7 February 2025
Phoenix Spree Deutschland
Limited
(the "Company", the "Group" or "PSD")
Portfolio
Valuation and Business Update
Phoenix Spree Deutschland (LSE:
PSDL.LN), the UK listed investment company specialising in Berlin
residential real estate, announces an update on its condominium
sales strategy since the financial year end and the valuation of
the portfolio of investment properties held by the Company and its
subsidiaries (the "Portfolio") as at 31 December 2024.
Highlights
|
Portfolio valuation
|
First increase since H1 2022, rising
by 3.2% in H2 2024, on a like-for-like basis.
|
|
Condominium sales
|
Year-on-year increase of 31% in
notarisations to €9.4 million, with vacant units achieving a 41%
premium to December 2023 carrying value and an 87% premium to the
Portfolio value implied by the current share price.
|
|
Accelerated condominium sales
strategy
|
Targeting annualised condominium
sales of €50 million by end 2025, a five-fold increase from
2024.
|
|
Balance sheet
|
Following €76 million portfolio
disposal in December 2024, pro forma Net LTV fell from 46.4% (30
June 2024) to 40.0% at year-end, with further reductions expected
in 2025 and beyond.
|
|
Debt refinancing
|
Current debt facilities expected to
be refinanced well ahead of maturity.
|
|
Continuation Vote
|
Brought forward, documents expected
to be posted no later than 17 February
2025.
|
Portfolio overview as of 31 December 2024
Condominium values remained
resilient during the financial year and, for the first time since
the real estate decline began in 2022, PRS valuations have begun to
stabilise, albeit at lower levels than the peak.
Table: JLL Valuation
summary
|
Strategy
|
JLL Dec 24
(€m)
|
JLL June 24
(LFL, €m)
|
JLL Dec 23
(LFL, €m)
|
JLL Dec 24
per sqm (€)
|
Dec 24 Multiple
(x)
|
LFL Change vs FY 23
(%)
|
LFL Change vs
H1 2024 (%)
|
|
Condominium sales pool
|
278.0
|
253.1
|
255.1
|
3,641
|
34.1
|
9.0%
|
9.8%
|
|
PRS
|
274.8
|
282.7
|
293.2
|
3,277
|
28.1
|
-6.3%
|
-2.8%
|
|
Total
|
552.8
|
535.9
|
548.3
|
3,633
|
30.8
|
0.8%
|
3.2%
|
As at 31 December 2024, the total
Portfolio value was €552.8 million, with an average value of €3,633
per sqm and a gross fully occupied yield of 3.3%. On a
like-for-like basis (adjusted for disposals), the Portfolio value
increased by 0.8% during the year to 31 December 2024 and 3.2% in
H2 2024, marking the first like-for-like valuation increase since
the German residential market downturn began in 2022. The valuation
for 2024 is after the disposal of a portfolio of 16 properties
which completed in late December 2024.
Reflecting the change in the
Company's strategy, additional disclosure is provided to reflect
the constituent parts (PRS and Condominiums sales pool) of the
Portfolio.
Condominium sales portfolio value increase of 9.0
percent
As of 31 December 2024, the
condominium sales pool (40 properties, 942 units) was valued at
€278.0 million (€3,641 per sqm). The value of these properties
increased by 9.0% during the year, driven by the transfer of PRS
buildings into the pool under the accelerated sales strategy, with
the valuation shifting from PRS rental to condominium value. In H2
2024, these properties saw an average uplift of 11.9%.
PRS
portfolio value stabilising
As at 31 December 2024, the PRS
portfolio (34 properties, 1,219 units) was valued at €274.8
million, with an average value of €3,277 per sqm. On a
like-for-like basis, its value declined by 6.3% over the year.
However, the 2.8% decline in the second half was the smallest
recorded since the market downturn began in 2022, and we expect
stable values for PRS properties in 2025.
2024 Condominium sales increase by 31%
Condominium sales accelerated in
2024, with 26 units notarised for a combined value of €9.4 million,
a 31% increase versus 2023 (€7.2 million). Of these, 13 were vacant
and 13 were occupied.
The average notarised price was
€4,295 per sqm, a 21% premium to December 2023 carrying value.
Vacant units sold for €5,027 per sqm (41% premium), while occupied
units sold for €3,430 per sqm (3% discount). These sales accounted
for 28% of the stock of condominiums available for sale at the
start of the year.
Since the financial year-end, 3
units with a combined sales value of €625,000 have been notarised
and the Company has outstanding reservations for a further 5 units
for an aggregate price of €1.2 million.
These sales do not include any
benefit from the 10 additional properties placed on the market at
the end of 2024 and we therefore anticipate a significant
acceleration in reservations during 2025, reflecting the increase
in the supply of units available for sale.
Annualised condominium sales expected to accelerate
significantly in 2025
Following the amendment of the
Company's debt facility in December 2024, the maximum number of
buildings allowed in the condominium sales pool increased from 6 to
40. Preparation for the first 10 buildings, comprising 258 units,
began in late 2024. These buildings were prioritised due to minimal
capital expenditure requirements and are now being actively
marketed by Engel & Völkers and Lübke Kelber. Tenants are
initially offered the option to purchase their units before wider
sales begin. Interest from tenants has been higher than expected
and we expect to agree a number of sales during the first half of
the financial year.
Preparatory work on the next 20
buildings is underway. Capital expenditure projects for 10 of these
buildings (282 units) are expected to conclude by the end of the
first half of the financial year, enabling their marketing to
begin. The final 10 buildings (294 units), requiring more
preparation, are expected to be market-ready by Q3 2025.
By 2025 year-end, the total number
of units available for sale is projected to grow from 108 (prior to
the addition of the first tranche of 10 buildings in Q4 2024) to
942, with an annualised condominium sales rate exceeding €50
million.
Outlook
The market correction of the past
two years seems to be ending. PRS building prices are stabilising,
and transaction volumes began recovering in late 2024, albeit from
low levels. However, any recovery will likely be
gradual.
A clear divergence has emerged
between demand and pricing trends for single-unit condominiums and
PRS properties. Condominium prices and transaction volumes have
remained resilient since the onset of the real estate market
decline, unlike PRS properties, which have seen steep declines in
both investor interest and valuations since the 2022 market peak.
This bifurcated market dynamic is expected to continue as investors
in PRS continue to adjust to the new market reality. This has
shaped the Company's strategy, which now prioritises single unit
condominium sales.
Recent amendments to the Company's
primary debt facility have paved the way for a significant
acceleration in condominium sales, with a target to increase
annualised sales five-fold by the end of 2025. Selling condominiums
is expected to generate considerably higher valuations compared to
the alternative of whole building disposals. This was evident in
2024, where the per sqm value of condominiums sold by the Company
was 68% higher than the per sqm value of its PRS sales.
The portfolio disposal announced in
December 2024 has already reduced leverage, with further reductions
expected from future condominium sales. Work to refinance both of
the Company's lending facilities is underway which, when completed,
should expedite distributions to shareholders.
Continuation Vote
The Company is required to propose a
Continuation Vote by June 2025, as per its Articles. However,
following the strategic shift marked by the accelerated condominium
sales programme, and after consulting major shareholders with
combined holdings in excess of 50 percent of the ordinary share
capital of the Company, proposals to bring forward the Continuation
Vote and amend the Investment Objective and Policy were announced
on 17 December 2024.
A circular with further details will
be sent to shareholders no later than 17 February 2025.
Annual results
The Company intends to publish its
full-year results for the twelve months to 31 December 2024 on 29
April 2025.
For Further Information, Please
Contact:
Phoenix Spree Deutschland Limited
+44 (0) 20 3937 8760
Stuart Young
Deutsche Numis (Corporate Broker)
+44 (0) 20 7260 1000
David Benda
Teneo (Financial PR)
+44 (0) 20
7353 4200
Elizabeth Snow
Annushka Shivnani
