Valuation upgrades give boost to Phoenix Spree results

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The London-listed German residential property investor Phoenix Spree Deutschland issued an update on its investment portfolio and its funding, with the highlight being a major upward price revaluation of its Berlin housing stock. It also issued a very positive outlook for 2017.

The company's valuation of its Berlin residential portfolio was raised to €423.8m by external valuers JLL at December 31st 2016, an increase of 49.9% over the valuation a year earlier of €282.8m. This news seems to have helped give further impetus to the company's share price, which has been on a steadily rising trajectory for the last two years, and still continue to push new highs.

The company's business plan is modelled on buying apartment houses, upgrading and renovating, and privatising individual apartments.

On a like-for-like basis, the company's portfolio value increased by 19% over the 12-month period, accelerating from 11% growth in 2015. All the company's geographical markets saw valuation gains in the period, with Berlin (at 76% of the portfolio value) up the most at 24% on a like-for-like basis, followed by Nuremberg/ Fürth at 12%, and Central and North Germany at 10.4%. The valuation represents a value per square metre of €1,965 (31st December 2015 €1,635) and a gross initial rental yield of 4.8%.

The company said since its last portfolio update in October 2016 it had bought a further three property packages in Berlin for €19.9m. It also sold a mixed-use property for €3.8m, at a 19% premium over book value. Overall, the properties include 102 residential and nine commercial units and are expected to increase rental income by around 4.2%.

In the second half of 2016 it took on €103.5m in new debt, following on from a €38m share placing in March 2016. Average loan maturity is now 7 years, up from 5.5 years in June 2016, while the average interest rate has improved to just under 2%.

Chairman Robert Hingley commented, "2016 has seen the Company successfully raise equity and debt finance and deploy this capital to increase its exposure to the Berlin residential market. The outlook for 2017 remains strong and we anticipate further growth in rents and property values from a combination of market factors and active asset management.”