Phoenix Spree Deutschland Share Discussion Threads

[davebowler] 04/10/2017 08:56

Comment on TPF thread;
''Berlin is now the preeminent city of Europe, yet property prices are less than half those prevailing in Moscow, Stockholm, Paris or Vienna: prices are far closer to those prevailing in Kiev than to London.''

[cerrito] 04/10/2017 08:49

Jonwig:just caught up with your 148 and having rad it, I did make a bit of a mountain out of a molehill.
Thanks as always davebowler for sharing Liberum's insights and I note they see a 10%+ upgrade in the tp from here

[davebowler] 04/10/2017 08:40

Liberum;
Stellar results; further upside to come
BUY
Target price 367p (from 275p) | Publication price 330p | *Corporate Client of Liberum

Phoenix Spree delivered 24% NAV return in H1 2017 as yield compression accelerated strongly. Rental growth remains robust with a 5% like-for-like increase in the period. The potential for further reversionary gains was highlighted by new lettings in Berlin (44% above passing rents). We are upgrading our NAV forecasts by an average of 18% to reflect material outperformance in H1 2017. We upgrade our TP to 367p (from 275p). BUY.

24% NAV return

The running yield compressed by c.50bps in H1 2017, which helped to drive a 15.6% revaluation gain. Annualised l-f-l rental growth of 6.1% in Berlin was ahead of listed peers.

Rising Berlin exposure

Exposure to the high-growth Berlin market has increased to 84% following the Nuremberg & Furth disposal. This will rise further as acquisition activity is Berlin-focused.

Re-letting rewards

The growth in new letting rents is outpacing in-place rents. New lettings in H1 were completed at a 31% premium to passing rent (44% in Berlin).

Material NAV upgrades

Our TP has been increased to 367p (from 275p) which is based on a 10% premium to one-year forward NAV. We upgraded our NAV forecasts by c.18% to reflect H1 outperformance.

[jonwig] 27/9/2017 05:57

Cerrito - thanks for your post. I didn't pay much attention to it at first, as you'd expect a performance fee to rear its head at some point, given its rather good performance.

Your question as to "what advice they are giving" I think can be answered by saying that PMM Partners are essentially the whole of PSDL and do all the work, apart from the Board, which oversees them and meets a few times a year! (Just as a normal investment trust is simply board plus investment manager.)

In fact, PMM Partners is involved with no other property company, from what I can see here:



(Website not maintained up-to-date.)

[cerrito] 26/9/2017 22:24

Good to see share price increase despite the weakening of the euro against the £ and fact that the generally good results had been trailed.
I have to say I had not anticipated the increase in accruals for investment advisor’s fees. I normally do not get too fussed about these when the investment adviser is not part of the group-I see one of the partners of the advisor is a director of PSDL which I have no intrinsic problem with and that PSDL provided financing to some partners for the acquisition of a related fund in 2015 which is before my time. Of more interest to me is what advise are they giving: is it big picture? ie should they be in Berlin or in Nuremberg ie should it be to continue expanding in residential at the expense of commercial or more small picture?-ie how should they be investing in the Berlin market.
I did read the TPF interims which came out in August this morning-I am in TPFZ but not TPF- as I find their overview of the Berlin market interesting.
The following TPF comments are borne out in today’s PSDL results:
quote
The virtuous circle in Berlin residential real estate continues apace. A low interest rate environment combined with higher property valuations is allowing the Group to re-finance maturing senior debt facilities at lower interest rates and higher principal amounts. Lower borrowing rates have played a large part in the yield compression seen in the portfolio valuation but equally important, I would argue, has been the ongoing price growth in individual apartment sales, the elevated level of market rents versus in situ rents and the still cheap absolute price of Berlin residential property.
Unquote
I also see that TPF appear to be more relaxed than they have in the past about regulatory risk by the Berlin authorities but do refer to political tensions and that a delay in getting planning permission for refurbishments which means an increase in vacant properties. That caught my eye as PSDL’s Belrin vacancy levels were higher than I thought they would have been.
Good that the balance sheet structure of PSDL is so healthy.
Not buying or selling at the moment ; a bit apprehensive of the Berlin concentration so my next move may be to sell.

[jonwig] 26/9/2017 06:33

H1 results very satisfactory:



EPRA NAV up 22.3% over half year to €3.34 (294p). Premium not excessive, I think.

[davebowler] 14/8/2017 09:32

Liberum;
nterims: 18% NAV increase due to revaluation gain

Event
Taliesin Property Fund's adjusted NAV per share rose 17.6% to €44.14 at 30 June 2017 (December 2016: €37.53).

The portfolio value rose 14.1% over the period and the average value per sqm is now €3,070 per sqm. Privatisation potential is increasingly being reflected in the valuation. Seven apartment sales completed at Kavalierstrasse in the first half of the year at an average sales price of €4,200 per sqm.

The LTV ratio has declined to 37.8% (December 2016: 42.2%) largely due to the valuation uplift in the period. A large senior loan matures at the end of 2017 and refinancing discussions are ongoing with various lenders. The company expects to release capital as part of the refinancing as indicative terms have been received for a €60m loan (current balance is €25m).

Liberum view
The 18% increase in H1 2017 follows a NAV return of 25% in 2016. Performance has benefited from increased share of the privatisation potential of the portfolio and ongoing yield compression in the market. In addition, the outlook for long-term rental growth in the Berlin residential market is underpinned by market dynamics with demand well ahead of supply. Taliesin currently trades on a 2.3% discount to the June 2017 NAV.

[grabster] 14/8/2017 07:14

Results this morning from Taliesin Property Fund (TPF) include plenty of observations relevant to PSDL. See TPF thread.

[pdriccio] 11/8/2017 19:41

Thanks for the update Dave.

[davebowler] 11/8/2017 09:14

Liberum;
Phoenix Spree Deutschland (Mkt Cap £275m)
Positive read-across from Deutsche Wohnen's H1 results

Event
Deutsche Wohnen has reported positive results for the period to June 2017. Deutsche Wohnen is a German residential property company with a €17 billion portfolio of which 77% (115,492 units) is located in Berlin.

Highlights of today's interim results include:

5.6% revaluation uplift for the overall portfolio in H1 2017 including an 8.3% increase in the average value per sqm of the Berlin assets.
Like-for-like rental growth of 3.6% in 12 months to June 2017. Management have increased guidance for rental growth in 2017 to 5% (previously 3.5%) partly due to higher than anticipated growth in the Berlin rent table (Mietspiegel). .
New letting rents have grown much faster than regulated in-place rents which has significantly increased the rent potential.
Deutsche Wohnen has also highlighted the widening spread between in-place and market-rent multiples which suggests further potential for NAV growth. New letting rents continue to outpace growth for in-place rents.


Liberum view
Deutsche Wohnen's results illustrate several trends that are occurring in the Berlin residential market as the supply demand imbalance has widened. There is no sign of a reversal as new construction remains relatively low partly as a result of asset values being below replacement cost. Completions are approximately 50% of the required 20,000 units pa. Phoenix Spree trades on a 1.3% premium to our estimate of the June 2017 NAV and we regard it as attractive given the favourable fundamentals and prospect of long-term NAV growth.

[cerrito] 19/7/2017 11:37

Continued thanks davebowler for sharing this and I am glad I have resisted the temptation to sell during the last few weeks

[davebowler] 19/7/2017 09:25

Liberum;
Phoenix Spree's portfolio valuation rose by 15.6% in H1 2017 with the Berlin assets experiencing an 18.2% uplift for the period. We calculate a like-for-like revaluation gain of 14.8% for the portfolio after adjusting for capex. We estimate a c.20% NAV total return in H1 2017 which is materially ahead of our prior forecasts for FY2017. We believe yield compression contributed two-thirds of the valuation growth in the period. The outlook for rental growth remains robust with favourable long-term market dynamics in addition to near-term support from the recent publication of Berlin's Mietspiegel (rent reference index) which was higher than anticipated at 9.6%.

15.6% revaluation gain

Phoenix Spree Deutschland's portfolio valuation at 30 June 2017 was €519.7m which reflects an increase of 22.6% over the half year. After adjusting for acquisitions and disposals, the increase was 15.6% (H1 2016: 9.8%; FY2016: 19.4%) with the Berlin assets rising 18.2%. We estimate a like-for-like revaluation gain of 14.8% for the half year after making further adjustments for capex.

The revaluation increase is slightly ahead of the 14.1% rise reported by peer Taliesin Property Fund over the same period. However, we estimate the average value per sqm of Phoenix Spree's Berlin assets is still c.11% below Taliesin's valuation.

Material outperformance in H1

We estimate a portfolio revaluation surplus of c.€63m in H1 2017 and an EPRA NAV of €3.23 per share (286p based on current FX rate) at 30 June 2017. This equates to a NAV total return of 19.6% for H1 2017 (H1 2016: 7.8% FY2016: 22.3%) which is comfortably ahead of our 11.5% forecast for the full year.

Estimated H1 NAV return


€m
Shares
Per share
EPRA NAV at 31 December 2016
253.0
92.5
2.73




H1 2017 Adjustments



Revaluation uplift
62.8


Recurring PBT
1.3


Dividends paid
-4.0


Other
-14.5


Total adjustments
45.6






H1 2017 NAV estimate
298.6
92.5
3.23




Dividends paid


0.043




H1 2017 NAV TR


19.6%


Source: Liberum estimates

Structural drivers remain in place

Phoenix Spree is currently trading on a 1.4% premium to our pro-forma June 2017 EPRA NAV estimate. The outlook for sustainable double-digit NAV returns remains robust with high occupational demand and a strong investment market.

We believe the Berlin residential market offers one of the most compelling long-term investment propositions in combination with downside protection provided by current values (versus replacement cost). We maintain our BUY rating and we are placing our 275p TP under review (until the publication of the upcoming interim results) following the significant level of outperformance in H1 2017 versus our forecasts and recent Euro strength.

[jonwig] 19/7/2017 06:41

Portfolio revaluation:



Like-for-like increase in values of 15.6%.

[riverman77] 14/7/2017 07:47

Thanks Jonwig. If I read that correctly, their argument seems to hinge on the fact that psdl grew by 49% last year and maintaining that rapid growth. However, like for like growth was only 19%, surely the relevant measure? I still think psdl could be better value but not sure I agree with their reasoning.

[jonwig] 14/7/2017 06:03

It's based on premium to last stated NAV. The relevant passage:

The share price today of 290p translates into €3.27, suggesting shares are trading at a premium to net asset value of around 18pc. That sounds very far from bargain territory.

However, the underlying value of Phoenix Spree's portfolio is growing staggeringly fast: it registered growth of 49.5pc during 2016, its first full year listed on the main London market.

Previous years' growth were 16pc (2015) and 5pc (2014). If growth in 2017 has continued at its breakneck 2016 rate, today's share price - which looks rich on the €2.73 valuation - would in fact represent a discount.

There is another, better-known, London-listed company investing in German residential property: the £187m Taliesin Property Fund. This gives us some benchmark of value.

Its latest NAV figure - again from the end of December 2016 - is some 10pc below the estimated NAV, according to data provided by broker Hargreaves Lansdown.

On the latest estimated NAV, Taliesin currently trades at a pc premium. On its December 2016 NAV, Taliesin is on a premium of 20pc.

This comparison suggests Phoenix is cheaper - irrespective of any growth since the latest official valuation.

[riverman77] 13/7/2017 09:28

Tipped by today's questor column in the Telegraph. By their measure they think psdl is now cheaper than tpf, they might be right although I didn't quite understand their logic for that assessment

[tigerbright] 04/7/2017 11:19

Yet strangely enough, the share price for TPF and PSDL seem subdued today. Buy the rumour, sell the fact? I'll be buying more soon. News bullitins here in Germany say the economy is going from strength to strength and a real baby boom as well. I don't think the market is going down anytime soon.

[davebowler] 04/7/2017 09:27

Liberum;
Event
Taliesin Property Fund has reported a 14.1% increase in its portfolio value for the 6 months ended 30 June 2017 after adjusting for sales . The portfolio value at the end of December was €359.7m (December: €318m) with an average value per square metre of €3,070 (June 2016: €2,700).

Liberum view
The 14% portfolio revaluation follows a 16.6% like-for-like uplift in FY 2016 and we calculate the NAV uplift in H1 will be c.19% after adjusting for the performance fee accrual. We believe the latest portfolio valuation reflects an increased share of the privatisation potential of the portfolio and ongoing yield compression.

The outlook for long-term rental growth in the Berlin residential market is underpinned by market dynamics with demand well ahead of supply.In the short-term, rental growth has also been supported by the announcement of Berlin's Mietspiegel (rent reference index) in May which was higher than anticipated at 9.4% versus the 5-6% that was widely expected in the market.

Taliesin's latest portfolio valuation per square metre of €3,070 is 32% higher than Phoenix Spree Deutschland's Berlin portfolio value at 31 December 2016. Our forecasts for Phoenix Spree imply a revaluation gain of 6% for FY 2017 and there is potential for a valuation uplift ahead of our numbers. Additionally, Phoenix Spree has a more shareholder-friendly fee structure with an 8% performance fee hurdle, compared to a hurdle of Euribor plus 1% for Taliesin. The attractiveness of the sector is reflected in the shares' premium rating, with Phoenix Spree currently trading on a 20.8% premium to its December 2016 NAV following its inclusion in the EPRA Index. Taliesin currently trades on a 3.9% discount to our pro-forma estimate of the June 2017 NAV.

Direct Lending

[cerrito] 04/7/2017 06:15

I see that TPF have announced a 14pc increase in Property valuation on H1 adjusted for sales

[yieldsearch] 15/6/2017 22:17

yes indeed interesting and much appreciated, tks

[cerrito] 15/6/2017 16:55

Thanks davebowler for that v interesting find
It could explain the recent share price increase-especially this pm- as may be the fact that the Euro is at 0.87£

[davebowler] 13/6/2017 13:59

Extract from British Empire Securities -BTEM's monthly commentary;




Adler Real Estate, the owner of 50,000 German residential units, was one of
our largest contributors. The discount narrowed to 12%, still wider than its
peers, as the German real estate sector rose on the back of potential
changes in stamp duty transfer taxes. At present, stamp duty is only
payable in Germany when an acquirer buys more than 95% of a company’s
shares, but it has been proposed that this be reduced to 75%. This brings
forward the prospect of further M&A transactions in the German residential
space, as potential acquirers may look to do deals ahead of this proposed
change (the timing of which is uncertain at this stage).
At the beginning of the month, an all-share takeover bid for WCM
Beteiligungs was lodged by TLG Immobilien. Our position in DIC Asset, a
German commercial real estate company, benefitted as DIC accepted the
bid for its 26% stake in WCM. Coming at an 18% premium to its EPRA
NAV, the bid for WCM was a good outcome for DIC Asset particularly given
that a property deal between the two had hit an impasse and there was
uncertainty as to how DIC would extricate itself from the stake. DIC’s share
price rose 6% in May, and we realised part of our holding at elevated levels.