Phoenix Spree buys Brandenburg apartment complex – Phoenix Spree Deutschland Limited has notarised on an apartment complex in Brandenburg. The property is a former barracks, comprising 259 residential units, one commercial unit and 210 parking spaces. It was redeveloped in 2018/2019 and benefits from efficient floor plans and new build technical standards.
Highlights:
- Property located in the Greater Berlin region, 30 minutes from the centre of Berlin in an area unaffected by the proposed Mietendeckel rent controls;
- Total asset value of EUR43.5 million (GBP36.3 million) and net consideration of EUR24.2 million (GBP20.2 million) excluding acquisition costs;
- Transaction intended to be refinanced during 2020, using existing acquisition facility;
- Refurbishment programme underway, 154 units (60%) completed in 2018/19 with 40 units planned for completion in Q1/2020 and 65 units in Q4/2021;
- Additional new build potential of a further 60 units;
- Price per square metre of EUR2,674 which represents an estimated prospective gross yield of 4.1%;
- Average residential rent per sqm is EUR9.02; new lettings in 2019 (22 new leases) of up to EUR14.01 per sqm;
- Acquisition expected to complete in December 2019.
The property is in Blankenfelde–Mahlow, a municipality 7 km south of Berlin. It is not located in a conservation zone, is unlisted and unaffected by the proposed Mietendeckel provisions. There are excellent transport connections to central Berlin and the new Berlin Brandenburg Airport is located 10 km northeast. The location is largely characterised by residential buildings with good infrastructure, including retail shopping, supermarkets, banks, kindergarten and schools.
The population in Blankenfelde has increased by 32% within the last 10 years and it is anticipated this will increase further as the deficit of housing supply in central Berlin will lead to a higher demand in the surrounding metropolitan area. The stock of above standard rental housing has lagged demand and asking rents in the surrounding area are estimated to have increased by 13% within the last 12 months.
Significant asset management potential
The property has benefitted from its redevelopment in 2018/19 and a refurbishment programme which has seen 155 units receive new facades and insulation, new windows, balconies, electricity, pipes and outside facilities. A further refurbishment of 40 units is ongoing and expected to be completed to the same standard by the end of Q1/2020. The last part of the housing complex will be vacated before the end of 2020, after which the redevelopment of another 65 units is expected to be completed within a twelve-month period. The entire complex is heated by a thermal power station.
Further new build and ‘densification’ potential
In January 2021 a further commercial unit will become vacant with outline planning permission for a new three-storey building with approximately 15 units. Outline planning permission has been sought for the construction of a further residential building and the complex offers further potential for development. In total, the whole complex offers new build potential for approximately 60 additional units.
The acquisition will initially be financed by existing cash resources and assumes outstanding bank debt of EUR16.4 million. It is intended that this will be refinanced in the new year.
The company expects to announce the year-end 2019 valuation for its portfolio of investment properties in late January 2020.
PSDL : Phoenix Spree buys Brandenburg apartment complex