Phoenix Spree Deutschland Share Discussion Threads

[davebowler] 04/3/2016 10:09

Liberum;
Phoenix Spree Deutschland (BUY)
Full take-up of offer for subscription

Event
All of the resolutions regarding PSDL's proposed fundraising and placing programme were approved at yesterday's EGM. Gross proceeds of £38m have been raised including full take-up of the £5m offer for subscription. £33m was originally conditionally placed with institutional investors.

The shares issued under the initial issue will rank pari passu in all respects with the existing shares including the right to receive any dividend for H2 2

[jeff h] 13/2/2016 14:32

Some interesting bits of info in the prospectus:-

"....one of the Portfolio apartment units in Berlin was renovated for a cost of approximately €33,000 resulting in a rental uplift of approximately €6,000 per annum which represents a return of the refurbishment expenditure in just over five years. Taking into account the value uplift from re-letting, and factoring in the cost of the refurbishment, the Property Advisor estimates that the renovation increased the value of the unit by around €78,000, representing a return on investment of 235 per cent."

...and this about splitting apartment blocks into individual units for sale:-

"In 2015, the Company commenced the sale of units in two partitioned properties in Central Berlin. As at the Latest Practicable Date, 20 out of the 47 units or 1,331 square metres of the total 2,983 square metres acquired had either completed or sale contracts had been exchanged. The average price per square metre achieved for single apartments was €3,912 and for all units (including commercial) the average was €3,643. This compares favourably with the most recent valuation of the Company’s Berlin rental portfolio of €1,863 per square metre, the difference further highlighting the arbitrage possible between a rental and condominium building. In 2016, it is expected that the condominium sale process will begin in at least two further properties in Berlin."

...all very much like the experiences of Taliesin Property Fund (TPF).

[jonwig] 13/2/2016 06:34

IC comment on the placing programme:

Germany-focused landlord Phoenix Spree Deutschland (PSDL) has announced plans to raise up to £38m by way of a firm placing of new shares and an offer for subscription. The proposal, which is subject to shareholder approval, also includes plans to implement a placing programme for up to 120m new shares from 7 March 2016 to 8 February 2017.

The offer is likely to attract significant institutional demand, and Phoenix is confident enough to set the offer price at a small premium to the current share price. And expenses from further placings will be met by setting a similar premium.

The advantage of the placing programme is that it cuts down the time needed to go through a fresh placing programme, and will allow the property adviser to act in a more opportunistic way. Five acquisitions costing £39m are due for completion by the end of March and, crucially, at £5.50 per square metre, rents are around 27 per cent below current market rates.
IC VIEW:

Phoenix Spree Deutschland has shown itself to be adept at acquiring property with significant rental income. Rent restrictions that make new build uncompetitive, together with a growing demand for residential properties, leaves the group well placed to develop its income stream. At 167p, the shares are up from our buy tip (144p, 10 Jul 2015), and we remain buyers.

Incidentally, the Circular is now on the website - I couldn't find it earlier.

[jonwig] 09/2/2016 10:36

Are they quoting the 12/15 NAV at the then ruling FX rate? It seems not, really!

I've just checked that the closing GBP/EUR rate was 1.35724, but 2.19/160 and 2.28/1.67 convert to 1.365 or so. Maybe an intra-day rate?
Agreed, the current rate gives a small discount.

The fact that they've apparently placed all but about 3m of the shares suggests they'll have no problems with the issue.

[cerrito] 09/2/2016 08:55

Yes Jonwig good spot and frankly rather irritating as it suggests silly bugxers. I am assuming that the H2 dividend will be 2.7p approx.-ie they say total dividend 2.5% of NAV or 4p per share with 1.3p per share paid in H1.
They say that the shares are being issued at a premium to the 12.15 NAV yet my reading is that using today’s FX rate of .774 they are being issued at a discount –ie the E2.19 NAV becomes 169.6p and the E2.28 NAV becomes 176.6p NAV
Is that how you folks see things.??

[yieldsearch] 09/2/2016 07:51

Well spotted!

[jonwig] 09/2/2016 07:43

Issue of new shares at 168p looks a bit pricey considering it's above the current price. (NAV at 31/12/15 confirmed as 167p.)

And how do misprints such as this creep in ...

The New Shares will, when issued and fully paid, include the right to receive all dividends or other distributions made, paid or declared, if any, by reference to a record date after the date of their issue. Accordingly, the New Shares issued under the Initial Issue will be entitled to receive any dividend for the period from 1 July 2015 to 31 December 2015.

[davebowler] 21/1/2016 14:41

Westhouse on Taliesin;
Taliesin Property Fund (TPF) announced a revaluation of its property portfolio by the company’s property valuers, Jones Lang LaSalle. As at 31 December 2015, the value of the portfolio increased to €267.7 million versus €212 million as at 31 December 2014. It also announced that 21 of the 25 residential units in its first privatisation project had been sold. As at 31 December 2015, the company estimated an NAV of over €30 per share. We have emphasized the attractiveness of the portfolio and the fund despite the company trading at a significant premium. We continue to like Berlin residential property, despite the current market turmoil and recommend that investors buy TPF at current levels.

[yieldsearch] 14/1/2016 11:38

Jonwig yes agree
Davebowler tks for posting

[jonwig] 14/1/2016 11:16

Yieldsearch - yes, the revaluation was completed on 31/12, and I'm looking at the price action since then - clearly not a complete surprise.

Dave - so Liberum has NAV up from 219c to 228c, which is a bit below my estimate.
Cash drag, exceptional costs, EPRA adjustments?

[davebowler] 14/1/2016 10:29

Liberum;
Event
PSDL's portfolio valuation rose by 15% in 2015 to €283m at 31 December 2015. We calculate a like-for-like revaluation uplift of 8.3% for 2015 (H2 3.8%) after adjusting for capex and net acquisitions. We now estimate an EPRA NAV of €2.28 (172p based on current FX rate) at 31 December 2015 which represents a 3% upgrade to our original forecast. This equates to a strong NAV total return of 12% in the company's first year of listing. We believe the shares are extremely attractive given the discount to peers and future NAV growth potential from a high-quality reversionary portfolio. BUY.


more;
PSDL has announced a portfolio valuation of €282.8m at 31 December 2015 which reflects an
increase of 15.3% over the year. After adjusting for acquisitions and disposals, the increase over the
year was 10.6% (H1 5.3%, H2 5.0%). We estimate a like-for-like revaluation movement of 8.3% for
the year (H1 4.4%; H2 3.8%) after making further adjustments for capex.
The revaluation uplift is a result of a combination of factors including yield tightening, rental uplifts,
market rent improvements, lower vacancy and asset management. The fully occupied gross yield on
the portfolio has tightened by 40bps in 2015 to 5.7% (2014: 6.1%) although this is not strictly like-forlike
and part of the yield movement is due to acquisitions. The portfolio value per sqm is now €1,635
which compares to €1,523 at 30 June 2015 and the increase over the period was broadly in line with
the uplift on Deutsche Wohnen's Berlin assets (announced earlier this week).
The portfolio delivered positive capital growth across all regions and PSDL's core markets
of Nuremberg and Fürth (+14.7%) and Berlin (+12.2%) have experienced the strongest like-for-like
growth.
This report is prepared solely for the use of David Bowler
12% FY2015 NAV TR estimate
We estimate a portfolio revaluation surplus of €9.7m in H2 2015 and an EPRA NAV of €2.28 per
share (172p based on current FX rate) at 31 December 2015. This represents a 3% upgrade to our
previous forecast of €2.22 per share.
This equates to a NAV total return of 11.7% for 2015 (H1 6.3%, H2 5.0%) which is well ahead of the
company's target of 8-10% per annum over the next three years. After stripping out exceptional costs
relating to the main market listing, NAV total return for the year was c.13.5%. The excess return has
also been achieved despite PSDL having a lower gearing level than targeted (41% net LTV at June
2015 vs. 50% target).
Figure 2: 2015 NAV total return estimate
€m € Per share
EPRA NAV at 31 December 2014 143.9 2.06
EPRA NAV at 30 June 2015 153.0 2.19
Dividends paid in H1 0.00
H1 NAV total return 6.3%
H2 Adjustments
Revaluation uplift 9.7
Recurring PBT 0.9
Other adjustments -2.9
Dividends paid -1.2
EPRA NAV estimate at 31 December 2015 159.5 2.28
Dividends paid in H2 0.02
H2 NAV total return 5.0%
FY 2015 NAV total return 11.7%
Source: Liberum estimates
A discount to a rising NAV with a strong growth outlook = BUY
PSDL is currently trading on a 4.7% discount to our December 2015 EPRA NAV estimate which is
significantly wider than its closest peer (Taliesin property Fund 27% premium to June NAV) and the
average for the larger German listed residential companies (21% premium).
We believe the current share rating represents a compelling opportunity to gain exposure to a
portfolio experiencing strong growth dynamics with the outlook for future returns supported by the
high level of reversion in the portfolio and favourable demographic drivers. This is further underpinned
by the company's strong balance sheet and the manager's excellent track record and strong
alignment of interests with shareholders (c.13% owned by the property advisor). We reiterate our BUY
recommendation.

[yieldsearch] 14/1/2016 10:22

jonwig: you are suggesting leaked because of recent days price action?

I am tempted to add more, would have expected a better price reaction with such an increase in NAV

[jonwig] 14/1/2016 07:54

perhaps - I didn't look at forex, sorry.

[langland] 14/1/2016 07:49

With fx movement I would expect nav to be in 175-80 range.

[jonwig] 14/1/2016 07:21

Property revaluation results: inclrease of about 15%. Given the gearing that would come to a NAV increase of about 30%. But on a like-for-like basis, the gross increase is 10%, so 20% at the net level.

It all depends on the amount of uninvested cash, but a 20% increase in NAV is still pretty good. It also looks to have been leaked!

[jonwig] 04/12/2015 14:54

Bought four in Berlin, sold two in Nürnberg:



Smaller cities are best left to locals with their closer knowledge. Berlin has a more liquid market and still, I think, lots of upside potential.

Sniff of an equity fundraising any time soon? The last reported NAV (30/06,€2.19, or 156p at today's forex) suggests they have scope in the 153p - 155p range, and no need to apply pre-emption rights.

[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 12:01

Not directly.

[jaws6] 14/10/2015 10:35

anything in funding circle ?

[davebowler] 14/10/2015 09:41

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 06:36

DAVE
Thanks
you seen this today ?

[davebowler] 06/10/2015 08:51

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.