5 Questions for Christian Daumann, CEO of QSix
QSix has recently launched a large-scale sell-off programme. What is the strategy behind it?
Christian Daumann: We are pursuing a clear plan with our programme: we are selling divided apartments individually instead of selling complete apartment buildings in one go. The reason for this is that the market for apartment buildings has deteriorated significantlyn since the broader German residential market downturn began in 2022. In the current market the sale of an entire property can generate as little as 2,500 euros per square metre, whereas we realise an average of 4,200 euros by selling the individual units. This is a decisive advantage for our investors and in particular for our main customer, Phoenix Spree Deutschland..
How large is the portfolio that you are currently selling off?
Daumann: Phoenix Spree Germany owns around 2,100 apartments in 75 apartment buildings in and around Berlin. As part of our sell-off programme, we are increasing the number of properties from six to 40, spread over three tranches. In total, over940 apartments will be offered on the market by the end of the current year.
Who are the typical buyers of these apartments?
Daumann: Interestingly, we are currently seeing an increasing willingness to buy among tenants. Many are taking the opportunity to hedge against uncertainties in the rental market and purchase property. In addition, there is increased demand from commercial tenants who are buying their business premises instead of continuing to pay rent. This is an interesting development that shows that the market environment is changing.
What role does the strategic change of Phoenix Spree Germany play in this sell-off?
Daumann: Phoenix Spree’s leverage is already lower than most of its listed peers. However, against a backdrop of heightened the economic and geopolitical uncertainty, the Company plans to reduce debt further. For many German residential operators, the classic sale of apartment buildings has the potential to generate book losses, as in certain instances they can be valued higher than they can currently be sold for on the market. Our individual sales approach enables us to achieve higher prices and thus reduce debt more rapidly without realising book losses.
Is this strategy limited to Berlin or do you see potential for other markets?
Daumann: Our primary focus is currently on Berlin, where we possess extensive experience and established frameworks. However, this model is adaptable and can be implemented in other major cities within Germany. Historically, our portfolio has included a diverse range of properties across various urban locations throughout the country.
We see considerable potential for additional investors to capitalise on the condominium arbitrage strategy we are actively employing for our clients. This strategy involves acquiring apartment buildings at advantageous prices and maximizing sales proceeds through strategic partitioning. This approach is not new to us; cumulatively we have been involved in transactions representing almost 5,000 units across Germany, the majority of which have received condominium approval.
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