Covid-19 Business Update

RNS Number : 3169M

Phoenix Spree Deutschland Limited

11 May 2020

 

11 May 2020

Phoenix Spree Deutschland Limited

("PSD" or the "Company")

COVID-19 Business Update

Phoenix Spree Deutschland Limited (LSE: PSDL.LN), the UK listed investment company specialising in German residential real estate, announces an update on the impact of COVID-19 on business operations.

Supporting our stakeholders

The Company's overriding priority is the health and wellbeing of its tenants, work colleagues and wider stakeholders throughout this period of unprecedented disruption. On 20 April 2020 the German government announced plans to begin to lift restrictions imposed on business and public life caused by the COVID-19 pandemic, becoming one of the first major European nations to commence the task of reopening.

Where necessary, the Company continues to support its tenants, both residential and commercial, through agreeing, on a case-by-case basis, the payment of monthly rents or deferring rental payments.

Limited impact on rent collection

To date, the impact on rent collection has been limited. In the month to 30 April 2020, 98% of rent due had been collected in total compared to 99% in January 2020.

Residential rent collection has remained particularly resilient, with over 99% of rent collected during the month of April. Germany's Hartz IV welfare programme includes help for rental payments in instances of financial hardship and is available to tenants impacted by the COVID-19 outbreak.

Commercial rents represent a small proportion of total rents, accounting for only 10% of rental income as of 30 April 2020. The COVID-19 restrictions involved the temporary closure of many commercial businesses, including a number of our commercial tenants. Following the latest German COVID-19 guidance on easing restrictions, many businesses are now in the process of reopening. During the month of April 2020, 89% of commercial rents have been collected, compared with 96% in January 2020.

The Company will continue to work sensitively, and on a case-by-case basis, with its tenants in arrears to agree appropriate and workable repayment schedules.

Successful refinancing on attractive terms, strong financial position

The Company is pleased to announce that on 8 May 2020 it refinanced the €16.4m of debt acquired as part of the share deal acquisition of the apartment complex in Brandenburg in December 2019. It was refinanced with a €20.3m facility using the acquisition facility negotiated with Natixis in September 2019. The new loan was signed on improved terms with an extended duration and lower interest rate. On completion of this refinance, the Company had gross borrowings of €283.0m and cash balances of €41.6m, resulting in net debt of €241.4 million and a net loan to value on the Portfolio of 33.1%.

As outlined in detail in the Annual Report, the Property Advisor has rigorously stress tested the potential downside scenarios associated with the Mietendeckel and COVID-19, including any potential impact on arrears and loan covenants. The Board is confident that the Company's liquidity and strong balance sheet leave it well placed to withstand any negative impact from the current short-term challenges.

Dividend and Outlook

As previously announced, the Company has declared an unchanged second dividend of 5.15 cents (€) per share, which is expected to be paid on or around 3 July 2020 to shareholders on the register at close of business on 12 June 2020, with an ex-dividend date of 11 June 2020.

Ahead of the lifting of restrictions imposed as a result of the COVID-19 pandemic, rent collection has remained resilient. Whilst there currently remains uncertainty surrounding the legality of the new Berlin Mietendeckel and the duration of legal challenges, PSD is well positioned to mitigate the financial impact pending legal clarification. On 6 May 2020, the parliamentary groups of the CDU/CSU and FDP of the Deutsche Bundestag officially filed for a judicial review of the Mietendeckel legislation at the federal constitutional court in Karlsruhe.

The Board remains confident in the long-term outlook for PSD, particularly given the strength of demand for housing in Berlin. The Company is due to announce its results for the half-year to 30 June 2020 in early September, and will provide further updates in the interim in the event that conditions substantially change as a consequence of COVID-19.

Robert Hingley, Chairman of Phoenix Spree Deutschland, commented:

"We have continued to focus on our top priorities of the safety and wellbeing of our tenants, suppliers and other key stakeholders.  The business has shown its resilience throughout these unprecedented times and, although German COVID-19 restrictions are now in the process of being lifted, the Portfolio is well prepared for a protracted period of disruption should this arise. Recent legal developments challenging the legality of the Mietendeckel have been positive and our balance sheet strength and  liquidity mean the Company is well positioned to weather any impact from both COVID-19 and the Mietendeckel until such time as market conditions normalise."

For further information, please contact:

Phoenix Spree Deutschland Limited Stuart Young	[phone]
Numis Securities Limited (Corporate Broker) David Benda	[phone]
Tulchan Communications (Financial PR) Elizabeth Snow Amber Ahluwalia	[phone]

 

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