Phoenix Spree Deutschland Share Discussion Threads

[davebowler] 20/12/2017 10:18

Liberum;
Event

The Blackstone Group LP, through various newly formed affiliates, intends to acquire Taliesin Property Fund for €51 per share in cash, which equates to a value of €260m for all of the company's share capital. The price represents a 10% premium to yesterday's closing price and a 16% premium to the company's adjusted June NAV of €44.14. Taliesin's Board of Directors has agreed to this bid, and recommends that shareholders vote in favour of it; it is expected that the acquisition will complete in Q1 2018.

Liberum view

The premium paid for Taliesin reflects the attractiveness of its Berlin property portfolio with continuing privatisation potential and ongoing yield compression. This takeover follows an active period of M&A activity and consolidation within the German property sector, most recently the intended takeover of BUWOG by Vonovia. Investment demand for German residential portfolios remains high, particularly for high-growth cities and the outlook for long-term rental growth in the Berlin residential market is underpinned by market dynamics with demand well ahead of supply.

The Taliesin shares currently trade at a 4.2% premium to NAV. Phoenix Spree Deutschland trades on a 14.4% premium to the June 2017 NAV and we expect strong performance in H2 2017 due to the strength of investment demand and rental growth following the Mietspiegel announcement in May 2017.

[cerrito] 20/12/2017 09:01

Good question, Grabster
Rise this morning no surprise as I think PSDL will be the only London listed Berlin property play.
I see only two significant shareholders- Woodford with 21% and Bracebridge(not sure who they are) with 6.5%....so much will depend on Woodford.
I have enough for now.

[grabster] 20/12/2017 08:39

Now Taliesin Property Fund (TPF) which has been a constant part of my portfolio has been snapped up - far FAR too cheaply imo. Is Phoenix Spree next target?

[davebowler] 19/12/2017 09:27

Liberum;
M&A activity highlights continued demand for German residential assets

Event

Vonovia has announced a cash offer for BUWOG at a price of €29.05 per share (24% premium to last reported EPRA NAV). The deal has been supported by the Board of BUWOG. BUWOG has a €3.9bn investment portfolio of which 51% is in Germany and 49% is in Austria. The deal will enable Vonovia to enhance scale in Austria and some of its overlapping regions in Germany. The largest city exposure in the enlarged portfolio will be Berlin (14% of portfolio).

Liberum view

The proposed transaction is the latest in a line of takeovers in the German listed market in recent years. Vonovia has completed five corporate acquisitions since February 2014. Investment demand for German residential portfolios remains high, particularly for high-growth cities. Phoenix Spree Deutschland trades on a c.14% premium to the June 2017 NAV and we expect strong performance in H2 2017 due to the strength of investment demand and rental growth following the Mietspiegel announcement in May 2017.

[yieldsearch] 18/12/2017 11:03

Germany’s Vonovia to buy BUWOG for €5.2bn

10% of the portfolio in Berlin

[jonwig] 25/11/2017 07:27

The property market in Berlin is booming and offers great value to businesses. It is one of Europe’s most dynamic destinations for tech companies. The city is also benefiting from growth in tourism and the continuing transfer of government ministries from other parts of Germany. Residential prices have been rising but remain good value compared to other major capitals such as London and Paris where prices per square metre are five or more times higher. It remains a high-growth, supply-constrained city. The economic fundamentals are strong with one of the highest GDPs per inhabitant (Eurostat, 2016) in the country, low unemployment and healthy wage growth.

More:

[jeff h] 17/11/2017 10:04

Thanks dave!

[davebowler] 17/11/2017 09:28

Liberum;
Event
Q3 updates from two of the larger Berlin-focused property companies have highlighted a number of positive portfolio trends and a strong long-term market outlook.

Deutsche Wohnen has a €16bn portfolio of which 77% is in Berlin (114,000 units) and ADO Properties has a €2.8bn portfolio located entirely in Berlin. Takeaways from the respective results included:

Rising rental growth - Deutsche Wohnen reported rental growth of 5.0% in Berlin for the 12 months to September 2017 (3.6% at June 2017) as the impact of the the most recent Mietspiegel (rent reference index) starts to come through. The Berlin Mietspiegel delivered its highest increase since inception in the most recent publication in May with an uplift of 9.4%. ADO Properties expects like-for-like rental growth of at least 5% p.a. going forward.
Reversionary potential - Despite strong rental growth, reversionary potential remains high for both companies with markets rents still 30% and 43% above in-place rents for Deutsche Wohnen and ADO Properties respectively.
Population growth - Berlin’s population rose by 60,000 in 2016 which was the highest annual growth since reunification. Berlin has the highest population growth forecast of the German federal states over the period to 2035 with an expected increase of 14.5% (500k residents) over that period.
Affordability - Rents remain significantly lower than the level of other large German cities.
Liberum view
We expect Phoenix Spree will deliver increased rental growth in the second half of the year following the Mietspiegel publication. Over the longer term, favourable demographic trends point to robust rental growth as evidenced by ADO's guidance of at least 5% p.a. going forward. Phoenix Spree's rental growth has typically outperformed the peer group due to the company's intense asset management approach.

Phoenix Spree currently trades on a 9.5% premium to the June NAV compared to a 13% average premium for the peer group. We continue to regard it as highly attractive given the prospect of material long-term NAV growth.

[davebowler] 10/11/2017 14:53

Relevant commentary , but on Taliesin-

[davebowler] 04/10/2017 09:56

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 09:49

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 09:40

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 06:57

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 23:24

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 07:33

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 10:32

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 08:14

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

[pdriccio] 11/8/2017 20:41

Thanks for the update Dave.

[davebowler] 11/8/2017 10:14

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 12:37

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 10:25

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 07:41

Portfolio revaluation:



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

[riverman77] 14/7/2017 08:47

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 07:03

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 10:28

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