Phoenix Spree D Regulatory News (PSDL)

12 September 2019

Phoenix Spree Deutschland Limited

(The "Company" or "PSDL")

Completion of a new €240 million term loan on improved terms

Improved capital structure provides more flexibility

Phoenix Spree Deutschland Limited (LSE: PSDL.LN), the UK listed investment company specialising in Berlin residential real estate, announces the completion of a new €240 million term loan facility (the "New Facility").

The New Facility was agreed with Natixis Pfandbriefbank AG ("Natixis") and comprises of two tranches, one being for €190 million (the "Refinancing Facility") and the other for €50 million (the "Additional Facility").

The refinancing follows a strategic review of the Company's liability structure with the aim of increasing the loan-to-value ("LTV") on the portfolio to a level closer to the stated goal in the listing prospectus, while introducing more strategic flexibility.

The New Facility was agreed with Natixis on 11 September 2019 by Phoenix Spree Deutschland I Limited, Phoenix Spree Deutschland VII Limited, and Phoenix Spree Property Fund Ltd. & Co. KG (together the "Borrowers").

New Refinancing Facility of €190 million

The Refinancing Facility, which was partly used to refinance existing indebtedness of c. €119 million, is a seven-year, interest-only loan (eliminating the previous amortisation obligations) with a margin of 115bp over 3-month Euribor, floored at zero. The outstanding swap portfolio was restructured to provide interest rate hedging to match the new loan maturity.

The Refinancing Facility will be drawn down by the Borrowers on 13 September 2019. The Company's LTV (excluding cash held on balance sheet) following drawdown increased from 28.6% to 39.2%, while the overall cost of financing decreased from 2.19% to 2.13%. The weighted average financing term remained unchanged at c. 7 years.

The remainder of the Refinancing Facility will be used to fund working capital and take advantage of other market opportunities.

Additional Facility of €50m

The Additional Facility is available for drawdown over a period of 24 months and carries a commitment fee of 57.5bp. On utilisation, the drawn amounts will be subject to the same terms as the Refinancing Facility.

Rent Control Update

Further to our most recent update on 2nd September, the Berlin Ministry for Housing published the draft law on its proposed 'Mietendeckel' or rent cap. A consultative process which will allow representations to be made from all industry participants, including landlords, is now underway. A Berlin Senate resolution on the final draft is currently scheduled to take place in mid-October, with implementation of the new rules expected in January 2020.

Pending the conclusion of the consultative process (and any further amendments), the "final form" of the rent-cap proposals still lack clarity. However, the Company is actively planning its strategic response to these proposals.

The company remains of the view that the rent proposals are unconstitutional and there are mounting legal arguments to support the view that State law cannot supersede Federal law. 

Robert Hingley, Chairman of Phoenix Spree Deutschland Limited, commented:

"We are delighted to have formed a new relationship with Natixis and to have secured a new credit facility which provides the Company with more flexible and cost-efficient financing and provides sufficient liquidity in order to take advantage of opportunities that may arise from the current regulatory uncertainty."

The Company expects to report its interim results for the six-month period ended 30 June 2019 towards the end of September 2019.

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