Rising rents and values boost Phoenix Spree Deutschland

Phoenix Spree Deutschland sat the first half of 2016 saw further growth in rents and property values, resulting in an EPRA NAV per share total return of 7.8% for the half year. This puts the company well on track to achieve its target annual return per share of 8-10%. The Board is pleased to declare a dividend of 1.6p (EUR1.92 Euro cents) per share for the first half of the year, an increase of 23% over 2015.

As at 30 June 2016, the portfolio was valued at EUR329.8 million (31 December 2015: EUR282.8 million) by Jones Lang LaSalle GmbH, the Company’s external property valuer. This represents an increase of 16.7% over the six-month period, equating to an average value per square metre of EUR1,775 (31 December 2015: EUR1,635) and a gross fully occupied yield of 5.2% (31 December 2015: 5.7%). Included within the portfolio are condominium properties with an aggregate value of EUR4.7m (30 June 2015: Nil) of which EUR0.4m was held for sale at the half year end.

On a like-for-like basis, after adjusting for the impact of acquisitions and disposals, the portfolio valuation rose by 9.8% per cent in the six months ended 30 June 2016, compared to an increase of 10.6% for the year ended 31 December 2015.  This reflects a combination of market growth, improved rents, and the increasing impact of rising condominium values on multi-family home pricing. By geographic segment, Berlin posted the largest like-for-like increase at 13.7%. As at 30 June 2016, Berlin represented 70.1% of the portfolio by value, up from 63.4% as at 30 June 2015.

EPRA NAV per share rose by 6.1% in the first half of 2016 to EUR2.42 (GBP2.02) (31 December 2015: EUR2.28 (GBP1.67)). After taking into account the 2015 final dividend of 2.9p (3.94 Euro cents), which was paid in June 2016, the EPRA NAV total return in the first half of 2016 was 7.8%. EPRA NAV per share growth in the first half, before exceptional costs associated with the share placing in Q1 2016, was 8.5%. Other factors affecting NAV growth include the costs related to recent property acquisitions and the short term impact of un-invested cash balances from the recent fund raising.

Annualised rental income as at 30 June 2016 stood at EUR15.1m (30 June 2015: EUR13.2m). Adjusting for acquisitions and disposals, this represents a like-for-like increase of 4.7% compared with 30 June 2015. Average in place rent was EUR7.6 per sqm as at 30(th) June 2016, an increase of 5.1% compared with 30 June 2015. On a like-for-like basis, the increase was 5.7%, with Berlin and Nuremberg & Furth both experiencing a strong increase.

Reported vacancy was 11.1% at 30 June 2016 (30 June 2015: 10.3%). On an EPRA basis, which adjusts for units undergoing development and made available for sale, the vacancy rate was 3.2% (June 2015 5.6%).

The Company continues to let units at a significant premium to in-place rents. During the period, 159 leases were signed, representing an annualised letting rate of 12.5% of units. The average rent achieved on new lettings was EUR9.4 per sqm, a 5.4% increase on the same period in 2015. In Berlin new leases were signed at an average rate of EUR10.9 per sqm, a 37.4% premium to passing rents and an increase of 7.2% compared to 30 June 2015.

As at 31 August 2016, Phoenix Spree had exchanged contracts on six Berlin property packages during 2016, consisting of 375 residential and 13 commercial units, for an aggregate purchase price of EUR39.7 million and representing an average price per square metre of EUR1,771. Two of the property packages were structured as share deals, which benefit from lower acquisition costs. Acquisitions representing a consideration of EUR22.9 million have completed in H1 2016, consisting of four properties notarised in 2015 and one property acquired in 2016. Taking into account properties notarised but which had not completed as at 30 June 2016, the Company’s Berlin properties  represent 73.1% of its portfolio value, versus 70.1% as at 30 June 2016.

Including the acquisition of Boxhagenerstrasse, which completed in October 2015 for EUR16.0 million (excluding acquisition costs), as at 31 August 2016, the Company had completed or notarised 11 Berlin property acquisitions since listing on the London Stock Exchange in June 2015. In aggregate, these were acquired for EUR75.5 million and comprise 588 apartments and 27 commercial units, with a lettable area of c.40,650 sqm.

Five apartments were notarised for sale during the first half of 2016, representing a sales’ value of EUR1.2 million. The average value per sqm achieved was EUR3,662. Since the period end, a further two apartments have been notarised for sale. As at 31 August 2016, 55.3% of available units at the two Berlin Kreuzberg apartment blocks had been sold. Since the half year end, marketing of the property in Boxhagenerstrasse, in Berlin Friedrichshain, has started and the first condominium sales are expected to take place within the next two months. An additional property in Friedrichshain is being considered for privatisation which, subject to final approval, is expected to contribute to condominium sales during the first half of 2017. The Company had expected to augment condominium sales further with a project in Berlin Moabit. The process was at an advanced stage, with planning permission granted and the application to partition having been lodged with the land registry. However, in May, the Company was informed by the authorities that they would not approve the application to split this property’s entry on the land registry, since the area where the property resides had subsequently been assigned to the special protection register. This property is in the process of being let, and it is expected that the rent achieved will command a significant premium to the portfolio’s average rent per sqm in Berlin.

PSDL : Rising rents and values boost Phoenix Spree Deutschland