Phoenix Spree Deutschland Share Discussion Threads

[jeff h] 14/5/2019 13:11

An interesting read that thanks dave.

[davebowler] 14/5/2019 09:05

Liberum;Phoenix Spree Deutschland  Lower growth in 2019 Mietspiegel Mkt Cap £363m | Prem/(disc) -7.5% | Div yield 1.8%EventBerlin's 2019 rent index (Mietspiegel) was published yesterday, implying growth of 5.2% in average rents (2.5% annualised) over the past two years to €6.72 per sqm. The growth rate is less than the 9.2% increase in the two-year period prior to the publication of the 2017 Mietspiegel. ?The Mietspiegel applies to approximately 1.4m of the 1.9m rental apartments in Berlin. New housing from 2018 and extensively renovated apartments are excluded from the index. Liberum viewThe implied rental growth rate is down on 2017 although this had been widely expected by market participants. The Mietspiegel has typically increased by an average of 5-6% at each publication. The data used to calculate the Mietspiegel rents has often been questioned as market rental growth has far outstripped the Mietspiegel growth rates in recent years. Based on Jones Lang LaSalle data for asking rents, markets rents have increased by 109% since the end of 2004 compared to just 50% as calculated by the Mietspiegel. ?Despite the reduced growth rate in the Mietspiegel rent, we believe Phoenix Spree will continue to generate strong double-digit NAV returns over the long term as it captures the embedded value in the portfolio. New lettings are typically 40% above passing rent. The company has achieved rental growth of 5%+ in recent years.Fundamentals remain positive with GDP and real wage growth outstripping the rest of Germany. The supply/demand imbalance remains acute in Berlin which is continuing to drive rents and capital values. Completions are well short of the required completion rate of 20,000 units pa. A myriad of factors has contributed to this including a slow planning process, rising land prices and construction costs and rent restrictions.?Sentiment for the larger Berlin-focused landlords (Deutsche Wohnen and ADO Properties) has weakened as housing activists are seeking to gather support for a referendum to expropriate properties from large landlords (over 3,000 units). The average discount for the peer group is now 5.6% compared to 7.5% for Phoenix Spree. At this stage, we believe expropriation is unlikely. The Berlin Senate has estimated the compensation cost for landlords at €36bn and this material outlay would not do anything to solve the main issue which is a lack of supply of properties.

[davebowler] 11/5/2019 18:02

htTPs://www.homesandproperty.co.uk/property-news/buying/holiday-homes/where-to-live-in-berlin-apartments-in-the-german-capitals-coolest-areas-cost-from-215000-a130186.html#gallery

[podgyted] 04/5/2019 20:59

One of the Tips of the Week in Investors Chronicle.

[jonwig] 01/5/2019 06:45

Berlin police braced for violent May Day protests
Officers drafted into German capital with 20,000 activists to protest over gentrification

[jonwig] 29/4/2019 08:06

FY results. "Exceptionally strong".



EPRA NAV at 411p. Discount looks anomalous.

[davebowler] 24/4/2019 12:22

Commercial property in Germany at 35% discount to NAV anyone?

Liberum
Strong returns, further growth to come

Mkt Cap £460m | Prem/(disc) -38.6% | Div yield n/a

Event

Summit Properties’ 2018 results have confirmed a period of strong performance for the company. NAV per share rose by 53.8% in the year to €1.894 (December 2017: €1.231). NAV total return for the year was 56.3%, maintaining the company’s strong performance since IPO in 2013.

The principal reason for the large NAV uplift was a €297m revaluation gain over the period. We estimate a like-for-like portfolio revaluation gain of c.25% in the period as a result of yield shift and asset management activities. Operationally, the portfolio continues to perform well with a further reduction in EPRA vacancy to 7.3%. The average portfolio rent per sqm rose by 8.7% in 2018.


Cash generation from the portfolio is high with funds from operations of €44.3m in 2018, representing a 21.4% increase over the prior year. FFO per share was 9.5 cents and we calculate recurring EPS of 8.5 cents (24% increase) after stripping out gains from apartment disposals. Summit has completed over €200m of acquisitions since June (average yield of c.6.6%). We estimate these acquisitions could increase annual recurring earnings by c.20%.

Market conditions in the German commercial real estate market remain very favourable. Rising office-based employment is leading to increased demand for space. Over the last decade, the number of office workers in the top 7 cities has risen by almost 25%, compared to an increase of just 6% for office space. The high level of demand, in combination with a lack of supply, has driven the average vacancy rate down to 3.6%. The majority of new supply in 2019 and 2020 has already been pre-let. Investment demand for German commercial property remains high, aided by a supportive financing environment. Transaction volumes have exceeded €50bn for each of the past four years, and achieved a record €60bn in 2018 according to Savills data. Market forecasts indicate volumes will again exceed €50bn in 2019.


Liberum view

We note the confident outlook from the company regarding the potential for future growth. Rental growth is likely to continue due to a combination of ongoing asset management and positive market fundamentals, suggesting further increases in market rents. Even if there was no growth in market rents, there is still plenty of upside to aim for within the existing portfolio. The portfolio ERV is 28% above the current annualised rent roll.

Summit’s -38.6% discount to the December 2018 NAV is 36 percentage points wider than the -2.7% average for peers (Alstria, TLG Immobilien, Aroundtown SA, Dream Global Office REIT and Sirius Real Estate). This is despite Summit’s significantly stronger NAV performance since IPO in 2014. In our view, the outlook for sustainable double-digit NAV returns remains robust given the stable recurring income, asset management potential (reversionary upside, low capital values) and positive market fundamentals.
Submit

[cerrito] 11/4/2019 12:36

An insight into some of the politics on the referendum but no analysis of what it may mean for PSDL.
hxxps://capx.co/berlin-embraces-the-folly-of-hard-left-housing-policies/?omhide=true&utm_source=CapX+briefing&utm_campaign=b7f3895085-EMAIL_CAMPAIGN_2017_07_17_COPY_02&utm_medium=email&;utm_term=0_b5017135a0-b7f3895085-241794357

[davebowler] 26/3/2019 16:14

Me neither.

[cerrito] 26/3/2019 11:18

Thanks as always for that davebowler and interesting that no comment from Liberum on the political noise.
Talking about political noise, cannot understand why the £ is so strong against the euro so see no reason to sell at this time.

[davebowler] 26/3/2019 09:26

Liberum;
Positive market update from peers

Mkt Cap £373m | Prem/(disc) -4.9% | Div yield 1.8%

Event

2018 results from two of the larger Berlin-focused property companies have reaffirmed a number of positive portfolio trends and a strong long-term market outlook.

Deutsche Wohnen has a €22bn portfolio of which 77% is in Berlin (112,765 units) and ADO Properties has a €4.1bn portfolio located entirely in Berlin. Takeaways from the respective results included

Rental growth - ADO Properties and Deutsche Wohnen achieved like-for-like rental growth of 5.6% and 3.6% respectively in 12 months to December 2018. In combination with yield compression, this resulted in NAV growth of 18% (Deutsche Wohnen) and 22% (ADO), respectively.
Guidance - The companies have guided towards similar rental growth of 3% (Deutsche Wohnen) and 5% (ADO Properties) in 2019. The new Mietspiegel (Berlin rent index) is due out in early-May. This has typically shown rental growth of 5-6% over a two-year period. We note discussions are ongoing which could lengthen the calculation period for the Mietspiegel.
Reversionary potential - Like-for-like rental growth has been high for a number of years for both companies but the reversionary potential remains significant. Market rents are 35-40% above in-place rents.
Supply/demand imbalance - The supply/demand imbalance remains acute in Berlin which is continuing to drive rents and capital values. Asking rents and prices for multi-family buildings rose by 5% and 13%, respectively, in 2018 (CBRE data). Completions are well short of the required completion rate of 20,000 units pa. A myriad of factors has contributed to this including a slow planning process, rising land prices and construction costs and rent restrictions.

Liberum view

We believe Phoenix Spree will continue to generate strong double-digit NAV returns over the long term as it captures the embedded value in the portfolio. Even in the event of a slowdown in market rental growth, there is considerable upside potential as the uplift achieved on new new lettings is c.40% above the average passing rent in the portfolio. Phoenix Spree trades at a -4.9% discount to the December 2018 NAV compared to an average -1.0% discount for the Berlin-focused peers, Deutsche Wohnen and ADO Properties.

[jonwig] 25/3/2019 08:57

That article tells us that landlords owning over 3,000 homes would be liable for expropriation. The PSDL H1 results said they held 2,304 units in Berlin at 30 June 2018. So can we be relieved at that?

(I haven't contacted them.)

[riverman77] 24/3/2019 22:22

Unable to view the article, but this doesn't seem to be a particularly new development, so would be surprised if it warranted a statement - would be interested if you hear anything though.

[jonwig] 24/3/2019 06:38

Thanks for that - not easy to find in the digital edition, but it's here:



The article talks of 'expropriation' but then gives an estimated figure for the compensation DW would receive.

As usual, the comments section is very enlightening. I wasn't aware that GDP per cap in Berlin was below the country average, or that the city has a big base of socialist protest (assuming that's true).

I'll contact PSDL tomorrow morning if they don't put out a statement.

[cerrito] 23/3/2019 20:49

Big article in today's FT about s move to have a referendum in Berlin to expropriate Deutsche Wohnen and take its flats into public ownership...and indeed flats of other companies.
This reflects the tight Berlin rental market and as this thread shows over the last years we have discussed possible rent controls in Berlin and ban on privatisations.
Early days and DW's stock price on Friday was very close to 52 week high.
Be interesting for me to see what if any comments PSDL make on the Berlin political scene in their AR.
Something to be aware of.

[davebowler] 13/3/2019 16:52

Share price chart looks like a coiled spring.

[jonwig] 26/2/2019 06:44

"Berlin: a sanctuary for property investors spooked by Brexit" -

[cerrito] 17/2/2019 21:17

Thanks as ever davebowler and yes bb given that people no longer have the alternative of TPF I would have thought that the price here would be higher.

[belgraviaboy] 15/2/2019 15:26

Given the lack of interest here in the progress being made by the company (as demonstrated by the lackluster shareprice), I can see this going the way of Taliesin...

[belgraviaboy] 08/2/2019 15:49

Shares using the historic (last formally quoted) NAV?

The Liberum numbers suggest 14% (ish) discount.

[davebowler] 08/2/2019 15:29

Shares mag today -GERMAN RESIDENTIALproperty investor Phoenix Spree Deutschland (PSDL)seems able to brush off the country's economic struggles after it reported a 14% increase in the value of its portfolio during 2018.Its focus on a relatively buoyant Berlin property market also delivered strong rental growth of 7.4%. The investment trust benefits from its exposure to a city with falling unemployment, an undersupply of rental properties and population growth.By renovating its properties, many of which are upwards of 70 years old, Phoenix can push through rent increases in a tightly regulated market.At 351p the shares trade at a 4.7% discount to net asset value and yield 1.9%.