Phoenix Spree Deutschland Share Discussion Threads

[jonwig] 20/11/2015 06:44

Brief Bloomberg article:

[jonwig] 17/11/2015 15:54

Thanks - a clear and direct presentation.

[davebowler] 14/10/2015 13:01

Not directly.

[jaws6] 14/10/2015 11:35

anything in funding circle ?

[davebowler] 14/10/2015 10:41

No I hadn't but here is the article;
Note the 2nd sentence- Germany, which is Europe's biggest housing market, is the only European country to have a listed housing sector which is now seeing a wave of consolidation





Article;
German residential property group Vonovia has offered to buy rival Deutsche Wohnen - if its shareholders reject a deal to acquire their smaller peer LEG Immobilien, in a €7.6bn deal inked just a month ago, first.

Germany, which is Europe's biggest housing market, is the only European country to have a listed housing sector which is now seeing a wave of consolidation.

In September Deutsche Wohnen, Germany's second-largest residential landlord, announced a deal to buy LEG Immobilien in an all-stock takeover valuing LEG at €79.37 a share.

But on Wednesday Vonovia threw a cat among the pigeons, saying it would offer Deutsche Wohnen shareholders 7 Vonovia shares and €83.14 in cash in exchange for every 11 Deutsche Wohnen shares, should this first deal be abandoned.

They added that they would submit a formal offer should Deutsche Wohnen shareholders agree with them and vote against the LEG deal at an extraordinary general meeting on October 28.

Vonovia chief executive Rolf Buch said:

Following in-depth analysis as well as conversations with Vonovia SE's and Deutsche Wohnen AG's shareholders, we have decided to offer an alternative. With this we are reacting to Deutsche Wohnen AG's announcement. If Deutsche Wohnen shareholders reject the Deutsche Wohnen AG-LEG Immobilien AG transaction, we will make an offer for Deutsche Wohnen. In our opinion, a combination of Vonovia and Deutsche Wohnen is a more sustainable and strategically sound alternative, offering significant benefits for all parties concerned.

He added:

We are open to enter into a constructive dialogue with Deutsche Wohnen as soon as its shareholders have decided on the LEG Immobilien AG offer, to shape the transaction in the interest of all parties concerned.

Vonovia was formerly owned by Terra Firma, the private equity group owned by Guy Hands. It has developed a taste for acquisition in the last two years, spending €3.9bn to buy Gagfah in 2014, and €1.9bn for the southern German landlord Südewo in June this year.

[jaws6] 14/10/2015 07:36

DAVE
Thanks
you seen this today ?

[davebowler] 06/10/2015 09:51

Liberum;

Phoenix Spree Deutschland Ltd
Momentum building across portfolio
BUY
Target price 173p | Published price 153p

PSDL delivered underlying NAV growth of 8% in H1 2015 as momentum builds across the portfolio. New leases signed in core markets in the period were 35% above previous passing rents and the condominium sales programme is producing encouraging early results. Future NAV upside is underpinned by numerous self-help opportunities in the reversionary portfolio. Favourable market dynamics also point to continued growth with rising household formation outpacing limited supply. We believe PSDL represents an attractive opportunity at the current 5% discount to NAV (c.30% discount to listed peers) given the property advisor's track record and strong alignment of interests. BUY

New hire demonstrates ambition

The property advisor recently appointed Jorg Schwagenscheidt as CEO of PMM Partners Germany GmbH. He has more than 30 years of relevant industry experience and was previously co-CEO of GSW Immobilien AG (Berlin's largest residential property company) for 8 years until it was acquired by Deutsche Wohnen for €1.8bn in 2014. We believe this hire demonstrates the property advisor's ambitions to grow the company beyond its current market cap and commitment to maintaining strong operational performance.

Interim results ahead of expectations

PSDL delivered 6.3% NAV growth in H1 2015 (June period end) which was 3% ahead of the run-rate implied by our forecasts. NAV growth was 8.1% before non-recurring items. The portfolio value rose by 5.3% driven by a combination of rental growth and yield compression. The reversionary upside in the portfolio was highlighted by the fact that new leases were signed at a 24.6% premium to in-place rents (35% premium in Berlin).

Successful start to condominium sales initiative

In Berlin, the typical value per sqm of apartment blocks lags the price of apartments that have been split up and sold as single apartments. PSDL is poised to capitalise on this arbitrage opportunity through a programme of selectively reselling apartment blocks as individual units. Marketing on the first two of these began in July 2015 and all 14 units in the first phase were reserved within a month at an average price of €3,840 per sqm. This compares to the average value of the Berlin portfolio of €1,840 per sqm.


Long-term growth drivers remain in place

The positive outlook for rental growth is underpinned by attractive fundamentals with demand outpacing supply and improvements in household income (due to declining unemployment and rising wages). Population growth in Berlin has been supported by positive net migration (average net migration of 40,000 p.a. in the three years to 2013). This is one of the main reasons for the projected 10% increase in household formation by 2025. Occupational demand is set to be boosted further across Germany with a significant rise in immigration.

The supply of apartments has begun to increase but it still remains well below requirements implied by new household formation. The Berlin Senate estimates there is a requirement of 20,000 units p.a. over the next decade which compares to an increase in housing stocks of just 8,637 homes in 2014.

Germany's residential investment market is experiencing tightening yields with 2015 on course to be a record year for transaction volumes. The upside for capital values is supported by the low interest rate environment and one of the lowest levels of home ownership in Europe.


Transactions highlight value opportunity

The recent acquisition of LEG Immobilien by Deutsche Wohnen at a 52% premium to the June 2015 NAV is the latest in a string of takeovers in the listed German residential sector. The listed German residential sector is trading on an average 28% premium to NAV and PSDL's closest peer (Taliesin) is currently priced at a 21% premium to NAV.

We believe the current share rating represents a buying opportunity due to PSDL's excellent track record (13% NAV CAGR since 2011), long-term NAV upside potential from a highly reversionary portfolio and strong alignment of interests with shareholders (c.13% owned by the property advisor). We reiterate our BUY recommendation.

[jaws6] 05/10/2015 08:36

hxxp://www.thelocal.de/20151005/report-up-to-15-million-refugee-arrival-in-2015

[jonwig] 28/9/2015 14:40

Thanks for recent encouraging posts.

I follow this also through contact with a relative ("in-law") with connections.

He says: the German government is buying up empty properties in large cities in order to house migrants. (Flats, entire blocks?) He suspects there could be an element of compulsory purchase. He does no know what the prices paid are, but shortages are inevitable.
Also, the supply of flats is dire in the Köln-Bonn area - his son is searching.

My only market-sensitive worry here is whether the German government is paying market or discounted rents. And I'm not convinced that the government in Berlin will allow market prices to determine the outcomes, which would be cause for worry.

This is a bit off topic, but anyone interested in the German immigrant question might find it interesting:

[davebowler] 28/9/2015 11:30

Relevant extract from TPF announcement above -very encouraging for us holders-

Taliesin Property
BACKGROUND TO AND REASONS FOR THE PROPOSAL

The latest Jones Lang LaSalle valuation report increased the value attributable to the Company's portfolio by EUR16.1 million to EUR228.2 million. The Company believes that two factors are driving this - the increasing availability of bank financing and the growing demand in Berlin from private individuals to purchase their apartments.

In recent months, the Company has successfully refinanced a maturing debt facility, managing to both reduce the interest rate charged on the loan and significantly increase the size of the facility. The Company has also been able to secure new development financing on its Warschauer Strasse project. This progress demonstrates the increasing availability of bank financing. The second factor driving an increase in the value of the Company's portfolio is the increasing demand to purchase apartments. The availability of cheap financing and the dearth of yielding alternatives has led to a strong demand to buy apartments in Berlin. Moreover, supply to this market is being held back by the continuing lack of approvals for new projects and by delays. At the Company's Warschauer Strasse project 20 of the 25 residential units have been reserved for sale.

This strong demand is one reason why the market is now beginning to better value properties that lend themselves to privatisation. Valuers have been further encouraged by a change in accounting standards, and are now beginning to assign more appropriate values to buildings with demonstrable improvement options. Properties are now being valued not for their rental income alone but increasingly for their privatisation and/or development promise. The Company expects this trend to accelerate as apartments in Berlin continue to achieve premium prices.

Given the increasing valuation of the Company's portfolio, the equity released in the recent refinancing and the fact that the proceeds from the first privatisation sales are starting to be received, the Board believes that it is now the appropriate time to put in place a mechanism to enable the Company to make capital returns to Ordinary Shareholders in a cost effective manner.

[jonwig] 23/9/2015 06:49

Citywire:

The recent market volatility has prompted Eclectica Asset Management's Hugh Hendry to review the ‘idiosyncratic’ opportunity in German residential property.

Hendry sees the strong macro backdrop for the sector as being ‘nuanced by a fundamental local property story and a compelling yield play’, in his monthly investment update.

He added: ‘European monetary policy is now set at a level which is at long last appropriate for the less productive nations, such as Spain and Italy, but certainly too loose for more productive countries like Germany.

‘This means that German asset prices should appreciate relative to other European assets.’

Hendry feels that with the uncertainty surrounding Chinese growth, domestic assets such as German property are probably a better play than the huge car and chemicals exporters that dominate the Dax.

He also highlighted how demographic change is supporting the German property market.

‘The German property market is changing as the population moves away from rural and eastern areas, in favour of large cities and industrialised parts of North Rhine-Westphalia,217; Hendry said

‘Vacancy rates are low and falling in these areas, and so pressure on housing stock means that prices are final rising from a low base.’

Hendry also highlighted how the ‘imbecilicR17; decision by authorities to introduce rent caps for existing tenants has resulted in rents crawling up by 2-3% per annum.

He outlined how this has discouraged developers to build new homes in Germany despite the desperate supply shortage. With new supply costing around €2,000/sqm to bring on, he believes rents needs to go up between 60-80% to incentivise new supply.

‘So what happens if rents re-price to the level required to bring on new supply?', Hendry questioned. ‘Under this scenario you could get 150% upside to the existing companies in their current corporate structure without doing anything too daring to the balance sheet.’

[davebowler] 16/9/2015 09:42

Liberum;
Phoenix Spree Deutschland Ltd (BUY, TP 173p)
Manager strengthens German operational team

Event
PMM Partners (property advisor to PSDL) has appointed Jorg Schwagenscheidt as CEO of PMM Partners Germany GmbH. He has more than 30 years of relevant industry experience and was previously co-CEO of GSW Immobilien AG (Berlin's largest residential property company) for 8 years until it was acquired by Deutsche Wohnen for €1.8bn in 2014.

Jorg Schwagenscheidt will head up PMM's German operation including the asset management of the portfolio and the identification of potential property acquisitions.

Liberum view
We regard this as an excellent appointment for the property advisor and PSDL which should reassure shareholders of the advisor's intention to maintain strong operational performance and to grow the business over time. PSDL trades on a 6.6% discount to NAV which compares to a premium of 11% for the large German residential property companies and a premium of 20.9% for Taliesin Property Fund (PSDL's closest peer). We maintain our BUY rating on PSDL following strong performance in H1 2015 (NAV +6.3%) and the potential for further value creation from the reversionary portfolio.

[jaws6] 04/9/2015 15:00

good point .

[4spiel] 04/9/2015 13:00

Pressure of population good for German property as indeed it's good for UK property. the big difference is Germany is in a cheaper euro. Price of this stock not much different from London Metric.

[jonwig] 03/9/2015 12:20

I assumed some people were unloading, as a large 'sell' often filled a lot of smaller 'buys' recently, but shorters? The potential rewards from that must have been tiny.

I doubled up my holding on Tuesday morning.

EDIT: sterling declines vs euro are helpful.

[4spiel] 03/9/2015 12:00

The shorters get screwed here ! they are just wiped out !

[4spiel] 01/9/2015 08:38

As for future earnings growth I think it would be satisfactory if they simply keep the properties fully let any further increases are a bonus.

[jonwig] 29/8/2015 07:41

Thanks for reminder. Strangely, I missed the announcement yesterday - two other portfolio companies reporting. I'd have added to my holding.

So NAV at 30/06 was 155p using forex of £:€ = 1.41. Nearer 160p today. Discount should narrow as company gets more recognition.

Can NAV grow at an annualised 17% for the forseeable?

Dividend of 1.3p ... small, as you say, but expect around 4p for full year.

[4spiel] 28/8/2015 19:50

Noticed very satisfactory half year results of August 28th showing strong demand and 24 per cent increase in rents on new lettings. may in part be due to pressure of population/ immigration. Small dividend half year dividend October 9 paid in sterling however current weakening of sterling against euro means strength for now in the assets. So passes as a growth stock hopefully the yield will grow too !

[jonwig] 29/7/2015 08:10

Acquisition of apartment complex in Berlin, plans to renovate and sell individual homes:



It's about 20 years old, so OK, the area itself is in the old East: typical 'village' atmosphere that you used to get in much of London.