Good debut results from Phoenix Spree Deutschland

Phoenix Spree Deutschland has published results that cover the year ended 31 December 2015, incorporating the listing of the company on the LSE in June 2015. The statement says, the year to December 2015 demonstrated continuing operational strength. Growth in both rents and property values continued, enabling EPRA NAV to increase by 10.7% for the year to EUR2.28 (12.2% before exceptional items). The active asset management strategies that have been pursued during 2015 have allowed the Company to take advantage of both the strong reversionary rental potential that exists within the Portfolio, as well as the opportunity to unlock value by reselling apartment blocks as condominiums.

During the year, new leases were signed at an average 21.2% premium to in-place rents. Additionally, the value arbitrage between an apartment block and the value of the same property sold as single apartments remains significant and the results of the first-phase condominium sales programme have been very encouraging.

The Company listed with an initial share price of 150 pence per share. By 31 March 2016, the share price had risen to 177 pence per share, representing an increase during the period of 18%. This share price appreciation has taken place against an uncertain market backdrop and, for the greater part, declining global equity markets.

Since the introduction to the Main Market, the Company has targeted a dividend equal to 2.5% of EPRA NAV per share and intends to pursue a progressive dividend policy. The Board is therefore pleased to declare a final dividend of 2.9 pence per share, taking the full year dividend to 4.2 pence per share.

The Portfolio valuation rose by 15.3% from EUR245.3m to EUR282.8m. On a like-for-like basis (excluding properties acquired or disposed of during 2014 and 2015), property values rose by 10.6%. This represents a value per sqm of EUR1,635, and a gross fully occupied yield of 5.7%. Using EPRA methodology, the net yield as at December 2015 was 4.6% (December 2014: 4.8%). Growth was strongest in Berlin and Nuremberg & Furth, which saw like-for-like values increase by 12.2% and 14.7% respectively.

Annualised rental income increased to EUR14.1m at December 2015, a like-for-like increase of 3.2% compared with December 2014. Average in-place rent per sqm stood at EUR7.5, a like-for-like increase of 4.8% compared with December 2014. Nuremberg & Fürth saw the strongest growth in rent per sqm, with an 8.9% increase, followed by Berlin with 6.5%.

Reported vacancy stood at 10.1% at the year end, compared with 10.3% as at June 2015 and 9.1% as at December 2014. On an EPRA basis, which adjusts for units under renovation and reserved for resale, vacancy stood at 3.9% compared to 5.6% in June 2015 and 4.1% in December 2014. The company had a strong letting performance, both in terms of volume and the price achieved. Around 370 leases were signed, representing 16% of total units owned. The average rent achieved on new lettings for the overall portfolio was EUR8.9 per sqm, a 9.8% increase over 2014. In Berlin, new leases were signed at an average of EUR10.3 per sqm, a 10.6% increase over 2014. By the final quarter of December 2015, the achieved price for new lettings stood at EUR8.9 per sqm, which represented a 24.7% premium to the average portfolio passing rent, and for Berlin this premium stood at 40%. This significant reversionary gap between new leases and passing rents is one of the strengths of the company’s portfolio, and should underpin rental income growth into the medium term.

PSDL : Good debut results from Phoenix Spree Deutschland