Phoenix Spree Deutschland Share Discussion Threads

[m_kerr] 29/9/2022 19:11

if REITs currently price in 30% drops in their property prices as they are, then clearly they will have a softer landing than real world investors who haven't priced any any drop at all, in fact quite the contrary, they've been knowingly overpaying (specifically residential).

this is obviously very different from the last crash of 2007, here it is just driven by interest rates going from 0.1% up to anything from 4-6% depending on who you believe so you have to impose a discount on the assets.

those that you can just value on a discounted cash flow basis (due to the elimination of refinancing risk) like SREI, is IMV the best bet in the sector.

[spectoacc] 29/9/2022 17:21

@m_kerr - how I wish you were right. I loaded up on the small REITs (take your pick from UKCM, SREI, BCPT, CTPT, EBOX, EPIC etc) on 30%+ discounts, with mostly low LTVs, low debt interest rates, and very few forthcoming debt expiries (in SREI's case, out to about 2029. LTV in UKCM's case c.13%, none over 30% LTV).

Yet many are now pushing 50% discounts, joining PE ITs on the 50% discount shelf. Some have fallen 40% in weeks.

And despite having added on the way down, I'm no longer convinced they're buys, and increasingly convinced, as you say, that property has to crash.

14 years of ZIRP is over, and I think they've run out of road for kicking the can, with the pound weak and inflation already high. Am sure they'd love to cut rates, do more QE (wait: they have) and spend more taxpayer cash (ditto), but things look set to get very nasty.

Not that you'd know it yet in the auction rooms.

[m_kerr] 29/9/2022 17:09

vonovia and deutsche wohnen also trade at huge discounts to NAV. a real divergence between what stock markets are pricing in, and what assets in the real world are trading at.

well there's early signs this is starting to change. there's been nothing short of a frenzy in the housing market in recent years. people knowingly overpaying because 'prices will only ever go up' and there's been so much money sloshing around. so a classic bubble, this one fuelled by money printing and low interest rates, and in the UK, various measures that have had the effect of pumping up prices yet further.

from these levels, stock market investors will have a softer landing than direct property owners, as they've already priced in a significant correction.

[davebowler] 29/9/2022 09:47

Numis
Phoenix Spree Deutschland – Interims: Fundamentals robust but macro outlook weakens
● Results summary: Phoenix Spree Deutschland’s interim results for the six months to 30 June show an EPRA NTA of €5.72
(£4.92) per share, which reflects a 1.2%. increase in Euro terms since the 31 December NTA of €5.65 (+3.8% in Sterling
terms). This increase was driven by a 2.2% like-for-like valuation uplift for the portfolio, excluding the impact of
disposals. The NAV total return for the six months was 2.2% (in Euro terms), including dividends paid in the period.
● Portfolio: As at 30 June, the portfolio of 95 assets (2,554 residential units, 136 commercial units) was valued at €820.1m,
reflecting a gross fully occupied yield of 2.8% (December 2021: 2.9%). The 2.2% like-for-like valuation increase reflects
the combined impact of increased rental tones as well as investments in the Brandenburg asset and completion of
the condominium splitting process in one building. Average passing rent was up 1.9% over the period to €9.8 per sqm
as the company continued to capture the re-letting premium. 174 new leases were signed in the period (a 7.3%
reletting rate), achieving an average rent of €12.7per sqm, which reflects a 28.4% premium to previous passing rents.
Focusing solely on the Berlin portfolio (91% of lettable space), the average premium to passing rent on re-lettings was
33.7%, (2021: 35.8%). EPRA vacancy across the portfolio remains low at 2.5%.
● Transactional Activity: In addition to investing c.€6.2m of capex across the existing portfolio in H1 to facilitate the
reversionary rental strategy, the company also acquired four multi-family houses (24 units) in Hoppegarten and
Nuenhagen Berlin for €6.3m, which offer significant reversionary potential. Since period-end, the company has also
agreed to acquire a 22-unit property in Berlin-Neukölln for €4.8m. Two non-core disposals have also been undertaken
since period-end, consisting of a fully-split Altbau building with an ongoing construction project within its original
footprint and a smaller asset with a significant commercial component and mature residential tenant structure. The
aggregate proceeds from these two disposals of €8.6m is fractionally below the 30 June valuation of €8.8m.
● Profitable Condominium Sales: Alongside its reversionary re-letting strategy, Phoenix Spree has continued its
condominium strategy whereby assets are divided and selectively sold as individual units. Nine condominium units
were notarised for sale in H1, with an aggregate value of €3.0m, which reflects a slowdown in investment volumes in
Q2, owing to the worsening macroeconomic sentiment and concerns over the cost-of-living crisis and borrowing
costs. However, condominium pricing has remained strong, with the average value achieved per sqm of €5,257
representing a 19.2% premium to book value and a 21.8% premium to the average portfolio value per sqm as at 30
June. Since period-end a further 2 units have been sold, with an aggregate value of €1.0m, reflecting a price of €6,236
per sqm, which is 33% ahead of book value and 44% ahead of the average residential portfolio value. However,
management notes that the headwinds impacting buyer confidence do not show signs of reversing during H2.
● Debt financing: At 30 June, Phoenix Spree had net debt of €295.5m (€305.1m gross borrowings and €9.6m cash),
which reflects a net LTV of 36%, up marginally from c.35% at 31 December. The company’s average cost of debt at 30
June was 2.1% and nearly all of the company’s debt cost is effectively fixed though hedging. The company has limited
near-term refinancing risk with the earliest debt maturity in 2026. Management considers the current level of gearing
to be appropriate and will therefore “not look to increase debt levels until such time as the market outlook becomes
more stable.”
● Dividends and Buybacks: The company has declared an interim dividend of 2.35 cents in respect of the period, which
is unchanged from H1 2021 and the Board remains committed to providing shareholders with a secure dividend over
the medium term. The Board has also resumed the company’s share buyback programme which has seen c.9% of
share capital repurchased since its implementation in October 2019. It has repurchased c.£3m, c.1% of share capital
year to date. Although it does not intend to increase gearing at this stage in the cycle, the Board notes that any excess
proceeds from future disposals may be used for share buybacks if considered appropriate.
● Numis views: From a property valuation and NAV perspective these results highlight a solid period for PSDL with values
up a further 2% on a like-for-like basis driving a 2.2% NAV total return (in Euro terms). However, the macroeconomic
landscape shifted over the course of H1 and has deteriorated further since year, which will inevitably present
headwinds over the coming periods. Bund yields have moved sharply higher in recent months, and this has started
to be reflected in transactional pricing for residential portfolios as debt-funded investors have become net sellers in

[davebowler] 29/9/2022 09:07

44% discount to NAV of June Euro figure of 5.72 = £5.10 !

[davebowler] 04/8/2022 16:40

Liberum;
1.9% like-for-like valuation growth in H1

Mkt Cap £309m | Share price 337.0p | Prem/(disc) -28.5% | Div yield 1.9%

Event

Phoenix Spree Deutschland's portfolio value rose by 1.9% on a like-for-like basis in H1 2022 to €812.4m. The valuation uplift reflects increased market rents, improvements in the micro locations of certain portfolio assets, investments in the Brandenburg asset and completion of the condominium splitting process in one building. Based on the valuation uplift and the impact of share buybacks, we estimate EPRA NTA per share will be within a range of €5.75-5.80 at 30 June 2022, which would represent a NAV total return of c.3% for the first half of the year.

The portfolio value per sqm was €4,318 at 30 June 2022 (Dec-21: €4,225). Six of the properties have been valued as condominiums, with a total value of €33m. The gross fully occupied yield on the portfolio is unchanged at 2.8%.

Phoenix Spree Deutschland has notarised nine condominium sales in H1 2022 for a total of €3.0m. Condominium notarisations during Q2 have slowed due to the impact of increases in the cost of living, higher borrowing costs and uncertainty surrounding the crisis in Ukraine. The average price achieved was €5,291 per sqm, representing a 20% premium to book value.

During H1, PSDL bought back a further 931k shares (0.9% of share capital), for £4.0m. The average price paid represents a 24.2% discount to the December 2021 EPRA NTA. We estimate this will have added c.0.3% to EPRA NTA. At 30 June 2022, PSDL had a net LTV of 37%.

Liberum view

The first half of 2022 was another solid period for Phoenix Spree Deutschland, with condominiums notarisations achieved well ahead of book values. The current macro environment will clearly put pressure on further sales in the near-term, with the cost of living crisis and rising borrowing costs already having an impact in Q2. The company continues to buy back shares, demonstrating confidence in the underlying portfolio. Further buyback activity is likely to slow, with the board stating these will be dependent on condominium sales and non-core asset disposals rather than refinancing, given the 37% LTV. It did, however, reiterate that any proceeds over and above amounts required to fund normal working capital requirements and payment of dividends will continue to be used to buy back shares. We believe the shares are materially undervalued at a c.30% discount to our estimated NAV.

[cerrito] 04/8/2022 07:37

I have taken my eye of this ball in recent weeks and have not seen the price gyration.
Given the steady as she goes tone of this morning 's update and the warning that future buybacks will depend on disposals not sure if we should expect share price increases unless sterling weakens against the euro.
I was interested to see that the number of shares bought back in H1 were at a lower rate than other periods since the programme started in September 2019.

[peckers56] 26/7/2022 18:19

Re: " ...biggest landlords said it is seeking permission to turn down central heating temperatures". I believe this relates only to "common" areas in apartment blocks, rather than individual apartments.

[jonwig] 25/7/2022 15:04

Telegraph:

German families face a colder winter as one of the nation’s biggest landlords said it is seeking permission to turn down central heating temperatures amid the energy price crisis.

Lars von Lackum, chief executive of LEG Immobilien, which lets out 166,000 apartments to around half a million residents, said “tough decisions” were needed to help the country through the shortages.

“For this winter we need a legal option permitting us to lower the temperatures more than before,” he told the German newspaper Handelsblatt.

He urged Olaf Scholz’s Government to act fast as the crisis intensifies in one of Europe’s biggest importers of Russian gas: “Politics must now decide this quickly”.

“I believe that in the current war situation, the population in Germany must be made aware that renunciation is now the order of the day,” Mr von Lackum said. “And that will be a renunciation of heat – you have to say that politically.”

As the link in #565 says, the key number seems to be 20degC day and 18degC night.
Germans should be tougher than that: we manage 18/16, we just got used to it.

[jonwig] 11/7/2022 17:38

This might have something to do with it:



Landlords are responsible for maintaining effective heating, including minimum temperature requirements.
It could be that a gas-fired system in an apartment block has to be converted into oil or coal.

In a recession, affording the rent is a problem.

[apollocreed1] 11/7/2022 14:49

I really think that today's 36% discount is way too large. Residential property is an essential commodity and should be very defensive in a recession.

[brwo349] 11/7/2022 08:31

The German economy is in a bad spot just now especially with the gas supply issues. Haw badly should that effect PSDL. It is on a 36% discount to net asset value now

[cerrito] 22/6/2022 07:05

Their buy back yesterday at 321 was a good piece of business...too bad just for 15k shares.
If the euro continues to appreciate against sterling this will be good for a sterling based investor like me

[davebowler] 13/5/2022 15:00

Renting in Berlin: how living in the German capital compares to being a tenant in London hTYps://a.msn.com/r/2/AAX6l6z?m=en-gb&a=0

[spectoacc] 12/5/2022 14:20

But for being massively overweight property of varying sorts, I'd go back in here - there's a lot of downside protection whatever the economy/Putin throws at it.

[davebowler] 12/5/2022 07:58

Edison research-

[cerrito] 24/4/2022 14:29

Wondering in rather a desultory way if I should buy more at the reduced price of 360 but decided to remain with what I have.
While to me not realistic to have in 2022 the same number of shares bought back as in 2021 ie 4.5m.shares, at the moment the share buy back programme is quite leisurely.
There are as the company notes headwinds but I am not expecting to see much change in the NAV between December 2021 and June 2022.
For me the big issue is that my online broker Barclays does not allow one to buy more and so I have to go through the hassle and expense of using my full service broker.
I do not see myself as selling.

[davebowler] 11/4/2022 17:45

Not residential but encouraging nevertheless...hTTps://www.dailymail.co.uk/money/investing/article-10299267/MIDAS-SHARE-TIPS-UPDATE-Invest-German-growth.html?ns_mchannel=rss&ns_campaign=1490&ito=1490

[jeff h] 02/4/2022 12:07

I think he added it after I posted rambutan, but yes dave often posts research rarely seen to general investors and I am very appreciative also.

[rambutan2] 01/4/2022 20:40

Jeff, the fantastic davebowler, who is always so generous with his info, posted it ie

PSDLFY22!

I can confirm that it works.

[jeff h] 01/4/2022 17:40

dave - per your above link:-

"Enter the passcode to watch "Phoenix Spree Deutschland Investor Webinar"

[davebowler] 01/4/2022 15:34

Webinar of results FY21



PSDLFY22!

[davebowler] 30/3/2022 08:10

Liberum;
Phoenix Spree Deutschland

Confident outlook

Mkt Cap £361m | Share price 390.0p | Prem/(disc) -18.5% | Div yield 1.6%

Event

Phoenix Spree Deutschland has generated an 8.4% NAV total return in 2021. EPRA NAV was €5.65 per share at 31 December 2021 (upper end of the previously indicated range of €5.60-€5.66 per share). NAV performance has been driven by a 6.3% like-for-like revaluation gain in the period. The valuation uplift reflects increased market rents and progress in condominium splitting.

The portfolio value per sqm was €4,225 at December 2021 (Jun-21: €4,075; Dec-20: €3,977). The gross fully occupied yield on the portfolio is 2.8%. Like-for-like rental growth of 3.9% for the 12 months to December 2021, maintains the company's consistent track record of uplifts. New lettings in Berlin were completed at an average 33.8% premium to passing rents. The average rent achieved on new lettings was €12.2 per sqm, representing a 4.4% increase on the prior year. Rent collection has remained robust at 97% and the EPRA vacancy rate is low at 3.1%. 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 95% of the back-dated rent which could be claimed from tenants.


Phoenix Spree Deutschland has notarised €15.2m of condominium sales in 2021. The average price achieved was €4,988 per sqm, representing an 18.3% premium to the December 2020 book value. 75% of the Berlin portfolio has been legally split into condominiums and applications are in progress for a further 10%. Legislation is likely to impact the ability of landlords to split condominiums in future. The legislation is not retrospective and should be positive for future sale prices.

Net LTV has increased marginally to 34.7% (33.1% at December 2020).

Liberum view

Several actions by management have demonstrated confidence in the portfolio and the outlook for improved returns. This was clearly highlighted by consistent buyback activity (€18m in 2021). The company recently completed its first acquisition since the removal of the rent freeze legislation and has also restored the level of capex investment in the portfolio to pre-rent freeze levels in order to capture the reversionary upside. Despite the rent freeze legislation, the company was still able to achieve an 8-9% NAV returns during this period.

The supply-demand imbalance remains acute, as evidenced by an 11.6% year-on-year increase in condominium asking prices in H2 2021, according to JLL. We believe the shares remain undervalued at an 18.5% discount to NAV, given long-term returns are underpinned by the reversionary potential across the portfolio.