18 December 2019
Phoenix Spree Deutschland Limited
Acquisition of Brandenburg Apartment Complex.
Phoenix Spree Deutschland Limited (LSE: PSDL.LN), the UK listed investment company specialising in German residential real estate, is pleased to announce that it has notarised on an apartment complex in Brandenburg (the "Property" or "Acquisition").
The Property is a former barracks, comprising 259 residential units, one commercial unit and 210 parking spaces. It was redeveloped in 2018/2019 and benefits from efficient floor plans and new build technical standards.
Highlights:
· Property located in the Greater Berlin region, 30 minutes from the centre of Berlin in an area unaffected by the proposed Mietendeckel rent controls;
· Share deal with total asset value of €43.5 million (£36.3 million) and net consideration of €24.2 million (£20.2 million) excluding acquisition costs;
· Transaction intended to be refinanced during 2020, using existing acquisition facility;
· Refurbishment programme underway, 154 units (60%) completed in 2018/19 with 40 units planned for completion in Q1/2020 and 65 units in Q4/2021;
· Additional new build potential of a further 60 units;
· Price per square metre of €2,674 which represents an estimated prospective gross yield of 4.1%;
· Average residential rent per sqm is €9.02; new lettings in 2019 (22 new leases) of up to €14.01 per sqm;
· Acquisition expected to complete in December 2019.
Attractive location with favourable demographics
The Property is attractively located in Blankenfelde‐Mahlow, a municipality 7 km south of Berlin. It is not located in a conservation zone, is unlisted and unaffected by the proposed Mietendeckel provisions. There are excellent transport connections to central Berlin and the new Berlin Brandenburg Airport is located 10 km northeast. The micro-location is largely characterised by residential buildings with good infrastructure, including retail shopping, supermarkets, banks, kindergarten and schools.
The population in Blankenfelde has increased by 32% within the last 10 years and it is anticipated this will increase further as the deficit of housing supply in central Berlin will lead to a higher demand in the surrounding metropolitan area. The stock of above standard rental housing has lagged demand and asking rents in the surrounding area are estimated to have increased by 13% within the last 12 months.
Significant asset management potential
The Property has benefitted from its redevelopment in 2018/19 and a refurbishment programme which has seen 155 units receive new facades and insulation, new windows, balconies, electricity, pipes and outside facilities. A further refurbishment of 40 units is ongoing and expected to be completed to the same standard by the end of Q1/2020. The last part of the housing complex will be vacated before the end of 2020, after which the redevelopment of another 65 units is expected to be completed within a twelve-month period. The entire complex is heated by a thermal power station.
Further new build and densification potential
In January 2021 a further commercial unit will become vacant with outline planning permission for a new three-storey building with approximately 15 units. Outline planning permission has been sought for the construction of a further residential building and the complex offers further densification potential. In total, the whole complex offers new build potential for approximately 60 additional units which is not reflected in the current underlying IRR targets.
The Acquisition will initially be financed by existing cash resources and assumes outstanding bank debt of €16.4 million. It is intended that this will be refinanced in the new year.
Robert Hingley, Chairman of Phoenix Spree Deutschland Limited, commented:
"We are delighted to announce this acquisition which demonstrates continued opportunity, despite the uncertain current regulatory environment. The property meets our strict investment criteria, is well-located with strong population and demographics, and there is significant potential to add value through our active asset management strategies.
"In addition to enabling us to take advantage of acquisition opportunities, our recent refinancing has also enabled us to deliver further value to shareholders through share buy-backs at a significant discount to EPRA NAV. Our condominium strategy also continues to progress well."
The Company expects to announce the year-end 2019 valuation for its Portfolio of investment properties in late January 2020.
This announcement contains inside information.
For further information, please contact:
Phoenix Spree Deutschland Limited Stuart Young |
+44 (0)20 3937 8760 |
Numis Securities Limited (Corporate Broker) David Benda Tulchan Communications (Financial PR) Elizabeth Snow |
+44 (0)20 3100 2222 +44 (0)20 7353 4200 |
