Forget the headline figures for Phoenix Spree Deutschland (PSDL), which include a property valuation gain of €21.7m (£19.4m) compared with a gain of €70.1m a year earlier. More important is the 11.4 per cent rise in like-for-like rental income in the six months to June.
Specialising in German residential real estate, Phoenix saw like-for-like rental growth of 9.9 per cent per square metre, as Berlin continues to suffer from a chronic imbalance between supply and demand for apartments. As well as collecting rent, Phoenix also made sales of €5.7m at €4,477 per sq metre; that’s a 34.9 per cent premium to the Berlin average. Around €3.4m was spent on renovations and modernisation, and there is still significant embedded value contained within the portfolio, with new leases signed at an average 40.6 per cent premium to passing rents.
The portfolio is now fully focused on Berlin following the disposal of assets in central and northern Germany, which raised €73m, a 26 per cent premium to the June 2017 valuation. Following several years of asset price inflation, yield compression is expected to moderate, although rental growth is likely to continue, not least because acquisition prices remain below the cost of construction. A total of eight buildings valued at €27.6m have been identified as acquisition targets, and offer considerable scope for improvement.
| PHOENIX SPREE DEUTSCHLAND (PSDL) | ||||
| ORD PRICE: | 362p | MARKET VALUE: | £365m | |
| TOUCH: | 362-369p | 12-MONTH HIGH: | 399p | LOW: 316p |
| DIVIDEND YIELD: | 1.8% | TRADING PROPERTIES: | €25.7m | |
| DISCOUNT TO NAV: | 3% | NET DEBT: | 40% | |
| INVESTMENT PROPERTIES: | €558m | |||
| Half-year to 30 Jun | Net asset value (¢) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
| 2017 | 316 | 63.1 | 55.0 | 2.3 |
| 2018 | 374 | 19.4 | 16.0 | 2.35 |
| % change | +18 | -69 | -71 | +3 |
| Ex-div: | 4 Oct | |||
| Payment: | 19 Oct | |||
| £1=€1.12 | ||||
