Portfolio Update

RNS Number : 3607U

Phoenix Spree Deutschland Limited

29 July 2015

 



29 July 2015

 Phoenix Spree Deutschland Limited

Portfolio Update

Phoenix Spree Deutschland (LSE: PSDL.LN), the UK listed investment company specialising in German residential real estate (together with its subsidiaries, the "Fund"), is pleased to announce that it has exchanged contracts (the "Acquisition") on an apartment complex located in Friedrichshain, Berlin (the "Property").

Highlights:

·     Total consideration of €16 million (£11.4 million), excluding acquisition costs;

·     Price per square metre of €2,580, which represents an estimated prospective gross yield of 4.8%;

·     The Acquisition will increase the Fund's rental income by c. 6%;

·     Attractively located in one of Berlin's most 'in-demand' locations: Boxhagener "Kiez", Friedrichshain; and

·     Expected to complete in Autumn 2015, following which the Fund's Berlin properties will represent c. 66% of gross assets

The Property was constructed in 1996, has c. 6,200 square metres of net leasable area, and is currently fully occupied. In addition to 63 residential units, the Property has four commercial units, the largest of which is tenanted by denn's Biomarkt, a national supermarket chain. The Property is located in Boxhagener "Kiez" in Friedrichshain, one of the most in-demand Berlin locations, and is well served by public transport. It also attractively located adjacent to Boxhagener Platz, a popular square consisting of many bars and restaurants.

As at 31 June 2015, the Property had a contracted rent roll of c. €760,000 per annum and the Acquisition will increase the Fund's rental income by c. 6%.  The Acquisition is expected to complete in autumn 2015 after which the Fund's Berlin properties are expected to represent c. 66% of the Fund's gross assets.

The Acquisition will initially be financed by existing cash resources, however it is expected that the Fund will refinance the acquisition and it has received indicative offers of finance from German lending banks.

PMM Partners, the Property Advisor, believes that in the medium term individual apartments could be sold as individual units to owner occupiers at a premium to the acquisition value.

The Fund has also completed the disposal of commercial property Hünxerstrasse 155, Dinslaken. The Property was sold for €1.44 million and the majority of proceeds will be used to repay loans outstanding on the property. The disposal value was in line with book value.

Robert Hingley, Chairman of Phoenix Spree Deutschland, commented:

"The Acquisition and recent disposal of Hünxerstrasse are both good examples of the Fund executing on its strategy of increasing its exposure to the residential market in Berlin and selected secondary cities. It demonstrates that, in a competitive market for assets, the Fund can acquire attractive properties which fit its strict return profile requirements. The acquisition of this large prime Berlin asset complements the Fund's existing rental portfolio as well as offering the potential to achieve returns through the resale of individual apartments in the medium term."

Note: Sterling denominated purchase price value is based on an exchange rate of €1.4 to £1.

For further information please contact:

PMM Partners (Property Advisor)                          

Mike Hilton                                                                        [phone]

Matthew Northover

Paul Ruddle

Stuart Young

Liberum                                                                              

Richard Crawley                                                               [phone]

Christopher Britton

Bell Pottinger                                                                   

Nick Lambert                                                                     [phone]

Victoria Geoghegan

Joanna Boon

Notes to Editors:

About Phoenix Spree Deutschland

Phoenix Spree Deutschland 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 of 113 properties containing 2,321 rental units (plus a further 497 parking and miscellaneous units) across Berlin and secondary cities in Germany, representing a lettable area of 169,500 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 63% 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.

 

END

 

 

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