Phoenix Spree Deutschland Share Discussion Threads

[jonwig] 13/6/2019 14:29

Thanks Dave.
This seems to be the PSDL bit of your link:



... but it's dated 30/04.

I sold out after your Liberum link, but the fall could be temporary as things have to go through courts - all a long-term uncertainty.

This company can produce a light-hearted RNS that it's NOT associated with something, but seemingly can't acknowledge that a political event caused a 17% share price fall in just three sessions. One hopes they're awaiting legal advice.

[davebowler] 13/6/2019 13:50

hTTps://www.investmentweek.co.uk/investment-week/analysis/3076923/miton-duo-increases-position-in-uk-micro-caps-in-anticipation-of-market-rebound?utm_medium=email&utm_content=&utm_campaign=IW.Daily_RL.EU.A.U&utm_source=IW.DCM.Editors_Updates&utm_term=FPC%20FINANCIAL%20SERVICES&im_company=FPC%20FINANCIAL%20SERVICES&utm_medium=email&utm_term=2%20to%209&im_edp=410979-05474982d5ce102b%26campaignname%3DIW.Daily_RL.EU.A.U

[caradog] 10/6/2019 12:24

I'm out now. Annoyed with myself - I read about the political rumblings in Berlin but failed to grasp how angry ordinary Berliners are about the practices of the big landlords. Tenants are, after all, the company's customers.

More than anything, I am very disappointed that the company has not made any statement to reassure shareholders about the drop in share price and the changed financial risk now facing the company. Any board that had the interests of small shareholders at heart would have made some clarification by now.

I wasn't too happy about the enormous share issue and dilution.

Moving on, a little poorer but a lot wiser (I hope)...

[mammyoko] 07/6/2019 12:52

Going to be a lot of apartments on the market in Berlin if this goes through. NAV will take a hit

[atalbot1] 07/6/2019 10:50

I think I’ll top up too.
Surely these type of regulations just create more pent up demand given the reduced future supply.
Plus when they sell it’s at a premium to nav, yet the share price is now 20% discount to nav.

[belgraviaboy] 07/6/2019 10:07

Happy to add at these prices - and have been.

[davebowler] 07/6/2019 08:52

Liberum-Discount -16.9% | Div yield 2.0%EventMedia reports in Germany yesterday indicated that Berlin's urban development senator will put forward proposals for a five-year rent freeze in the city to the Berlin Senate this month. The proposed rent freeze is due to be implemented from January 2020. The proposals state that rents will not be allowed to increase in multi-family houses in Berlin for five years. In the event of a new letting, the highest rent that can be charged is what the previous tenant was paying. This is regardless of whether the previous rent was below the level set by the Mietspeiegel. Prior approval would also have to be obtained for rent increases via modernisation works. Liberum viewThe Berlin residential market has been the subject of increasing political debate as public pressure has risen over the last 12 months. The rent freeze proposals have been met with a backlash at a federal level and from industry participants. The constitutionality of the proposals have been questioned by several parties including the Berlin Chamber of Commerce. It is unclear whether local governments can implement their own rental legislation, superseding federal rental laws. It will undoubtedly be challenged in court should it be voted through by the Senate. A rent freeze would likely deter development of new rental housing in the city and would reduce supply which is the real issue. We would expect much of the existing rental stock will be converted to condominiums by landlords with existing permissions. It would bring an end to the business model operated by landlords, such as Phoenix Spree, that seeks to achieve rental growth through refurbishment and re-letting. Phoenix Spree Deutschland has the ability to adjust its business model as it already has permission to convert approximately 50% of the portfolio to condominiums and is in the process of seeking further approvals. The company could also seek to change its letting strategy to focus on short-term furnished letting, which would not be affected by the proposed legislation.Nevertheless, this creates huge uncertainty for the Berlin residential sector and could lead to further weakness for companies with Berlin exposure. The final outcome of the proposals is very hard to predict. Phoenix Spree fell -3.2% yesterday (after adjusting for the dividend) and the German-listed Berlin peers (Deutsche Wohnen, ADO Properties) were impacted heavily (-7.5% on average) and have also opened up significantly lower this morning. Phoenix Spree -16.9% discount is broadly in line with the average for peers. 

[davebowler] 06/6/2019 15:49

Anyway, I've just bought more.

[davebowler] 06/6/2019 15:37

Surely PSDL, Deutsche Wohnen etc. and other landlords will then sell any property as soon as it becomes vacant and not relet it?!
If so the Berlin 'proposal' will actually diminish the supply of rented property, which goes against the whole point of the idea.
Bonkers.

[davebowler] 06/6/2019 15:33

Deutsche Wohnen webcast -

[podgyted] 06/6/2019 13:06

I think, from memory, the 3,000 units was for expropriation - not sure if this is linked to the freeze proposal.

Seems to be being taken seriously on the German Bourse - Ado Properties down 7%, Deutsche Wohnen down 7.5%

[riverman77] 06/6/2019 13:01

There's always been massive intervention in the Berlin property market. That's why the supply demand imbalance is so acute.

I was in Berlin the other week visiting a friend who rents a very nice flat at a very good price. This is because he is on an old deal which only increases at a couple of per cent each year. However, if he wanted to rent a new place he would have to pay double what he is currently paying. He also said the demand is massive with a huge influx of Americans and other nationalites. In other words, the pent up value in Berlin property will eventually be unlocked, irrespective of any new rent controls. I'm not too concerned by this latest development.

[jonwig] 06/6/2019 12:53

I gather from earlier coverage that the plans affect owners of 3,000-plus units. Not therefore PSDL. But I hadn't heard of rent freezes before, and this would be material, I think.

[novision] 06/6/2019 12:22

From

The Berlin Senate is considering introducing a 5 year rent freeze (a.k.a. Mietendeckel) from January 2020, according to numerous press articles yesterday, such as rbb24. Details. The articles cite a draft copy of a proposal that has been drawn up by the Berlin SPD and is set to be presented to the Berlin Senate on 18 June. According to the articles, under the SPD proposals rental increases could still be pushed through when properties are modernised. It is important to note that the press articles highlight the debate over whether rental law is within the remit of the federal government, and that according to the CDU parliamentary group a rent freeze would be at risk of being challenged by the Constitutional Court. We note a potential rent freeze has already been talked about since February (e.g. BBC dated 26 February 2019).Context. Rental protests in Berlin continue to be a focus for investors. We recently collated details and management commentary, see our report dated 2 April.Our view. Increasingly low property yields on German residential property (and Berlin assets in particular) mean that owners of these assets are reliant on organic rental growth and modernisation-driven uplifts to drive a total return that is sufficiently higher to sustain their current valuations around NAV. We have been taking the view that some of the debated measures around German residential property are very low probability extreme bear cases, and therefore we have stuck with our Overweight recommendation on the three main German residential stocks we cover (D Wohnen, LEG and Vonovia). A potential long-term rent freeze is arguably a more significant concern; not only does the likelihood of this seem higher, it could also reduce capital values as much or even more than other measures, we argue.Berlin or Germany-wide? So far the public discontent has been concentrated mainly in Berlin, which makes stocks such as Deutsche Wohnen most exposed. But we think equity markets will be concerned about potential contagion, which would affect peers such as LEG and Vonovia.

[jonwig] 04/6/2019 16:31

Yes, good to know ...

Following recent investor enquiries regarding the status of Woodford Investment Management's holding in Phoenix Spree Deutschland Ltd, the Company would like to clarify that it is unaware of any holding in Phoenix Spree by any funds managed Woodford Investment Management.

[davebowler] 04/6/2019 11:43

Pleasing that Woodford has sold out!

[cerrito] 30/5/2019 20:44

Been going through the AR and please see some random comments.
I have over the last year reduced my holding by about 50% and I needed to read the AR to see if I should buy or sell.
At the current price, I see no reason to sell. Since ARTL sold their Frankfurt property and TPFZ was redeemed I have no other exposure to German property.
I am rather indecisive if I should buy more. It has a good balance sheet and debt is under control; it trades at a healthy discount ..bigger than I would have thought given that with TPF having been sold there is no other such animal on the LSE.It has of course a very concentrated portfolio-not only in just one city but also in the type of building-pre 1914 altbau properties. That said there are no immediate clouds on the Berlin property scene, apart from the referendum.
Would be good to have a better dividend
I think good that Woodford have exited.
A good clear AR
Page 2
As and when I get the mental energy I need to work out why IFRS NAV has gone up by just 2.3% and EPRA NAV by 11.4%.
Page 4
The Portfolio mainly consists of classic ‘Altbau’ properties which were built before 1914. Typically, these five-storey buildings contain between 20 and 40 units, consisting of one to threebedroom apartments, often with shops on the ground floor.
Page 11
Average monthly rents E9.8 per sqm lower than Lisbon, Frankfurt Rome and Milan and roughly half of those of Edinburgh.
Page 14
2018 Berlin acquisitions were less than half of those of 2016. 2015 average price per sq m was 1.965 and in 2018 E2.290-not clear to me if that reflects general price rise or buying better properties.
Page 16
Building costs must be low in Berlin as it says average spend per apartment on modernization is E20/E30k
Page 25
In first four months acquisitions notarized were E2.4m way down on the 2018 full year figure of E36.3m;I am going on the basis that 2019 acquisitions will be less than 2018 but was not expecting such a sharp fall…perhaps timing differences. Interested to see that 2019YTD average price was E2.956 compared to E2.390 but no guidance if this is a result of price increases or that they have been buying in more expensive areas.
Also interested to read this-see page 36
Quote
The Company is currently undertaking a substantive review of its financing requirements to support its future strategy and will update investors following the conclusion of this exercise
unquote
Page 26
As someone who has been involved in UK planning will be interesting to see how easy to get planning permission for their densification programme;
Page 27
My reading of the outlook section is that both rents and property prices will increase at a measured pace; they reference the referendum proposals -I am not sure where we stand on the referendum as things have gone quiet since April 11. I have read they only need 20k signatures which is a very small number to get a referendum. As far as I can determine there are no Berlin City elections this year but I may be wrong. Remember that with 2516 properties they are under the 3k cut off in the current referendum proposals. They mention regulations imposed to regulate condo sales but with no commentary as to the impact on this.
Page 36
In analysis of risks, an increasing risk is insufficient capital to support expansion.
It says
Quote
Taking this into account, and current and future spending commitment on improving the Increasing portfolio and returns to shareholders, without further debt the Group has limited capacity for acquisitions. It continues to look for methods to achieve further capital on an ongoing basis.
Unquote
I would have thought it could gear up abitbut not sure if conditions exist to have a big equity raise.
Page 37
Recognizes that changes to property and tenant law are an increasing risk.
Page 40
I see that over the last year Woodford who had 19.4% in April 2018 have disappeared to be replaced by Invesco who have 6.8pc and Thames River who have come in with 8pc, and Bracebridge have gone up by 6%+ to 12,2%. No doubt this has been mentioned before and for me good that Woodford are out.
I have never come across Bracebridge before-they describe themselves as a leading Boston based hedge fund manager. It has AUM of $23b and a google search did not reveal anything negative. It can and does play hardball as it made $1.5b out of the Argentine restructuring and was co founded by the woirld#s richest female hedge fund manager.
That said have no real insight if they will use their 12% shareholding to get some corporate action given the discount to NAV.
Incidentally Liberum who were sacked as their broker seems to have done a good job in getting a home for the Woodford shares.

Page 77
Given all the talk on residential property, I was surprised to read that they had E73m of commercial property compared to E560m of residential property.
Page 88
I note that they had drawn down virtually all their debt and indeed as per page 97 they now seem to have drawn down all their debt facilities. I would have thought they would have had a revolving facility.

[cerrito] 30/5/2019 17:40

Just in case you missed this in yesterday's RNS and be very good if enough people register for it to happen
Shareholder Presentation (London)

For private (non-institutional) shareholders who are unable to attend the AGM, the Company is also proposing to hold a presentation on Phoenix Spree in London on 21 June at 1.00pm. Details of the venue will be confirmed subject to demand, and investors who would like to attend are kindly requested to register their interest by e-mailing the Company at [e-mail].

[davebowler] 30/5/2019 12:12

Extract ;
.....coupled with concerns around the populist backlash against rising rents (particularly in Berlin), meant that German residential companies were the weakest subsector in April. The EPRA Germany index fell -4.7%, with the two largest Berlin-focused residential businesses falling the most. Deutsche Wohnen fell by -7.3% and ADO Properties by -7.6%. The London-listed company Phoenix Spree (1.4% of the Trust’s NAV) performed slightly better, falling -3.1%. We note that the populist referendum initiative to ‘expropriate’ landlords in the German capital with more than 3,000 dwellings would technically not apply to Phoenix Spree, which owns fewer flats.

[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.