Phoenix Spree Deutschland (PSDL) has been around for eight years, but floated on London's main market in June this year. The business model is simple: create a portfolio of residential assets in Germany, mostly in vibrant and fast expanding Berlin, and watch values grow as demand continues to outstrip supply by a significant margin.
- Strong demand for rental property in Berlin
- Solid balance sheet
- Significant reversionary value
- Shares trade at a discount to forecast NAV
- Rental increases limited by regulation
- Exposure to euro weakness
The key value metric lies in Phoenix Spree's portfolio's "reversionary" potential. In other words, rents charged on the portfolio of rented assets are far below the market rate. This is because rents are strictly regulated in Germany, and cannot be increased to reflect the growing imbalance between supply and demand. Between 3,000 and 5,000 apartments become available in Berlin each year, but the population inflow is currently running at nearer 40,000.