Taliesin Property Fund has reported results for the six months to June 30 2015. Its portfolio is now valued at €228.2m, an increase of €16.1m. The adjusted NAV per share increased by 10.0% to €26.40 (from €24.00 on 31 December 2014). On an EPRA basis the NAV increased to €26.16 (€23.88). the valuation per square metre now stands at €1,900.
Taliesin say their intention is to start returning funds to shareholders later this year as equity is released from debt refinancings and the first privatisation sales begin to complete.
At Warschauer Strasse their first redevelopment project is fast approaching completion and will consist of 25 residential and 2 commercial units, all of which have been fully refurbished alongside the actual building itself. Lifts have been added as well as new roof apartments. The apartments vary in price between around €200,000 and €500,000 (with an additional penthouse at €725,000). Average psqm prices across the building are at €3,730, close to twice the psqm valuation of the Taliesin portfolio. The prices of the remaining units have been increased in light of the strong demand experienced so far.
Taliesin has begun to take reservations on its second privatisation project, Kavalierstrasse in Pankow. This property was fully refurbished by the Company in 2010/11 so requires very little in the way of additional investment. It is, however, tenanted and therefore presents a different challenge to Warschauer Strasse. Whereas there is an active market for the sale of tenanted apartments, those with vacant possession command the best prices. The reservations taken so far have been for the vacant units in the building. Again, the authorities have just granted approval to split the freeholds in this building.
Capital expenditures in the six months to June totalled over €2.2m. This followed investments in the portfolio in excess of €6m in 2014. They say that, given the numerous opportunities to add value across the portfolio, it is expected that capex will remain relatively elevated and targeted at those projects with the highest potential returns.
The underlying rental market in Berlin remains robust. Adjusting for property sales, like-for-like rental growth in the first six months of the year was 5.5% versus the same period in 2014. Average in situ residential rents across the portfolio are now close to €7 psqm per month, an increase in the six months under review equivalent to an annualised increase of over 5%. This rental growth has been achieved at a time when the Company’s vacancy rates are relatively high given the various investment projects that are underway. The overall vacancy rate declined slightly to 7.4%.
At Warschauer Strasse, Taliesin was able to replace an existing €1.3m loan with a project loan of €4.9m. A large part of this increase was predicated on the completed and ongoing capex programme. The loan is structured in tranches to be drawn down in line with the completion of works. The repayment schedule is linked to apartment sales at the project with an accelerated pay-back on the initial unit sales. The interest rate on the loan is around 2% and the duration is shorter than usual for Taliesin given the fact that most apartments are already reserved for sale.
A second facility has just been finalised to refinance a portfolio of nine properties, predominantly located in Friedrichshain. The existing loan had been amortised down to below €14m and had an interest rate of 3.09%. The properties were acquired as a block in 2007 for a consideration of approximately €14m. The new loan is for an amount of €24.5m with an interest rate of below 2%. The loan is structured in three tranches – fixed rate, hedged and floating – specifically designed to give the Company flexibility to accommodate future privatisation plans without incurring significant pre-payment penalties. Taliesin has approximately €29m of bank loans maturing in the next 18 months and an additional €32m in the 12 months thereafter. The most recent refinancing will increase the loan-to-value ratio to a still comfortable 54%, giving ample room for future increases. The two recent deals will release well over €10m of new liquidity, albeit delivered in tranches.
TPF : Taliesin intends to return capital as first privatisation sales complete