Last checked at 
4 Dec 2015 07:00
4th December 2015
Phoenix Spree Deutschland
Portfolio Update
Phoenix Spree Deutschland (LSE: PSDL.LN), the UK listed investment company specialising in German residential real estate (the "Fund"), is pleased to announce that it has exchanged contracts to acquire four properties in Berlin ("Acquisitions") and disposed of two buildings in Nürnberg at a significant premium to book value.
Highlights
· Four Berlin properties acquired for an aggregate consideration of €19.8 million (£14 million), excluding acquisition costs; representing a price per square metre of €1,640
· The Acquisitions represent 150 residential and 10 commercial units and should increase the Fund's rental income by approximately 5.4%
· Completion expected in Q1 2016, following which the Fund's Berlin properties will represent c.68% of its portfolio
· Acquisition spend since London Stock Exchange listing in June 2015 is €35.8m, and the Fund expects to deploy further capital during 2016
· Disposal of two buildings in Nürnberg at a significant premium to book value
The Fund has exchanged contracts on four, well-located Berlin properties. In aggregate, the properties contain c.12,000 sqm of lettable space, representing 150 residential and 10 commercial units. These Acquisitions are expected to increase the Fund's rental income by c.5.4% and are scheduled to complete in Q1 2016.
Three of the properties are classic "altbau" buildings constructed before 1914. Two properties are located in Prenzlauer Berg, a desirable district in East Berlin, while the remaining two are located in South East Berlin, and are expected to benefit from the opening of the new international airport. PMM Partners, Property Advisor to the Fund, believes that all of the properties offer scope for value improvement through active asset management.
Including the acquisition of Boxhagenerstrasse, which was notarised in July 2015 for €16 million, the Fund has completed or notarised a total of five acquisitions since listing on the London Stock Exchange in June 2015. In aggregate the acquisitions have a value of €35.8m, representing 213 apartments, 14 commercial units and a lettable area of approximately 18,200 sqm.
In total, these five acquisitions are expected to add more than 11% to the Fund's rental income and increase the proportion of the portfolio in Berlin, where residential prices remain, on average, below the cost of construction. The Acquisitions will initially be financed by existing cash resources, however it is expected that the Fund will refinance the Acquisitions and it has received indicative offers of finance from German lending banks.
The Fund has also notarised the disposal of two small buildings in Nürnberg to a local developer. The disposal value represents a premium of around 60% to book value and the transaction is expected to add approximately 0.25% to the Fund's EPRA NAV.
Robert Hingley, Chairman of Phoenix Spree Deutschland, commented:
"These acquisitions meet the Fund's acquisition criteria and strategy and offer significant scope for value creation through active asset management. They also demonstrate the Fund's ability to execute its strategy of increasing exposure to the highly attractive Berlin residential market, where the significant demand continues to grow thanks to the ongoing urbanisation and population growth. The Fund is expected to deploy further capital during 2016."
Note: Sterling denominated purchase price value is based on an exchange rate of €1.41 to £1.
For further information please contact:
PMM Partners (Property Advisor)
Mike Hilton +44 (0)20 7292 7153
Matthew Northover
Paul Ruddle
Stuart Young
Liberum
Richard Crawley +44 (0)20 3100 2222
Christopher Britton
Bell Pottinger
Nick Lambert +44 (0)20 3772 2500
Victoria Geoghegan
Elizabeth Snow
Notes to Editors
About Phoenix Spree Deutschland:
Phoenix Spree Deutschland Limited is a UK listed investment company offering shareholders exposure to the German real estate market, particularly residential property in Berlin and other secondary German cities. Since Phoenix Spree Deutschland was incorporated in Jersey in 2007, the Company has assembled an attractive portfolio of German real estate assets which currently consists 114 properties containing 2,377 rental units (plus a further 520 parking and miscellaneous units) across Berlin and secondary cities in Germany, representing a lettable area of 174,000 square metres. The primary assets are multi-apartment residential buildings built pre-1914 or post-1990 and 82% of the Portfolio by lettable area relates to residential property, with the balance being commercial property. Berlin is the Portfolio's largest geographical market representing 66% of its current total value.
Phoenix Spree Deutschland has a growth strategy to manage and invest in the Portfolio in order to drive capital growth and increase Shareholder value. The Property Advisor has significant experience in generating rental and capital growth through innovative asset management and value added investment. Underpinning this strategy is the potential value uplift the Property Advisor believes can be achieved within the Portfolio through a natural reversion of current rents to higher market rents, combined with a number of strategies to maximise the rental income and value of properties.