Phoenix Spree D Regulatory News (PSDL)

18 October 2019

Phoenix Spree Deutschland Limited

(The "Company" or "PSDL")

Commencement of share buy-back programme and condominium sales update

Phoenix Spree Deutschland Limited (LSE: PSDL.LN), the UK listed investment company specialising in Berlin residential real estate, announces the commencement of a share buy-back programme and provides an update on progress with its condominium sales strategy.

Commencement of share repurchases at discount to NAV

On 26 September 2019, the Company indicated that it would consider buying back up to 10% of existing share capital in issue. This followed the completion of a new €240 million term loan on improved terms which provides additional liquidity to take advantage of opportunities arising from market disruption caused by changes to the rent laws, as well as weaknesses in the share price. This liquidity has been supplemented by the proceeds of condominium sales, details of which are provided in this announcement.

PSDL shares currently trade at a 24% discount to EPRA Net Asset Value as at 30 June 2019 and the Company announces today that it will commence the purchase of ordinary shares on the London Stock Exchange. The repurchased shares will be held in treasury.

Acceleration in second-half condominium sales at a 21.6% premium to book value.

Since the financial half-year ended 30 June 2019, a total of 10 condominium units have been notarised for sale with an aggregate value of €3.8 million.  The average achieved value per sqm for these units was €4,685, representing a 21.6% premium to their book value as at 30 June 2019. These sales represent a significant increase compared with the first half of the current financial year, during which four units were notarised for sale, with an aggregate value of €2.5 million.

In addition to these notarisations, there has been an encouraging start to the marketing of the remaining occupied Boxhagener Strasse units by Accentro, with a number of notarisations expected by the year-end. Accentro is marketing the remaining 16 occupied Boxhagener Strasse units through their extensive network on behalf of PSDL.

The Company announced on 26 September 2019 that it had concluded a broader Cooperation Agreement with Accentro which potentially covers the entire portfolio of condominium projects owned by PSDL.  Details of this agreement were set out in the interim results for the half year ended 30 June 2019.

Berlin rent cap update

PSDL and its legal advisors remain firmly of the view that the rent proposals as currently drafted are not lawful and are unconstitutional. In Germany, residential tenant law is governed by the German Civil Code and is therefore a matter for the Federal and not State Government There is considerable and mounting legal opinion supporting this view.

The Board also notes recent press reports that certain elements of the current Mietendeckel proposals continue to be the subject of discussion within the Berlin Senate. Specifically, the proposal that existing tenants can apply for rent reductions in certain instances is not supported by all parties within the Berlin coalition.

The Company continues to explore all options within the existing portfolio to optimise strategic flexibility pending clarification of the legality of Mietendeckel rules. As well as condominium sales, these include its new re-letting strategy focused on short term furnished apartments and densification projects.

Robert Hingley, Chairman of Phoenix Spree Deutschland, commented:

"I am delighted that we have seen an acceleration in condominium sales since the half-year end and that our partnership with Accentro has made a promising start. We look forward to further progress as Accentro begins to market other properties on our behalf. Our ability to convert units to be sold at a premium to book value underpins the strategic optionality and value within the portfolio. We are also pleased that our refinancing has allowed us to take advantage quickly of the share price weakness and start buying back shares at a significant discount to Net Asset Value."

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