Phoenix Spree works to mitigate rent law

That’s the shareholder worry, particularly as the city’s senate presses ahead with the so-called Mietendeckel draft plans that would prevent residential rents being set at free market levels. Phoenix Spree, whose half-year profits were hit by movements in interest rate hedges in the period, used its results to rail against the changes, which it thinks will exacerbate a lack of housing supply. As if shareholders need reminding, the changes will also hit net asset value uplifts and yield compression.

At the same time, mitigation efforts are under way. Of the group’s 97 assets, 55 are now legally registered as condominiums, and another 29 are in the planning stage for conversion, meaning sales could soon accelerate once management gets more clarity on the rent law proposals.

Following these results, Germany-listed peer ADO Properties sold a portfolio of 5,800 residential units in west and north of Berlin at an implied price of €920m. Analysts at Liberum reckon the deal – struck at a 10 per cent premium to ADO's carrying value for the assets – shows demand is ripe despite the rent law proposals.