Phoenix Spree Deutschland Share Discussion Threads

[spectoacc] 28/9/2021 10:57

2,586 and falling too - probably for the best. Tho none of the socialist attempts at housing control have anything but the opposite effect to the one intended.

[cerrito] 28/9/2021 10:55

I see that the referendum in Berlin passed by 56%. To me the only surprise was that the vote in favour was not higher.I see that the incoming SPD administration in Berlin not very enthusiastic.
With 2586 residential units, PSDL falls comfortably under the 3000 cut off point.
Perhaps people wanting exposure to Berlin property without expropriation risk will buy PSDL.

[riverman77] 24/9/2021 12:37

The only problem with that is the amount of condominiums they are selling is minuscule. Unless they step it up its not going to have any impact on NAV

[cerrito] 24/9/2021 12:18

Thanks davebowler for posting this so promptly

[spectoacc] 24/9/2021 09:04

"...Disposals at a price...representing a 25.3% premium to book value and a 38.8% premium to to the average residential portfolio value at June 2021. At a 13% discount to NAV, PSDL represents an attractive long-term investment."

Hard to argue with that.

[davebowler] 24/9/2021 08:59

Liberum;
Improved rental growth drives H1 performance

Mkt Cap £378m | Share price 404p | Prem/(disc) -12.9% | Div yield 1.6%

Event

Phoenix Spree Deutschland has generated a 3.6% NAV total return in H1 2021. EPRA NAV was €5.42 per share at 30 June 2021 (31 December 2020: €5.28). NAV performance has been driven by a 2.5% like-for-like revaluation gain in the period. The valuation uplift reflects increased market rents following the removal of the rent freeze and progress in condominium splitting.


The portfolio value per sqm was €4,075 at June 2021 (December 2020: €3,977). Eight of the properties have been valued as condominiums, with a total value of €43m. The valuation assumes market rents for the full period (the December valuation had assumed the rent freeze legislation was in place for five years). Like-for-like rental growth of 4.6% for the 12 months to June 2021 represents an improvement on the prior year. New lettings in Berlin were completed at an average 35.8% premium to passing rents. The gross fully occupied yield on the portfolio is 2.9%. Rent collection has remained robust at 97% and the EPRA vacancy rate has dropped to a low of 1.3%.


Phoenix Spree Deutschland has notarised 13 condominium sales in H1 2021 for a total of €4.3m. The pace of condominium sales was hampered by Covid restrictions during H1. The average price achieved was €4,821 per sqm, representing a 25.4% premium to book value. The sale price represents a 15.9% premium to the average value for the Berlin portfolio. 74% of the Berlin portfolio has been legally split into condominiums and applications are in progress for a further 11%.

All of PSDL's leases had been structured to allow for the back payment of rents due for the period during which the Mietendeckel (rent freeze) was in place. PSDL has collected 92% of the €2.1m of back-dated rent which could be claimed from tenants.

Net LTV was relatively stable at 33.7% (33.1% at December 2020). The weighted average maturity of the company's debt is now 5.3 years with an average cost of 2.0%.

Liberum view

The company's outlook is notably bullish and we expect continued strong performance from PSDL's portfolio over the medium term due to the ongoing supply demand imbalance. The availability of rental stock has reduced as a result of the rent freeze legislation. Despite a significant increase in rents over the last decade, Berlin rental costs remain lower than other large German cities. The company's confidence in its long-term growth prospects were demonstrated by the enhanced share buyback programme. The removal of the rent freeze legislation will enable the company to return to its highly profitable asset management strategy. The reversionary upside across the portfolio was evidenced in the 36% uplift achieved on new lettings and the company expects to increase capex spend to capture further gains.

There is always the potential for new rent regulations but PSDL remains well-placed to deal with any material changes in legislation. The condominium disposal programme can be accelerated if required. The upside from condominium disposals was demonstrated in H1 and in transactions post period end. Since June, PSDL has notarised a further €3.9m of disposals at a price per sqm of €5,655, representing a 25.3% premium to book value and a 38.8% premium to to the average residential portfolio value at June 2021. At a 13% discount to NAV, PSDL represents an attractive long-term investment.

[cerrito] 24/9/2021 08:44

Note that cash spent on buy backs in H121 was E7m compared to E1.7m in H120 and E4.3m in H120.
The small reduction in the £ dividend reminds us of the current FX headwind.
The company was correct to remind us of the dampening effect of any interest rate increase.
I have not followed the comments on rent controls in the TV debates.

[cerrito] 13/8/2021 17:20

A confusing RNS ref Thames River
To me it suggests they have come in first time at 8.5% but in fact it is a reduction from 12.68% when the AR was published April time.

[cerrito] 12/8/2021 12:39

Thanks from me as well, Rambutan.
Would have been helpful if the company had clarified that in its last TU.

[spectoacc] 12/8/2021 07:00

Thanks @rambutan2.

[rambutan2] 11/8/2021 21:35

Noted:

"The action would only apply to entities owning more than 3,000 apartments. Phoenix Spree Deutschland owned 2,555 at the end of 2020 and so should not be affected."

[cerrito] 11/8/2021 12:58

I would be interested to hear from anyone who has a detailed knowledge of German politics as to their view of the referendum outome. As in so many things I myself am in a little knowledge is a dangerous thing territory.
I go on the basis that Linke would be campaigning for and FDP/CDU against. At a federal level the Greens will be cautious as they do not want to frighten the horses and for thre SPD not something that Olaf Scholz has sympathy for.
However I have no sense as to how the Greens/SPD will respond at a local Berlin level.As we know referenda are hard to predict at the best of times even if they are not caught in the slipstream of a hard fought federal election.
If the referendum was passed it would act as a clod over PSDL as all the constitutional wrangling took place and from the top of my head I would say there would be a hit to the share price of 30p approx.
Views welcome

[jonesy100] 11/8/2021 05:16

Thanks Cerrito. I had missed the Bloomberg article. This explains perhaps why the buyback programme hasn't had more impact. Agree it is odd that it hasn't been mentioned more widely in broker note etc. I think they were focused on constitutional court issue.

[cerrito] 10/8/2021 23:45

I have just seen this Jonesy100 and people more on the ball than me have I now see have known about this since last year as the first article on this appeared in November 2020.
For those who cannot access the FT, here is a Bloomberg June 25 article.

Interesting that Liberum did not mention this in their August 4 note...nor indeed PSDL in their portfolio update, which was a bit naughty.
I note that the referendum will take place on the day of the national elections so the turnout will be big.This seems to be important if as the FT says more than a quarter of all eligible voters have to vote for it.
If the referendum is passed, no doubt the legal wrangles would go on for some time.
I suspect there will be a wobble in the share price in September.
My problem is that my online broker-Barclays-does not allow me to buy PSDL probably because PSDL has not sent them some paperwork.
PS
Given that this has been in the works since last year I went to the Principal risks and uncertainties section in the AR which came out on May 7 and there was no mention of this..

[jonesy100] 10/8/2021 11:50

More political risk comment in FT'My flat is now a commodity': Berlin to vote on seizing rental properties https://www.ft.com/content/ad96da11-d012-440a-b1d9-05718aac47a5?shareType=nongift Not sure what this means other than unsettled backdrop for PSDL?

[cerrito] 04/8/2021 10:37

Thanks as always for posting that davebowler.
I am surprised that no NAV figure.
I continue to be very comfortable with my holding here. I did some topping up in Q220 but have done nothing since then. One reason is that my online broker Barclays does not allow one to buy...probably because PSDL have not filled up one of their forms.

[davebowler] 04/8/2021 09:39

Liberum;
2.5% like-for-like revaluation gain in H1

Mkt Cap £387m | Share price 408p | Prem/(disc) -8.7% | Div yield 1.6%

Event

Phoenix Spree Deutschland's portfolio value rose by 2.5% on a like-for-like basis to €777.7m in the six-month period to 30 June 2021. The valuation uplift reflects increased market rents following the removal of the rent freeze and progress in condominium splitting. The valuation assumes market rents for the full period (the December valuation had assumed the rent freeze legislation was in place for five years).

The portfolio value per sqm was €4,075 at June 2021 (December 2020: €3,977). Eight of the properties have been valued as condominiums, with a total value of €43m. The gross fully occupied yield on the portfolio is 2.9%.

Phoenix Spree Deutschland has notarised 13 condominium sales in H1 2021 for a total of €4.3m. The pace of condominium sales was hampered by Covid restrictions during H1. The average price achieved was €4,821 per sqm, representing a 25.4% premium to book value. The sale price represents a 15.9% premium to the average value for the Berlin portfolio. 74% of the Berlin portfolio has been legally split into condominiums and applications are in progress for a further 11%.

All of PSDL's leases had been structured to allow for the back payment of rents due for the period during which the Mietendeckel (rent freeze) was in place. PSDL has collected 89% of the €2.1m of back-dated rent which could be claimed from tenants.

Liberum view

The NAV gain as a result of the valuation uplift in H1 2021 is c.3.8%. This is at the lower end of the range in recent years but we expect continued strong performance from PSDL's portfolio over the medium term due to the ongoing supply demand imbalance. The removal of the rent freeze legislation will enable the company to return to its highly profitable asset management strategy to capture the significant reversionary potential across the portfolio. The company's confidence in its long-term growth prospects were demonstrated recently by the enhanced share buyback programme. PSDL has allocated a material amount of capital to the buyback programme and this has contributed to a significantly narrower discount to NAV.

[jeff h] 03/8/2021 10:38

Vonovia upped their bid slightly from E52 to E53 but Michael Muders from Fund Manager holder Union Investment still thinks it undervalues the company. FT says:-

"....Muders argues that the book value of Deutsche Wohnen’s property is outdated because it does not reflect a landmark court decision in April that struck down a highly contentious rent cap imposed by Berlin’s local government.

By the end of March this year, Deutsche Wohnen reported that its net asset value stood at €52.50 per share. But Muders insisted that the value of Berlin-based property had increased as a result of the court ruling.

He said he estimated a net asset value of roughly €56 per share. “We are very uncertain if the shareholder’s interests still have the highest priority for Deutsche Wohnen’s management,” he added...."

[jonwig] 25/7/2021 07:30

FT, Friday -

The €18bn takeover of German residential landlord Deutsche Wohnen by rival Vonovia has collapsed after the bidder narrowly missed the required level of support from shareholders.

Has this any implications for PSDL? Possibly, as we're at a steeper discount than the two others (I think). Monday's reaction may be interesting.

[jeff h] 15/6/2021 11:07

New Edison report:-

[davebowler] 02/6/2021 09:11

Liberum;
Additional share buyback programme

Mkt Cap £368m | Share price 380p | Prem/(disc) -16.9% | Div yield 1.7%

Event

Phoenix Spree Deutschland intends to adopt a more proactive share buyback strategy in order to address the share price discount to NAV. The company will make a material allocation of capital to the buyback programme through a combination of existing cash balances, refinancing, condominium sale proceeds and the disposal of non-core assets. The new buyback programme will take effect immediately.

Liberum view

The enhanced buyback programme follows the improved outlook for the Berlin market after the recent court ruling that Berlin's rent freeze was unconstitutional. The buyback programme should have a meaningful impact on the discount to NAV. We believe the company is vulnerable to a potential bid and this may have influenced the decision to take a more aggressive approach on buybacks. We expect continued strong performance from PSDL's portfolio over the medium term due to the ongoing supply demand imbalance.. We also note the latest portfolio valuation from December 2020 assumed the rent freeze would be in place for five years, offering near term NAV upside in the June 2021 interims.

[mammyoko] 02/6/2021 07:22

Should be good for a reduction of 10% in the discount over time?

[davebowler] 28/5/2021 16:09

Fascinating-

[cerrito] 28/5/2021 07:54

The FT today has an article on the video game Berlin Flat Quest illustrating the problems of renting a flat there which does not have the shower in the kitchen.

[davebowler] 25/5/2021 13:12

htTTs://citywire.co.uk/investment-trust-insider/news/ftse-steady-phoenix-rises-on-bid-talk-after-big-berlin-deal/a1512143?