Phoenix Spree Deutschland revalues Berlin assets by 21%
Phoenix Spree Deutschland, the London-listed investment company focused on Berlin residential real estate, saw its investment portfolio valuation rise by 14.0% during the year as it continued to benefit from the German capital’s strong market fundamentals.
The company portfolio was valued at €645.7 million as at December 31, up 6.0% from €609.3 million the prior year.
This represents an average value per sqm of €3,527 and a gross fully occupied rental yield of 3.0%. The Berlin portfolio was valued at €641.8m, an increase of 21.4 per cent year-on-year (31st December 2017: €528.5 million). Since the 2018 financial year-end, all the residual non-Berlin assets have been sold, making the company now a fully-focused Berlin fund.
Based on the year-end portfolio value, net asset value per share as at December 31 is expected to be between €4.52 to €4.56, up from €4.11 the year before.
"Our carefully targeted acquisition and disposal strategy has created a fully-focused Berlin portfolio which continues to benefit from robust market conditions, underpinned by the significant undersupply of available rental property. This, combined with our ongoing reinvestment programme, has created significant embedded value within the portfolio," said chairman Robert Hingley.
"The board continues to view the prospects for the Berlin property market with optimism and remains confident that the company's active asset management strategy will deliver further growth during the year ahead. We will continue to acquire rental properties in Berlin, where the market outlook remains strong and where we see potential for further value and rental growth through continued investment," Hingley added. The company publishes its annual results at the end of April.
The share price has performed strongly, nearly tripling over the past four years, although has been on a downward trend for the last twelve months. Earlier this month former property advisor PMM Partners (UK) Ltd and its principals sold 2.2m shares at 350.00 pence, to cover tax liabilities arising from a performance fee, the company said.
In a similar message last year, Mike Hilton, founder of real estate advisory firm and fund manager PMM Partners, told REFIRE: "The increase in value of Phoenix Spree’s portfolio is largely due to the increase in its revaluation at the end of last year. Berlin has been a very strong market for the last two-to-three years and the rental market has been performing very well."
‘If we have an empty unit, we can typically let it at a significant premium because demand is very strong. Residential rents have been increasing by 8% a year – the strongest growth in any rental market. Our average rents are around €8 per sqm, which rises to €12 for a new letting. Rents have basically doubled over the last five years. This year, we anticipate rental growth of between 5% and 6%.’