Berlin residential landlord Phoenix Spree Deutschland (PSDL) has proposed a change to the fee structure for its property advisor, capping its annual fee at €5m.
The company’s core rental business remains strong, but it had to suspend its dividend earlier this year as this was paid out of proceeds from condominium sales (which have been impacted by the poor residential market).
Nevertheless, the company continues to market actively both individual properties and portfolios for sale. Plans to bring additional condominium properties to market have also been accelerated. Any surplus cash generated over amounts required to reinvest in the company’s existing portfolio and reinstate dividends on a sustainable basis will, so long as the material discount to NTA persists, continue to be used principally to return capital to shareholders and not to acquire further properties.
This enhanced disposal activity will be the primary focus of the company’s strategy for at least the next 12 months.
To align the incentives of the property advisor – Qsix Residential Limited – with the company’s short-term strategic priorities, the board is proposing to change the fees payable to the property advisor from 1 July 2023 for a 12-month period, capping all ongoing fees to QSix – other than a new disposal fee (set out below) and any asset and estate management performance fee for the period – at €5.0m.
This compares to aggregate asset management, capital expenditure monitoring and investor relations fees of €7.4m for the year ended 31 December 2022. QSix has agreed to waive any Performance Fee for the period, which in any case would have been highly unlikely to accrue.
The €5.0m fee cap will be renegotiated in the first quarter of 2024 (and each subsequent year) to take effect from 1 July in each year.
Simultaneously, the board is also proposing to introduce a disposal fee of 1% of the gross value of assets sold over the 12-month period from 1 July 2023 in any form, including, but not limited to, condominiums, single properties, portfolios or of all or any of the entities that own the company’s properties.
The proposals will be put to shareholders at its AGM on 28 June.
PSDL : Phoenix Spree Deutschland proposes amendment to manager fees