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29 April 19

Phoenix Spree Deutschland: Annual results for the year ended 31 December 2018

Phoenix Spree Deutschland (LSE: PSDL.LN), the UK listed real estate company specialising in Berlin residential property, today announces its full year results for the year ended 31 December 2018.

Financial highlights: increases in rental growth, property values and EPRA NAV

  • IFRS NAV per share up 2.3% to €4.05 (£3.64) (31 December 2017: €3.96 (£3.52).
  • EPRA NAV per share up 11.4% to €4.58 (£4.11) (31 December 2017: €4.11 (£3.65).
  • Strong like-for-like rental income growth per sqm of 9.0% during the year.
    • Contracted net rental income of €17.5 million, (31 December 2017 €18.1 million), reflecting the sale of the Northern German portfolio in April 2018.
    • Gross rental income including service charges of €22.7 million (€23.7 million in 2017).
  • EPRA total return per share of 13.2% (year to 31 December 2017: 53.0%).
  • Profit before tax €56.4 million (year to 31 December 2017: €138.5 million); year-on-year change reflects lower revaluation increase in 2018 after exceptionally strong gains in 2017.
  • Earnings per share €0.46 (31 December 2017: €1.21).
  • Net loan to value of 26.1% as at 31 December 2018 (31 December 2017: 32.0%).
  • New debt of €28.8 million signed during 2018. Average debt maturity of 7.7 years, average interest rate reduced to 2.0%.
  • Final dividend per share of €5.15 cents (GBP:4.62p), giving a total dividend per share of €7.50 cents (GBP:6.73p) for year to 31 December 2018 (2017: €7.3 cents (GBP: 6.4p)).

Operational highlights: Strong portfolio performance

  • Like-for-like Portfolio valuation increase of 14.0% in year to 31 December 2018.
    • Total Portfolio valued at €645.7 million, an increase of 6.0% in absolute terms over the twelve-month period (31 December 2017: €609.3 million), reflecting the impact of non-Berlin disposals during year.
    • Berlin portfolio valued at €641.8 million, an increase of 21.4% year-on-year (31 December 2017: €528.5 million).
    • Portfolio valuation represents an average value per square metre of €3,527 (31 December 2017: €2,853).
  • EPRA Vacancy remains low at 2.8% (31 December 2017 2.9%).
  • Condominium sale completion proceeds up 4.4%, to €9.9 million, achieving an average value per sqm of €4,566.
  • Continued active management of the Berlin portfolio with record investment of €7.9 million in renovations and modernisations during 2018.
  • New leases on average signed at a 39.7% premium to passing rents and condominium sales completed at a 27.8% premium to the average valuation of Berlin rental properties as at 31 December 2018.

Berlin transition complete: further progress on Berlin acquisitions

  • Contracts to acquire 222 units notarised during 2018, representing an aggregate purchase price of €36.3 million and an average value per sqm of €2,390.
  • As at 23 April 2019, contracts to acquire a further 14 units in Berlin have been notarised since the December 2018 year end for a purchase price of €2.4 million, representing a price per sqm of €2,956.
  • Disposal of Central and Northern Germany portfolio completed in April 2018 for €73.0 million, a 26% premium to the Jones Lang LaSalle valuation pre-notarisation.
  • Since 31 December 2018, all residual non-Berlin assets have been sold, creating a fully-focussed Berlin fund with potential for greater economies of scale.

Positive outlook: Significant embedded value remains within rental Portfolio

  • Berlin residential property prices continue to benefit from lack of supply and favourable demographics, driven by strong job creation and population growth.
  • Significant reversionary potential underpins future rental growth.
  • Potential for further valuation creation through condominium projects and sales.
  • Further Berlin acquisitions expected in current financial year. Acquisition prices remain below construction values.
  • Substantive review of financing structure in progress. Expected to create further capacity for Portfolio development.
  • Active consideration of densification projects, including attic conversions and new building construction on land surrounding buildings already owned by the Company.

I am delighted to report that, following an exceptionally strong year in 2017, we have continued this momentum, delivering further increases in rental growth and portfolio value. This performance reflects the active management of our portfolio as well as the continued positive dynamics that characterise the Berlin residential market, where we are now fully focused following the disposal of our Northern German portfolio. Although Berlin residential yield compression has moderated, following a long period of declining property yields, we see significant opportunity to grow the portfolio value through a combination of investment into our existing properties and the acquisition of assets that meet our strict acquisition criteria. We are confident that we will continue to deliver value to shareholders through further rental growth, condominium sales and densification within the existing portfolio.

Robert Hingley
CHAIRMAN OF PHOENIX SPREE