Phoenix Spree Deutschland Share Discussion Threads

[cerrito] 07/2/2024 21:33

I didn't find anything really striking in this morning's RNS apart from the v important fact that over 2023 the portfolio valuation declined by 11.9pc and 5 3pc in H2..
Be good if the offers they have received YTD for e7.4m can be concluded.
One thing thar I do not understand is last year they notarized 25 sales for a total value of e7.2m ie an average of e288k. To me this seems very low. Anyone have an explanation??
I see that the 4 sales notarized year to date have an average price of e475k ,which to me also ,if anything ,seems on the low side.
Changing tack I was surprised to see that Ameriprise of Minneapolis had increased their shareholding from 16.2pc to 20pc as I had never seen them on the register before and after some digging saw that they are the owners of established shareholder Columbia Threadneedle who have never struck me as very active shareholders. Did some digging on the Web about 15pc shareholder Bracebridge Capital. They do a lot with the Yale Endowment Fund and I could find no indication as to how active they are on shaking up Boards.
Not planning to sell or buy in the immediate future.

[cerrito] 07/1/2024 20:55

Here is the Citywire article
quote
Berlin property investor Phoenix Spree Deutschland is left with a £4.7m compensation bill after pulling out of a deal to buy 34 homes to avoid increasing its debt.
Berlin residential property fund Phoenix Spree Deutschland (PSDL) has pulled out of a deal to buy a development in the Brandenberg forest, saddling it with a €5.55m (£4.7m) compensation bill.
The £155m London-listed fund cancelled its contract with The Grounds Real Estate Development for the sale of its Terra Homes project in Erkner on the south-eastern edge of Berlin. The trust had been due to purchase the 34 homes in a contract worth €18.5m but the contract was terminated by mutual agreement at PSDL’s request, according to reports in German newspapers.
According to Justin Bell of Deutsche Numis, PSDL has confirmed the cancellation of the contract and the subsequent €5.5m payment it has to make will have ‘no material impact on net asset value (NAV)’ and the decision to pull out of the deal ‘avoids drawing down further on debt to fund completion of the project and taking market risk on valuations’.
The property trust has been trying to offload properties over the past six months in a bid to raise cash to reinstate its dividend and hopefully narrow its persistently wide discount, which currently stands at 44%.
The fund even agreed to pay its fund manager, QSix Residential, a 1% disposal fee to increase sales of its condominiums in the German capital. The new fee was combined with a €5m cap on QSix’s annual management fee in the next 12 months, down from the €7m the fund manager earned in the previous year.
Shares in the Jersey investment company have slid 32.5% in the past year, mystifying shareholders such as MIGO Opportunities (MIGO) manager Nick Greenwood who believes that the closed-end fund deserves a much higher rating given the shortage of residential property in Berlin.
At 168p yesterday the shares languished on a 58% discount to NAV of 399p, although the valuation is out of date as it relates to the 30 June figure released in the half-year results in September.
unquote

[cousinit] 07/1/2024 11:24

I wonder why that didn't warrant an RNS.? Would have been nice to know the impact directly from the Co rather than via the broker.

Will QSIX earn the disposal fee...?

[davebowler] 07/1/2024 11:06

hTTps://citywire.com/investment-trust-insider/news/phoenix-spree-hit-with-5m-bill-as-it-backs-out-of-berlin-development/a2433302?re=116368&ea=252901&utm_source=BulkEmail_Investment+Trust+Insider+Weekend&utm_medium=BulkEmail_Investment+Trust+Insider+Weekend&utm_campaign=BulkEmail_Investment+Trust+Insider+Weekend

[cerrito] 01/1/2024 19:45

Just to make sure I understand is the relevance of the 2 posts on The Grounds project to show that yes there are bright spots in the Berlin property market?? Rather than the fact there is a PSDL involvement.
Guthman a Berlin property company puts out updates on the apartments market in Berlin and the last one of last week (which I appear to have deleted) suggested there are green shoots. It discusses how the market is in different areas of the City but I do not know Berlin well enough to know which area is most relevant to PSDL.

[davebowler] 01/1/2024 19:08

Encouraging extract.....Jacopo Mingazzini, Management Board of The Grounds, says: "Cancellation of the purchase contract at the buyer's request has no impact on further progress of the project, which is being continued by The Grounds as planned. We have currently already reached a construction status of 48 per cent and an award status of 90 per cent. The first houses are expected to be ready for occupancy in summer 2024. Renewed marketing of the project will begin on 8 January 2024. Due to the attractive location and strong demand for residential units in the neighbourhood of the Tesla factory, we anticipate lively interest from potential buyers and expect notarisation to take place in the second quarter of 2024 at the latest."

[jeff h] 01/1/2024 13:52

Erkner homes development announced March 2022 cancelled:-

[davebowler] 23/12/2023 11:28

HTtps://www.msn.com/en-GB/finance/other/german-property-prices-plummet-as-housing-bubble-bursts/ar-AA1lUChD?ocid=sapphireappshare

[davebowler] 20/12/2023 20:19

Migo Opps report...Disappointments include Baker Steel Resources, Phoenix Spree Deutschland and Macau Property Opportunities. In the case of Baker Steel there is currently little interest in lending to develop new mines and many of the trust's projects have been delayed in the absence of financing. It is noticeable that the carrying value of these assets are now only a fraction of what they would be worth as an operational mine. Baker Steel shares trade at a significant discount to the already depressed carrying value. It would only need a couple of successes to drive the share price significantly higher. It is a bit of a mystery as to why Phoenix Spree is so depressed given that locally listed peer Vonovia has been moving steadily higher in recent months. There remains a shortage of residential property available to rent in Berlin. The most likely reason is a lack of interest and knowledge about the asset class amongst UK Investors. After a burst of excitement about the reopening of China post-Covid, recent newsflow has been depressing and taken its toll on the Macau Opportunities share price

[davebowler] 11/12/2023 17:52

Do you have a breakdown of the £80m? I'll take it up with the broker.

[smithie6] 11/12/2023 12:40

80 million !!

Really !!

(..that property managers for listed companies take far too much & are often linked/owned by big shareholders so they can't, in reality, be sacked...
...it is very common

& an intentional scam at many listed property companies.

[cwebb1] 05/12/2023 15:41

Interesting.

Just got back from Germany, some points of interest:

- Prices of these apartment buildings in Berlin are at around 2700 euros. “Give it take”. “Condominium” sales have stalled across the city as speculators have gone home - i.e. earning more in the bank now that savings interest rates are positive.
- qsix has a new investor from Switzerland who they are buying property for. Everyone in the city is talking about this given how little activity there is. They have already closed on deals. So PSDL shareholders are footing the bill for infrastructure, staff etc through the exorbitant management fees charged - that were supposed to be for the benefit of PSDL properties - but qsix is now focussed on catching new fish for new money. Another kick in the teeth for shareholders. Frankly these guys get paid whatever the weather, what ever their performance. Unbelievable really. They deserve to get kicked out. Every action they take is self serving and not for the benefit of the shareholders. Conflict of interest??? Great to see the board acquiescing along.

The disaster train rattles on. What a terrible “manager”;. I’m still absolutely shocked at how they’ve taken over 80 million in fees to collect some rent and deliver dreadful underperformance. They just don’t seem to care. Let’s hope the other big shareholders see sense and force change sooner rather than later.

[smithie6] 03/12/2023 21:46

Can't argue with that.

European Convergence
(ticker was ?, ecdc ?)
was another dubious company. Founders had the management done by company X, which not surpringly was them ! So little desire/pressure to minimise the annual payment!
The founders (read managers ) got to own the assets since their high pay was not paid.
Overall money put in by investors was a few hundred million £ if my memory is correct. Complete wipe out for shareholders while the founders made money I think. (Or did they buy any shares during a fund raise & lose money on that ?)

Probus was another dodgy one, a wipe out for shareholders I think.
Was it Probs that used it's cash & perhaps new loans to buy building land in Spain. That moved cash/assets out of the company. The company then declared that the land bought did not in fact have building permission & hence it was pretty worthless. And that the money would not be recouped.
Was it an intentional con ?
We're directors involved ?
(Seems difficult to buy land with building permission that turns out not to have permission (& the company's money has been syphoned off), unless you are in on it).

One property company had apartments in Eastern Europe. Now, an agency/manager would normally charge ~10% of the monthly rental price to act as the manager. At the listed co. it was much higher.
And some apartments were apparently sold without the manger or the listed company knowing anything about it !! Sounds impossible to believe.

[spectoacc] 27/11/2023 14:05

HOME too.

I'm in PSDL & DCI, & was caught in SPDI - am now highly cynical.

Forgetting the outright fraud at HOME, or the shenanigans exposed at DCI, even the "reputable" ones take shareholders to the cleaners. Charges based on (usually) NAV, and seem moderately reasonable (eg £14m on a £1.5bn portfolio at LXI). Yet when you compare annual charges to annual income, some REITs are giving up as much as a quarter of income.

Like much of the fund management industry, it's a racket IMO.

[smithie6] 27/11/2023 13:52

"QED why the management changed the comp metric as they are focussed now on disposals and want their share."

Would it be fair to say that property managers for listed companies are less honourable than used car salesmen ??!!

I could reel off a list of companies where the conduct of the property managers has been pretty disgraceful.

FPO- arguably wildly excessive options for the boss; & breaking the overall guideline for all options of 10% over 10 years

- Convergence. Was it European Convergence. Property managers put the co. in their pockets for their high unpaid fees. At a few pence per share when investors had funded the same ppl at 100p/share ! >£200million smoked !
- Dolphin. Lse:dci Now renamed
Property manager/director recently sacked due to perceived/documented fraud.
>£100million reduction in value imo
- SPDI or similar name. Been a disaster
- Blacksea. Been a disaster
- Probus ?. Have I got the name right ? Wipe out. A fraud imo
...invested in building land in Spain, that moved millions of £ out of the company...turned out it had no permission as building land !!
Then administration!!

- Property investment co. with flats in Hungary. A scandal since some flats were sold without the company apparently knowing anything about it !

=======

I guess that bigger property companies or those operating only in the UK are much more honest but the % with property outside the UK that have been frauds is frightening!!

[carlopig1] 03/11/2023 15:06

Smithie6. Current avg debt fixed at c 2.4% till sep 26 early 27. Fwd euro curve suggests rates falling in 2026 to somewhere c 2.5+%. Add in margin spread and PSDL will be refinancing at c4+%. Rental income should pari passu grow at c 4-5%. Still leaves a neg balance of 1.5m+ pa. If rates don't drop as expected then the pain will be greater. Only way to balance the books is to sell some assets! QED why the management changed the comp metric as they are focussed now on disposals and want their share. Watch this space as we see chunks of stuff sold under NAV.

[smithie6] 01/11/2023 12:35

What do ppl think about the interest rate & it's future impact on the company's numbers ?

Currently paying <3% when mkt rate for euros is perhaps almost double that.
Does that mean that the financial numbers implode over time as the existing loans end and new loans are taken out at a much higher % rate ?

[cerrito] 05/10/2023 07:45

davebowler
Thanks for these posts.

[davebowler] 04/10/2023 11:39

Numis-
Phoenix Spree Deutschland* – Interims: Condominium market reopening; Disposal
programme accelerated
● Results Summary: Phoenix Spree Deutschland’s interim results for the six months to 30 June show an EPRA NTA of €4.64
(£3.99) per share, which reflects a 9.0%. decrease in Euro terms versus the 31 December NTA of €5.10 (-11.7% in Sterling
terms). This decrease was driven by a 6.9% like-for-like valuation decline for the portfolio, (excluding impact of
disposals), which reflects the increase in market yields, partially offset by increasing rents. Rental growth remains
strong at 5.6% on an annualised basis and EPRA vacancy remains at historically low levels of 2.7%, reflecting the
continued supply demand imbalance within the Berlin residential market. The fund’s LTV at 30 June was 42.7%.
PSDL – Like-for-like portfolio valuation movement PSDL – Annual like-for-like rent per sqm growth
Source: Company Data As at 30 June. Source: Company Data
● Reversionary rental uplifts remain compelling: During H1 2023, supply-demand imbalances within the Berlin PRS market
have widened with the company signing 148 new leases at average rents of €13.39 per sqm, equating to an average
31.2% premium to previous passing rents. This reflects the continued net inward migration into the city, which combined
with the higher cost of home ownership thanks to rising mortgage rates, is increasing rental demand at a time when
supply remains constrained by higher funding and construction costs. The annualised like-for-like rental growth at 30
June was 5.6%, and management expect this to increase further. During the period a new transitional Berlin Mietspiegel
(rent index) was published by the Senate Department, which details permitted increases of 5.4% vs 2021. Where
applicable (c.20% of PSDL portfolio), the new rents will become effective from October and although not the primary
driver of the company’s rental growth, it will be accretive to rental income in H2 2023.
● Portfolio valuation: As at 30 June, Phoenix Spree Deutschland’s portfolio was valued at €714.3m. This represents a 6.9%
like-for-like valuation decrease over the six-month period, reflecting outward yield shift within the market given the
rise in interest rates and its impact on buyer sentiment. The valuation equates to an average value of €3,808 per sqm
(31 December: €4,082) and a gross fully occupied yield of 3.3% (31 December: 3.0%). Six properties were valued as
condominiums, with an aggregate value of €39.1m.
● In line with the strategic focus on enhanced disposal activity, the manager has undertaken a detailed analysis of the
entire portfolio to identify individual apartment blocks, portfolios of apartment blocks and additional condominiums
units that can be marketed for sale. Given the fund’s shares continue to trade at a discount to NAV, the Board will
consider disposals at a discount to carrying value. Since period-end the company has accepted offers on two
properties (completion expected at start of 2024), with discussions ongoing over a range of other assets. Several new
condominium projects are also being brought to market. No assets were acquired in H1, in line with the previous
guidance that no new acquisitions would be undertaken at this stage of the cycle. €4.6m of capex was invested in
the existing portfolio in H1 and management expects the full year figure to be materially lower than 2022 (€16.4m).


● Condominium buyer interest returning: The wider macroeconomic backdrop continued to weigh on sentiment in the
condominium market during H1 resulting in only eight condominium units being sold (aggregate value €2.0m).
However, pricing remained compelling with average sales value of €5,715 per sqm representing an average 68%
premium to 31 December 2022 carrying value, which reflects that these units were fully renovated and vacant. Since
period-end, there have been signs of a recovery in buyer interest, with a further six condominiums for sold for €2.1m.
The valuation equated to a 2.2% discount to 31 December 2022 carrying value, reflecting the fact that the majority of
these units were occupied and therefore carried lower premiums. Reservations on a further three units (aggregate
value €0.8m) have been received and are pending notarisation. Management is continuing to review and benchmark
its pricing of condo units, particularly for occupied units where the sales market remains challenging. Importantly, 78%
of the portfolio has been legally split into condominiums, which together with revised sales expectations and a greater
stock of renovated units, should underpin an acceleration in condominium disposals in H2 2023 and H1 2024.
PSDL – Condominium sales PSDL – Portfolio vacancy rate
As at 30 June. Source: Company Data As at 30 June. Source: Company Data
● Balance Sheet: At 30 June, the fund had total borrowings of €318.1m and cash balances of €13.1m, resulting in net debt
of €305.0m and a net loan to value of 42.7% (December 2022: 39.1%). The average remaining duration of the loan book
is 3.3 years with the nearest maturity in 2026. The blended interest rate is 2.49% with the interest rate on 88% of drawn
debt either fixed or hedged with swaps.
● Numis views: Phoenix Spree Deutschland’s 30 June NAV of €4.64 (-9.0% NAV TR in € terms) is broadly in line with
expectations given the 6.9% like-for-like portfolio valuation decrease in H1 had already been released. This reflects the
challenging macro backdrop as property markets respond to rising interest rates. Positively, the underlying supplydemand imbalance for rental property in Berlin continues to result in low vacancy and provides attractive prospects
for reversionary rental growth. Although macro headwinds also served to suppress the level of condominium disposal
activity in H1, pricing remains very attractive for this second avenue of value creation and there are signs of a cautious
recovery in buyer sentiment. The company remains uniquely well placed to capitalise on this, with 78% of its existing
portfolio legally split into condominium units. This, combined with recent realignment of management fees to
incentivise disposals, should help the company execute on its strategy of a period of enhanced disposal activity that
also includes possible sales of individual properties and portfolios. Given the shares continue to trade at a wide c.55%
discount to NAV we believe it is positive to see willingness to undertake disposals at small discounts to carrying value
that are still accretive to overall returns. Although the forecasts for German economy are weak in the near term in
particularly the manufacturing sector, the Berlin market should remain largely insulated thanks to its lower reliance
on the manufacturing sector. Therefore, in our view, the current share price (which implies a value of c.€2,600 per
sqm) is not reflective of the property market fundamentals and the portfolio’s embedded value, reflected by an
average sales price on condominiums of €5,545 per sqm over the past 12 months.

[davebowler] 03/10/2023 12:44

hTTps://citywire.com/investment-trust-insider/news/phoenix-spree-to-ramp-up-cheap-disposals-in-bid-to-narrow-57-discount/

[cerrito] 27/9/2023 20:01

I have so many company announcements coming out this week that I have not had the time to have a close study but I have read the Chair's and Manager's report and nothing really surprised me. I note the comments that the market is showing tentative signs of picking up but I have no clear view of the direction of Euro interest rates.
A silly question I am almost embarrassed to ask.
The following suggests that the average price of a condominium is euro 250k. Can that be right??
Quote
in condominium buyer interest

· During the six months to 30 June 2023, eight condominium units were notarised for sale for an aggregate value of €2.0 million (H1 2022: € 3.0 million).
Unquote

[spectoacc] 06/9/2023 15:53

I question whether any fund-of-funds type investor does much research (look how many were buying HOME, in M&G's case well after the allegations had emerged), but you'd think with that large a stake, TRY would get round to taking a dive into PSDL.

They've instigated the wind-up at EPIC, wonder if they'll do the same here. They'd never manage to sell out that many in the market.

[hugepants] 06/9/2023 15:52

According to TRY's last accounts PSDL was their 8th largest position comprising 3.1% of NAV. They hold 14.7% of PSDL so they have some influence.

[spectoacc] 06/9/2023 15:29

TRY are a big fan I believe. Not that I'm much of a fan of TRY.