Phoenix Spree Deutschland: Investment property valuation
Investment Portfolio Valuation
Phoenix Spree Deutschland (LSE: PSDL.LN), the UK listed investment company specialising in German residential real estate, announces the updated valuation for the portfolio of investment properties held by the Company and its subsidiaries (the “Portfolio”) as at 31st December 2017.
Significant portfolio valuation gains
The Portfolio was valued at €609.3 million by Jones Lang LaSalle GmbH, the Company’s external valuers, an increase of 43.8 per cent over the twelve-month period (31st December 2016: €423.8 million).
This increase was substantially driven by the continued strength of demand in the Berlin residential market given the significant undersupply of available rental property and decreasing vacancy rate. This has led to very strong market conditions and corresponding further yield compression. It also reflects rental growth as a result of increased market rents and the ongoing active management of the portfolio, as well as the net impact of acquisitions and disposals.
The Company aims to balance the needs of its key stakeholder groups by working in partnership with its tenants and owners to make a positive contribution to living standards and the environment in areas where its properties are located. There has been significant investment in the Portfolio throughout the year, as the Company continues its process of modernisation and renovation of apartments. This has included upgrades to communal space, such as hallways and staircases, investment in more efficient heating systems, as well as expenditure on outdoor service areas and building facades.
The Portfolio valuation represents an average value per square metre of €2,853 (31st December 2016: €1,965) and an average gross initial rental yield of 3.4 per cent (31st December: 4.8 per cent). On a like-for-like basis, the Portfolio valuation increased by 37.6 per cent in the twelve months ended 31st December 2017. This compares to like-for-like growth of 19.4 per cent for the twelve months ended 31st December 2016.
Increased Berlin focus
All geographical markets registered valuation gains during the period, with the Berlin Portfolio increasing to an average of €3,220 per square metre at 31st December 2017, up from €2,320 per square metre at 31st December 2016. This represents an annual like-for-like increase of 38.8%. Following the disposal of the Company’s Nuremberg and Fürth portfolio, completed in July 2017, and a portfolio of 34 properties located in Central and Northern Germany (notarised in December 2017), Berlin represents over 99 per cent of the Portfolio by value on a pro-forma basis.
The proceeds from these disposals will be used to continue to source and acquire attractive assets in Berlin. Since 30 June 2017, the acquisitions of 15 Berlin properties with an aggregate value of €54.2 million have been notarised.
The Company expects to report its results for the twelve-month period ended 31st December 2017 towards the end of April 2018.
I am delighted at the continued strong performance of the Portfolio, the best period of growth in the Company’s 10-year history. The valuation gains reflect both the quality of the assets and portfolio management and a very positive market backdrop. Following profitable disposals made in the year, the Portfolio is now fully focused on Berlin, where the Company has acquired further assets at attractive prices. We will continue to grow the Portfolio in Berlin, where the market outlook remains strong and where we see potential for further value and rental growth through continued investment.
Robert Hingley
CHAIRMAN OF PHOENIX SPREE
For further information please contact
Phoenix Spree Deutschland
Stuart Young
+44 (0)20 3937 8760
Liberum Capital Limited (Corporate Broker)
Richard Crawley
Christopher Britton
+44 (0)20 3100 2222
Tulchan Communications (Financial PR)
Tom Murray
Elizabeth Snow
+44 (0)20 7353 4200
