Portfolio Update

RNS Number : 7533D

Phoenix Spree Deutschland Limited

11 July 2016

 

11 July 2016

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 since the start of 2016 it has exchanged contracts on or completed the acquisition of 486 residential and 23 commercial units in Berlin ("Acquisitions") for an aggregate purchase price of €55.0 million (Dec'15 portfolio valuation €282.8 million).

 Highlights

-	8 Berlin property packages exchanged or completed for an aggregate consideration of €55.0 million (£47.0 million), excluding acquisition costs; representing a price per square metre of €1,705
-	5 acquisitions have completed in H1 20161, the remaining 3 are due to complete in Q3 2016, following which the Fund's Berlin properties will represent c.72% of its portfolio value (66% at Dec'15)
-	The Acquisitions comprise 486 residential and 23 commercial units and are expected to increase the Fund's rental income by over 16%.
-	2 property packages structured as share deals, resulting in acquisition cost savings
-	Acquisition spend since London Stock Exchange listing in June 2015 is €71.0 million, and the Fund expects to deploy further capital during H2 2016

Since the beginning of 2016, the Fund has exchanged contracts or completed on eight, well-located Berlin property packages. In aggregate, the properties contain c.32,300 sqm of lettable space. Four of the properties are classic "altbau" buildings constructed before 1914. Two properties are located in Prenzlauer Berg, a desirable central district of East Berlin; two in Wedding, an adjacent central area; one on the border of Lichtenberg/Friedrichshain; one just to the south of Tempelhof Field; 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 completed in October 2015 for €16.0 million (excluding acquisition costs), the Fund has completed or notarised nine acquisitions since listing on the London Stock Exchange in June 2015. In aggregate, these were acquired for €71.0 million and comprise 549 apartments, 27 commercial units, with a lettable area of c.38,500 sqm.

In total, the eight Acquisitions from the year to date are expected to add more than 16% to the Fund's annualised rental income (31 December 2015: €14.1m), while also increasing the Berlin proportion of the portfolio value to c.72%. Two of the Acquisitions have been structured as share deals for Real Estate Transfer Tax purposes and come with existing debt in place. The remaining properties will initially be financed by existing cash resources. It is expected that the Fund will refinance the Acquisitions and it has received indicative financing offers from German banks.

Robert Hingley, Chairman of Phoenix Spree Deutschland, commented:

"Following the £38 million share placing in March, we are pleased to be able to report good progress in securing properties which meet the Fund's acquisition criteria and strategy. These properties all offer significant scope for value creation through active asset management. The Berlin residential market is highly attractive, with in-place housing stock valued below the cost of construction, and this is attracting significant inflows of capital. Against this competitive backdrop, these Acquisitions demonstrate the Fund's ability to execute its strategy of increasing exposure to the Berlin residential market. The Fund is expected to deploy further capital during 2016."

Jones Lang LaSalle will be valuing the Fund's portfolio as at 30 June 2016 and PSD expects to report the interim property portfolio valuation before the end of August 2016. Publication of the interim results is expected before the end of September 2016.  

Note:

Sterling denominated purchase price value is based on an exchange rate of €1.17 to £1.

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 

¹Four of which were exchanged in H2 2015 and previously announced via RNS on 4 December 2015

For further information please contact:

Phoenix Spree Deutschland                                                                                             

Stuart Young                                                      [phone]

Bell Pottinger                                                    [phone]

Nick Lambert

Elizabeth Snow

 

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