Edison Investment Research - Phoenix Spree Deutschland Fund (PSDL) Phoenix Spree Deutschland - Stress-testing the challenges

Report

Edison Investment Research

Martyn King

Phoenix Spree Deutschland - Stress-testing the challenges

Phoenix Spree Deutschland’s (PSD’s) core rental business continues to perform well as the demand-supply balance for Berlin rented residential accommodation remains tight. However, the challenging economic backdrop has negatively affected property values, NAV and condominium sales. While DPS has been paused to maintain cash flow for value-creating portfolio investment, PSD remains conservatively financed, with 83% of debt costs fixed/hedged and no debt maturities until 2026.

31/05/2023 1 EN

Underlying

Phoenix Spree Deutschland Fund

Phoenix Spree Deutschland is an investment company engaged in acquiring and managing residential property, as well as commercial property in Berlin and other German secondary cities. The majority of commercial property within the portfolio is located within residential and mixed-use properties. Co.'s portfolio mainly consists of classic ‘alt-bau' properties which are buildings built before 1914.

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JE00B248KJ21 London Stock Exchange Jersey

Provider

Edison Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.

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Analysts

Martyn King

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Phoenix Spree Deutschland - Accelerating the unlocking of value

While the Berlin private rental market continues to be strong, Phoenix Spree Deutschland (PSD) has adapted its historical rent reversion strategy to the changes in market conditions. It plans a material increase in condominium sales, intended to accelerate the unlocking of value embedded in the portfolio, reduce borrowings and better position the company for refinancing in 2026. In this report we analyse in detail the potential impacts of this strategy on earnings, NAV and gearing, but, given the variables involved, refrain from forecasting the outcomes precisely.

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Phoenix Spree Deutschland - One city but two tales

Phoenix Spree Deutschland’s (PSD’s) trading update contrasts the strength of the Berlin private rental sector, reflected in PSD’s increased rents and low vacancy, with the subdued investment market, which continues to weigh on property valuations. Positively, sales of individual condominiums picked up in H223, underlining the strong premium to rental values. Full year results, to 31 December 2023, are due in late April.

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Phoenix Spree Deutschland - Stress-testing the challenges

Phoenix Spree Deutschland - Accelerating the unlocking of value

Phoenix Spree Deutschland - One city but two tales

Phoenix Spree Deutschland - To buy or to rent?

Pan African Resources - Analysing H224 and looking forward to FY25

Greencoat Renewables - Efficient capital allocation and increasing demand

Henderson International Income Trust - Buying into the rapid spread of technology

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