Phoenix Spree renews focus on Berlin after Bavarian sales

German real estate investment firm Phoenix Spree Deutschland Ltd recently sold a non-core property portfolio for €35.3 million, realising a decent profit over book value.

The London-listed Phoenix Spree, which invests in both residential and commercial properties, said it had exchanged contracts to sell the portfolio of 17 properties in the cities of Nuremberg and Furth with an unnamed buyer. The sale proceeds are at an 11% premium to the portfolio's valuation at December 31st by JLL, noted Phoenix, with the sale expected to have a positive impact on the company's net asset value.

The properties were bought for an aggregate price of €13.9 million in 2007 and 2008, and their sale represents the company's exit from the two cities. The proceeds will be used to further acquisitions in Berlin, where 82% of Phoenix's portfolio value is now concentrated, along with debt reduction and investment in the company's existing portfolio.

According to Jorg Schwagenscheidt of PMM Partners Germany, which acts as property advisor to Phoenix, "This is another important milestone for the company. The disposal represents a profitable exit from the region, releasing capital from non-core assets which can be redeployed to increase our exposure to the attractive Berlin residential market."

As at 31st December 2016 the Phoenix Spree portfolio consisted of 130 properties containing 2,785 residential units and 237 commercial units across Berlin and secondary cities in Germany, representing a total lettable area of 215,631 sqm. The primary assets are multi-apartment residential buildings mostly built pre-1914 or post-1990, with residential representing 84% of the portfolio. The company's business plan is modelled on buying apartment houses, upgrading and renovating, and privatising individual apartments.