different
nature, condition or location (or subject to different lease or
other contracts), adjusted to reflect those differences.
c) Recent prices of similar properties in less active markets, with
adjustments to reflect any changes in economic conditions since
the date of the transactions that occurred at those prices.
The Directors remain ultimately responsible for ensuring that the
valuers are adequately qualified, competent and base their results
on reasonable and realistic assumptions. The Directors have appointed
JLL as the real estate valuation experts who determine the fair
value of investment properties using recognised valuation techniques
and the principles of IFRS 13. Further information on the valuation
process can be found in note 12.
For further information with regard to the movement in the fair
value of the Group's investment properties, refer to the management
report on pages 6 to 7.
ii) Judgment in relation to the recognition of assets held for
sale
In accordance with the requirement of IFRS 5, Management has made
an assumption in respect of the likelihood of investment properties
- held for sale, being sold within the following 12 months. Management
considers that based on historical and current experience of market
since 30 June 2023, the properties can be reasonably expected to
sell within this timeframe.
4. Segmental information
Information reported to the Board of Directors, the chief operating
decision maker, relates to the Group as a whole. Therefore, the
Group has not included any further segmental analysis within these
condensed consolidated unaudited interim financial statements.
Notes to the Condensed
Consolidated
Financial Statements
For the period from 1 January
2023 to 30 June 2023
5. Property
expenses
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Property management
expenses 720 613 1,233
Repairs and
maintenance 937 899 1,525
Impairment charge - trade
receivables (52) (66) 868
Service charges paid on behalf
of tenants 4,759 3,862 6,631
Property Advisors'
fees
and expenses 3,091 3,429 6,862
9,455 8,737 17,119
======================================= ======================================= =======================================
6. Administrative
expenses
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Secretarial &
administration
fees 446 318 651
Legal & professional
fees 913 895 2,261
Directors' fees 135 152 275
Bank charges 8 41 74
(Profit) / loss on
foreign
exchange (1) (105) 5
Depreciation 31 8 8
Other income (65) (3) (10)
1,467 1,306 3,264
======================================= ======================================= =======================================
7. Gain / (loss) on disposal of investment
property (including investment property held
for sale)
Notes 30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Disposal proceeds 9,514 7,314 13,754
Book value of
disposals 12 (8,864) (6,720) (12,982)
Disposal costs (134) (506) (957)
516 88 (185)
======================================= ======================================= =======================================
Where there has been a partial disposal of a property, the net book
value of the asset sold is calculated on a per square metre rate,
based on the December valuation.
8. Net finance
charge
/ (income)
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Interest income (156) (14) (376)
Swap interest (2,661) - -
income
Fair value gain on
interest
rate swap (349) (6,089) (26,920)
Finance expense on bank
borrowings 7,287 3,906 8,313
4,121 (2,197) (18,983)
======================================= ======================================= =======================================
9. Income tax
(credit)
/ expense
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
The tax charge for
the
period is as
follows: EUR'000 EUR'000 EUR'000
Current tax charge 109 803 817
Deferred tax credit - origination
and reversal of temporary differences (11,121) 2,178 (2,556)
(11,012) 2,981 (1,739)
======================================= ======================================= =======================================
Notes to the Condensed
Consolidated
Financial Statements
For the period from 1 January
2023 to 30 June 2023
9. Income tax
(credit)
/ expense
(continued)
The tax charge for the year can be reconciled to the theoretical
tax charge on the profit in the condensed consolidated statement
of comprehensive income as follows:
30 June 30 June 31 December
2023 2022 2022
EUR'000 EUR'000 EUR'000
(Loss) / gain before tax on
continuing operations (58,040) 16,952 (17,549)
Tax at German income tax rate
of 15.8% (2022: 15.8%) (9,185) 2,678 (2,773)
Income not taxable (82) (14) 29
Tax effect of losses brought
forward (1,746) 316 1,005
Total tax (credit)
/
expense for the
period
/ year (11,012) 2,981 (1,739)
======================================= ======================================= =======================================
Reconciliation of current tax
liabilities
30 June 30 June 31 December
2023 2022 2022
EUR'000 EUR'000 EUR'000
Balance at
beginning
of period/year 808 512 512
Tax paid (157) (19) (521)
Current tax charge 109 803 817
Balance at end of
period/year 760 1,296 808
======================================= ======================================= =======================================
Reconciliation of
deferred
tax
Capital Interest Total
gains rate
on properties swaps
EUR'000 EUR'000 EUR'000
Liability Liability Net
liabilities
Balance at 1 January
2022 (75,198) 1,722 (73,476)
Charged to the
statement
of comprehensive
income (1,215) (963) (2,178)
Deferred tax
(liability)
/ asset at 30 June
2022 (76,413) 759 (75,654)
Charged to the
statement
of comprehensive
income 8,031 (3,297) 4,734
Deferred tax
liability
at 31 December 2022 (68,382) (2,538) (70,920)
--------------------------------------- --------------------------------------- ---------------------------------------
Charged to the
statement
of comprehensive
income 11,176 (55) 11,121
Deferred tax
liability
at 30 June 2023 (57,206) (2,593) (59,799)
======================================= ======================================= =======================================
10. Investment
property
fair value gain
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Investment property
fair
value (loss) /
gain (57,340) 11,395 (42,241)
======================================= ======================================= =======================================
Further information on investment properties is shown in note 12.
11. Dividends
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Amounts recognised as distributions
to equity holders in the period:
Interim dividend for the year ended 31
December 2022 of 2.35c (2.09p) declared
29 September 2022, paid 29 October 2022
(2021: 2.35c (2.02p)) per share. - - 2,158
No final dividend was paid for the year
ended 31 December 2022 (2021: 5.15c (4.36p)
per share, declared 30 March 2022, paid
9 June 2022. - 4,856 4,752
======================================= ======================================= =======================================
The Board are not proposing to declare a dividend for the first
half of the year (six months to 30 June 2022: 2.35c (2.09p)).
12. Investment
properties
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
Fair value EUR'000 EUR'000 EUR'000
Balance at
beginning
of period/year 775,904 801,461 801,461
Capital expenditure 4,649 6,234 16,437
Property additions - - 13,229
Disposals (8,864) (6,720) (12,982)
Fair value (loss) /
gain (57,340) 11,395 (42,241)
--------------------------------------- --------------------------------------- ---------------------------------------
Investment properties at fair value -
as set out in the report by JLL 714,349 812,370 775,904
Assets considered
as
"Held for sale"
(Note
13) (9,705) (40,804) (14,527)
Assets considered
as
"Under
construction"
(Note 14) - 7,724 -
Balance at end of
period/year 704,644 779,290 761,377
======================================= ======================================= =======================================
The property portfolio was valued at 30 June 2023 by the Group's
independent valuers, Jones Lang LaSalle GmbH ('JLL'), in accordance
with the methodology described below. The valuations were performed
in accordance with the current Appraisal and Valuation Standards,
8th edition (the 'Red Book') published by the Royal Institution
of Chartered Surveyors (RICS).
Notes to the Condensed
Consolidated
Financial Statements
For the period from 1 January
2023 to 30 June 2023
12. Investment
properties
(continued)
The valuation of the property Portfolio (other than the assets held
at directors' valuation as noted below) is performed on a building-by-building
basis and the source information on the properties including current
rent levels, void rates and non-recoverable costs was provided to
JLL by the Property Advisors QSix Residential Limited. Assumptions
with respect to rental growth, adjustments to non-recoverable costs
and the future valuation of these are those of JLL. Such estimates
are inherently subjective and actual values can only be determined
in a sales transaction. JLL also uses data from comparable market
transactions where these are available alongside their own assumptions.
Having reviewed the JLL report, the Directors are of the opinion
that this represents a fair and reasonable valuation of the properties
and have consequently adopted this valuation in the preparation
of the condensed consolidated financial statements.
The valuations have been prepared by JLL on a consistent basis at
each reporting date and the methodology is consistent and in accordance
with IFRS which requires that the 'highest and best use' value is
taken into account where that use is physically possible, legally
permissible and financially feasible for the property concerned,
and irrespective of the current or intended use.
All properties are valued as Level 3 measurements under the fair
value hierarchy (see note 24) as the inputs to the discounted cash
flow methodology which have a significant effect on the recorded
fair value are not observable. Additionally, JLL perform reference
checks back to comparable market transactions to confirm the valuation
model.
The unrealised fair value gain or loss in respect of investment
property is disclosed in the condensed consolidated statement of
comprehensive income as 'Investment property fair value gain or
loss.
Valuations are undertaken using the discounted cash flow valuation
technique as described below and with the inputs set out as follows:
Discounted cash flow
methodology
(DCF)
The fair value of investment properties is determined using discounted
cash flows.
Under the DCF method, a property's fair value is estimated using
explicit assumptions regarding the benefits and liabilities of ownership
over the asset's life including an exit or terminal value. As an
accepted method within the income approach to valuation the DCF
method involves the projection of a series of cash flows on a real
property interest. To this projected cash flow series, an appropriate,
market-derived discount rate is applied to establish the present
value of the income stream associated with the real property.
The duration of the cash flow and the specific timing of inflows
and outflows are determined by events such as rent reviews, lease
renewal and related lease up periods, re-letting, redevelopment,
or refurbishment. The appropriate duration is typically driven by
market behaviour that is a characteristic of the class of real property.
Periodic cash flow is typically estimated as gross income less vacancy,
non-recoverable expenses, collection losses, lease incentives, maintenance
cost, agent and commission costs and other operating and management
expenses. The series of periodic net operating incomes, along with
an estimate of the terminal value anticipated at the end of the
projection period, is then discounted.
Included within Investment Properties is an investment property
under construction which has been valued by the Directors using
a methodology that the Directors deem appropriate to represent the
fair value of this asset. The fair value of the investment property
under construction has been calculated as the Red Book value of
the completed asset minus the present value of cashflows required
to achieve the finished asset. The Red Book value has been provided
by JLL based on the same valuation methodology as the rest of the
portfolio. The present value of cashflows required to achieve the
finished asset has been derived using a discounted cashflow using
the remaining contractual payments and the same discount rate as
JLL have applied to cashflows post completion. The subjectivities
surrounding the present value of future payments are deemed to be
the finished asset value, the discount rate and the timing of payments.
The Group categorises all
investment
properties in the following
three ways;
Rental Scenario
Where properties have been valued under the "Discounted Cashflow
Methodology" and are intended to be held by the Group for the foreseeable
future, they are considered valued under the "Rental Scenario" This
will equal the "Investment Properties" line in the Non-Current Assets
section of the condensed consolidated statement of financial position.
Condominium
Scenario
Where properties have the potential or the benefit of all relevant
permissions required to sell apartments individually (condominiums),
and have been approved for sale by the Board, then we refer to this
as a 'condominium scenario'. Properties expected to be sold in the
coming year from these assets are considered held for sale under
IFRS 5 and can be seen in note 13. The additional value is reflected
by using a lower discount rate under the DCF methodology. Properties
which do not have the benefit of all relevant permissions are described
as valued using a standard 'rental scenario'. Included in properties
valued under the condominium scenario are properties not yet released
to held for sale as only a portion of the properties are forecast
to be sold in the coming 12 months.
Disposal Scenario
Where properties have been notarised for sale prior to the reporting
date, but have not completed; they are held at their notarised disposal
value. These assets are considered held for sale under IFRS 5 as
set out in note 13.
The table below sets out the
assets valued using these 3
scenarios:
30 June 30 June 31 December
2023 2022 2022
EUR'000 EUR'000 EUR'000
Rental scenario 675,193 779,540 738,554
Condominium scenario 37,745 32,318 28,470
Disposal scenario 1,411 512 8,880
Total 714,349 812,370 775,904
======================================= ======================================= =======================================
Notes to the Condensed
Consolidated
Financial Statements
For the period
from
1 January 2023 to
30
June 2023
13. Investment
properties
- Held for sale
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Fair value - held for sale investment
properties
At beginning of
period/year 14,527 41,631 41,631
Transferred from
investment
properties 3,352 5,359 (14,566)
Capital expenditure 558 534 1,038
Properties sold (8,864) (6,720) (12,982)
Valuation gain on
apartments
held for sale 132 - (594)
At end of
period/year 9,705 40,804 14,527
======================================= ======================================= =======================================
Investment properties are re-classified as current assets and described
as 'held for sale' in three different situations: properties notarised
for sale at the reporting date, properties where at the reporting
date the Group has obtained and implemented all relevant permissions
required to sell individual apartment units, and efforts are being
made to dispose of the assets ('condominium'); and properties which
are being marketed for sale but have currently not been notarised.
Properties notarised for sale by the reporting date are valued at
their disposal price (disposal scenario), and other properties are
valued using the condominium or rental scenarios (see note 12) as
appropriate.
Investment properties held for sale are all expected to be sold
within 12 months of the reporting date based on management knowledge
of current and historic market conditions.
14. Investment properties
- Under construction
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Fair value - under construction
investment properties
At beginning of -
period/year - -
Properties -
purchased - 5,550
Capital
expenditure - 2,174 -
At end of - 7,724 -
period/year
======================================= ======================================= =======================================
For the presentation of the 30 June 2022 interim consolidated financial
statements, investment properties were considered as under construction
from the point of completion of the acquisition of the property
up until the completion of the development, at which point the property
would be transferred to investment properties. The presentation
was changed for the 31 December 2022 annual consolidated financial
statements, to include investment properties under construction
within investment properties. The valuation methodology for investment
properties under construction has been included within note 12.
15. Other financial
assets at amortised
cost
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Non-current
Balance at
beginning
of period/year 828 926 926
Transfer to current other financial
assets at amortised cost - - (122)
Repayment of loan
interest (24) - -
Accrued interest 12 12 24
Balance at end of
period/year 816 938 828
======================================= ======================================= =======================================
The Group entered into a loan agreement with the minority interest
of Accentro Real Estate AG in relation to the acquisition of the
assets as share deals. This loan bears interest at 3% per annum.
These financial assets are considered to have low credit risk and
any loss allowance would be immaterial.
None of these financial assets were either past due or impaired.
16. Trade and
other
receivables
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Current
Trade receivables 827 1,061 932
Less: impairment
provision (321) (249) (373)
--------------------------------------- --------------------------------------- ---------------------------------------
Net receivables 506 812 559
Prepayments and accrued income 618 2,321 68
Service charges receivable 9,530 8,066 6,192
Other receivables 3,060 576 3,249
13,714 11,775 10,068
======================================= ======================================= =======================================
Notes to the Condensed
Consolidated
Financial Statements
For the period
from
1 January 2023 to
30
June 2023
17. Borrowings
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Current
liabilities
Bank loans - NATIXIS
Pfandbriefbank AG* 228 34 19
Bank loans - Berliner Sparkasse 801 801 801
--------------------------------------- ---------------------------------------
1,029 835 820
Non-current
liabilities
Bank loans - NATIXIS
Pfandbriefbank AG** 253,850 239,454 250,872
Bank loans - Berliner Sparkasse 59,965 60,816 60,392
313,815 300,270 311,264
314,844 301,105 312,084
======================================= ======================================= =======================================
* Nominal value of the borrowings as at 30 June 2023 was EUR1,240,000
(31 December 2022: EUR1,031,000, 30 June 2022: EUR986,000).
** Nominal value of the borrowings as at 30 June 2023 was EUR256,074,000
(31 December 2022: EUR253,602,000, 30 June 2022: EUR242,497,000).
For further information on borrowings, refer to the management report
on page 10.
18. Trade and
other
payables
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Trade payables 3,868 609 4,525
Accrued liabilities 1,283 2,806 1,485
Service charges payable 8,417 5,769 5,394
Advanced payment
received
on account - 1,778 3,700
Deferred income - - 26
13,568 10,962 15,130
======================================= ======================================= =======================================
19. Derivative
financial
instruments
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Interest rate swaps - carried at fair value
through profit or loss
At beginning of
period/year 16,036 (10,884) (10,884)
Gain in movement in fair value through
profit or loss 349 6,089 26,920
At end of
period/year 16,385 (4,795) 16,036
======================================= ======================================= =======================================
The notional principal amounts of the outstanding interest rate
swap contracts at 30 June 2023 were EUR230,098,750 (December 2022:
EUR214,878,750, June 2022: EUR204,269,000). At 30 June 2023 the
fixed interest rates vary from 0.775% to 3.21% (December 2022: 0.775%
to 1.287%, June 2022: 0.24% to 1.01%) above the main factoring Euribor
rate.
Maturity analysis of interest rate swaps
30 June 30 June 31 December
2023 2022 2022
EUR'000 EUR'000 EUR'000
Between 2 and 5
years 16,385 (4,795) 16,036
16,385 (4,795) 16,036
======================================= ======================================= =======================================
20. Share based
payment
reserve
Performance
fee
EUR'000
Balance at 1
January
2022 343
Settlement of
performance
fee in shares (343)
---------------------------------------
Balance at 30 June -
2022
-
Fee charge for
the period
---------------------------------------
Balance at 31 -
December
2022
Fee charge for the -
period
Balance at 30 June -
2023
=======================================
No performance fee has been recognised in the period because the
performance criteria were not met.
Notes to the Condensed
Consolidated
Financial Statements
For the period
from
1 January 2023 to
30
June 2023
20. Share based payment reserve (continued)
Performance Fee
The Property Advisor is entitled to an asset and estate management
performance fee, measured over consecutive three year periods, equal
to 15% of the excess (or in the case of the initial period or any
performance period ending prior to 31 December 2020, 16%) by which
the annual EPRA NAV total return of the Group exceeds 8% per annum,
compounding (the 'Performance Fee'). As the EPRA NAV measurement
has been superseded by EPRA NTA (See note 23), future performance
fees will be calculated with respect to movements in EPRA NTA. The
Performance Fee is subject to a high watermark, being the higher
of:
(i) EPRA NTA per share at 1 January 2021; and
(ii) the EPRA NTA per share at the end of a Performance Period in
relation to which a performance fee was earned in accordance of
the provisions continued with the Property Advisor and Investor
Relations Agreement.
Other Property Advisor Fees
Under the Property Advisory Agreement for providing property advisory
services, the Property Advisor will be entitled to a Portfolio and
Asset Management Fee as follows:
(i) 1.2% of the EPRA NTA of the Group where EPRA NTA of the
Group is equal to or less than EUR500 million; and
(ii) 1% of the EPRA NTA of the Group greater than EUR500 million.
The Property Advisor is entitled to receive a finance fee
equal to:
(i) 0.1% of the value of any borrowing arrangement which the
Property Advisor has negotiated and/or supervised; and
(ii) a fixed fee of GBP1,000 in respect of any borrowing arrangement
which the Property Advisor has renegotiated or varied.
The Property Advisor is entitled to a capex monitoring fee equal
to 7% of any capital expenditure incurred by any Subsidiary which
the Property Advisor is responsible for managing.
The Property Advisor is entitled to receive a transaction fee fixed
at GBP1,000 in respect of any acquisition or disposal of property
by any Subsidiary.
The Property Advisor is entitled to a letting fee equal to between
one and three month's net cold rent (being gross rents receivable
less service costs and taxes) for each new tenancy signed by the
Company where the Property Advisor has sourced the relevant tenant.
The Property Advisor shall be entitled to a fee for Investor
Relations Services at the annual rate of GBP75,000 payable
quarterly in arrears.
The management fee will be reduced by the aggregate amount of any
transaction fees and finance fees payable to the Property Advisor
in respect of that calendar year.
On 17 August 2023 the Company announced an amendment to the fees
payable to the Property Advisor. Details of the revised fee paid
to the Property Advisor are set out in note 27.
21. Stated capital
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Issued and fully
paid:
At 1 January 196,578 196,578 196,578
196,578 196,578 196,578
======================================= ======================================= =======================================
The number of shares in issue at 30 June 2023 was 100,751,410 (including
8,924,047 as Treasury Shares) (31 December 2022: 100,751,410 (including
8,924,047 as Treasury Shares), 30 June 2022: 100,751,410 (including
8,879,802 as Treasury Shares)).
22. Earnings per
share
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
Earnings for the purposes of basic earnings
per share being net profit attributable
to owners of the parent (EUR'000) (46,614) 13,891 (15,435)
Weighted average number of ordinary shares
for the purposes of basic earnings per
share (Number) 91,827,363 92,456,025 92,139,098
Effect of dilutive potential ordinary
shares (Number) - - -
Weighted average number of ordinary shares
for the purposes of diluted earnings per
share (Number) 91,827,363 92,456,025 92,139,098
======================================= ======================================= =======================================
Earnings per share
(EUR) (0.51) 0.15 (0.17)
Diluted earnings
per
share (EUR) (0.51) 0.15 (0.17)
======================================= ======================================= =======================================
Notes to the Condensed
Consolidated
Financial Statements
For the period
from
1 January 2023 to
30
June 2023
23. Net asset value per share and
EPRA Net Tangible Assets (NTA)
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
Net assets (EUR'000) 366,565 444,896 413,179
Number of
participating
ordinary shares 91,827,363 91,871,607 91,827,363
Net asset value per
share
(EUR) 3.99 4.84 4.50
======================================= ======================================= =======================================
EPRA NTA
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
Net assets (EUR'000) 366,565 444,896 413,179
Add back deferred tax assets and liabilities,
derivative financial instruments and share
based payment reserves (EUR'000) 43,414 80,449 54,884
EPRA NTA (EUR'000) 409,979 525,345 468,063
EPRA NTA per share
(EUR) 4.46 5.72 5.10
24. Financial
instruments
The Group is exposed to the risks that arise from its use of financial
instruments. This note describes the objectives, policies and processes
of the Group for managing those risks and the methods used to measure
them. Further quantitative information in respect of these risks
is presented throughout the condensed consolidated financial statements.
Principal financial instruments
The principal financial instruments used by the Group, from which
financial instrument risk arises, are as follows:
-- financial assets
-- cash and cash equivalents
-- trade and other receivables
-- trade and other payables
-- borrowings
-- derivative financial instruments
The Group held the following financial assets at each reporting
date:
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Held at amortised
cost
Trade and other receivables - current 13,096 9,454 10,000
Cash and cash
equivalents 13,061 9,552 12,485
Loans and
receivables 816 938 828
26,973 19,944 23,313
--------------------------------------- --------------------------------------- ---------------------------------------
Fair value through
profit
or loss
Derivative financial asset
- interest rate swaps 16,385 - 16,036
16,385 - 16,036
--------------------------------------- --------------------------------------- ---------------------------------------
43,358 19,944 39,349
======================================= ======================================= =======================================
The Group held the following financial liabilities at each reporting
date:
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Held at amortised
cost
Borrowings payable:
current 1,029 835 820
Borrowings payable:
non-current 313,815 300,270 311,264
Trade and other payables 13,568 10,962 15,130
328,412 312,067 327,214
--------------------------------------- --------------------------------------- ---------------------------------------
Fair value through
profit
or loss
Derivative financial liability - 4,795 -
- interest rate swaps
- 4,795 -
--------------------------------------- --------------------------------------- ---------------------------------------
328,412 316,862 327,214
======================================= ======================================= =======================================
Notes to the Condensed
Consolidated
Financial Statements
For the period
from
1 January 2023 to
30
June 2023
24. Financial
instruments
(continued)
Fair value of
financial
instruments
The fair values of the financial assets and liabilities are not
materially different to their carrying values due to the short-term
nature of the current assets and liabilities or due to the commercial
variable rates applied to the long-term liabilities.
The interest rate swap was valued externally by the respective counterparty
banks by comparison with the market price for the relevant date.
The interest rate swaps are expected to mature between September
2026 and February 2027.
The Group uses the following hierarchy for determining and disclosing
the fair value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical
assets or liabilities;
Level 2: other techniques for which all inputs which have a significant
effect on the recorded fair value are observable, either directly
or indirectly; and
Level 3: techniques which use inputs which have a significant effect
on the recorded fair value that are not based on observable market
data.
During each of the reporting periods, there were no transfers between
valuation levels.
Group fair values
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Financial
(liabilities)
/ assets
Interest rate swaps - Level - - -
2 - current
Interest rate swaps - Level
2 - non-current 16,385 (4,795) 16,036
16,385 (4,795) 16,036
======================================= ======================================= =======================================
The valuation basis for the investment
properties is disclosed in note 12.
25. Capital
commitments
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
EUR'000 EUR'000 EUR'000
Contracted capital commitments
at the end of the year 22,750 12,950 26,750
======================================= ======================================= =======================================
Capital commitments include contracted obligations in respect of
the acquisition, construction, enhancement and repair of the Group's
properties. Within the amount disclosed above, EUR12.95m relates
to an asset under construction and is matched 100% with secured
debt finance.
26. Related party
transactions
Related party transactions not disclosed elsewhere are as follows:
QSix Residential Limited is the Group's appointed Property Advisor.
No Directors of QSix Residential Limited currently sit on the Board
of PSD, although its Principals retain a shareholding in the Company.
For the six-month period ended 30 June 2023, an amount of EUR3,262,874
(EUR3,219,011 Management Fees and EUR43,863 Other expenses and fees)
(December 2022: EUR6,861,680 (EUR6,773,608 Management fees and EUR88,072
Other expenses and fees), June 2022: EUR3,429,000 (EUR3,384,000
Management Fees and EUR45,000 Other expenses and fees)) was payable
to QSix Residential Limited. At 30 June 2023 EUR1,315,162 (December
2022: EUR1,584,505, June 2022: EUR839,000) was outstanding.
The Property Advisor is also entitled to an asset and estate management
performance fee. The charge for the period in respect of the performance
fee was EURNil (December 2022: EURNil, June 2022: credit EUR343,000).
Please refer to note 20 for more details.
Apex Financial Services (Alternative Funds) Limited, the Company's
administrator provided administration and company secretarial services
to PSDL and its subsidiaries in 2023. For the six-month period ended
30 June 2023, an amount of EUR307,602 (December 2022: EUR651,000,
June 2022: EUR289,000) was payable to Apex Financial Services (Alternative
Funds) Limited. At 30 June 2023 EUR8,730 (December 2022: EURNil,
June 2022: EUR117,500) was outstanding.
Dividends paid to Directors in their capacity as a shareholder amounted
to EURNil (December 2022: EUR937, June 2022: EUR643).
27. Events after the
reporting date
The Company has exchanged contracts for the sale of six residential
units in Berlin with aggregated consideration of EUR2.1 million
after the reporting date. The sale of these is expecting completion
in 2023.
In September 2022 the Company exchanged contracts to acquire an
asset in Berlin for the purchase price of EUR4.9m. The transaction
completed in Q3 2023.
On 17 August 2023 the Company announced an amendment to the fees
payable to the Property Advisor. From 1 July 2023 all ongoing fees
to the Property Advisor are subject to a cap of EUR5.0m for a period
of 12 months. The Property Advisor has agreed to waive any Performance
fee for the period. The Property Advisor will be entitled to an
additional disposal fee of 1% of the gross value of assets sold
over the 12-month period.
Professional
Advisors
Property Advisor QSix Residential Limited
54-56 Jermyn Street
London SW1Y 6LX
Administrator Apex Financial Services (Alternative
Funds) Limited
Company Secretary IFC 5
and Registered Office St Helier
Jersey JE1 1ST
Registrar Link Asset Services (Jersey) Limited
IFC 5
St. Helier
Jersey JE1 1ST
Principal Banker Barclays Private Clients International
Limited
13 Library Place
St. Helier
Jersey JE4 8NE
UK Legal Advisor Stephenson Harwood LLP
1 Finsbury Circus
London EC2M 7SH
Jersey Legal Advisor Mourant Ozannes
22 Grenville Street
St. Helier
Jersey JE4 8PX
German Legal Advisor Mittelstein Rechtsanwälte
as to property law Alsterarkaden 20
20354 Hamburg
Germany
German Legal Advisor Mittelstein Rechtsanwälte
as to general matters Alsterarkaden
20354 Hamburg
Germany
Taylor Wessing Partnerschaftsgesellschaft
German Legal Advisor as mbB
Thurn-und-Taxis-Platz
to German partnership law 6
60313 Frankfurt
a.M.
Germany
Numis Securities
Sponsor and Broker Limited
45 Gresham Street
London EC2V 7BF
Independent Property Valuer Jones Lang LaSalle
GmbH
Rahel-Hirsch-Strasse
10
10557 Berlin
Germany
Auditor RSM UK Audit LLP
25 Farringdon Street
London EC4A 4AB
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IR MFBRTMTJBBRJ
(END) Dow Jones Newswires
October 17, 2023 02:00 ET (06:00 GMT)
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