REG - Phoenix SpreeDeutsch - 2023 full-year results and condominium strategy
30/04/2024 07:00
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RNS Number : 4754M Phoenix Spree Deutschland Limited 30 April 2024
Phoenix Spree Deutschland Limited
(the "Company", the "Group" or "PSD")
Financial results for the year ended 31 December 2023
STRATEGY TO ACCELERATE CONDOMINIUM SALES
Phoenix Spree Deutschland Limited (LSE: PSDL.LN), the UK listed investment
company specialising in Berlin residential real estate, announces its full
year audited results for the financial year ended 31 December 2023. The Board
also announces its strategy to significantly accelerate condominium sales and
reduce debt.
Financial Highlights
Year to 31 December 2023 Year to 31 December 2022 2023 v 2022
% change
Income Statement
Gross rental income (€m) 27.5 25.9 5.9
Loss before tax (€m) (111.8) (17.5) 537.1
Dividend per share in respect of the period 0.00 (0.00) 2.35 (2.09)
(€ cents (£ pence))
Balance Sheet
Portfolio valuation (€m) (1) 675.6 775.9 (12.9)
Like-for-like valuation decrease (%)(4) (11.9) (3.1) 283.9
IFRS NAV per share (€) 3.43 4.50 (23.8)
IFRS NAV per share (£)(2) 2.97 3.99 (25.6)
EPRA NTA per share (€)(5) 3.96 5.10 (22.4)
EPRA NTA per share (£)(2,5) 3.43 4.52 (24.0)
EPRA NTA per share total return (€%) (22.4) (8.4) 166.7
Net LTV(3) (%) 46.3 39.1 18.4
Operational Statistics
Portfolio valuation per sqm (€) 3,598 4,082 (11.9)
Annual like-for-like rent growth (%)(4) 5.6 6.1 (8.2)
Annual like-for-like rent per sqm growth (%)(4) 4.1 3.9 5.1
EPRA vacancy (%) 2.0 2.4 (16.7)
Condominium sales notarised (€m) 7.2 4.7 53.2
(1 - 2022 Portfolio valuation includes investment properties under
construction)(.)
(2 - Calculated at FX rate GBP/EUR 1:1.153 as at 31 December 2023 (2022:
GBP/EUR 1:1.128))
(3 - Net LTV uses nominal loan balances (note 22) rather than the loan
balances on the Consolidated Statement of Financial Position which include
Capitalised Finance Arrangement Fees.)
(4 - Like-for-like excludes the impact of acquisitions and disposals in the
period.)
(5 - EPRA metrics defined and calculated in note 29)
( )
( )
FINANCIAL AND OPERATIONAL SUMMARY:
( )
Portfolio valuation reflects a challenging macroeconomic backdrop
· As reported in the recent Portfolio update published in February,
buyer sentiment and transaction volumes remain fragile; like-for-like
Portfolio value decreased by 5.3 per cent during H2 2023 (11.9 per cent versus
Dec 2022), reflecting an increase in market yields, partially offset by rental
growth.
Increasing shortage of Berlin rental supply continues to drive strong rental
growth
· 255 new leases were signed during the year at an average premium of
31 per cent to passing rents, or €13.7 per sqm, a new record high, and a 5.9
per cent increase versus 2022.
· EPRA vacancy of 2.0 per cent (2022: 2.4 per cent) at a record low.
· New rent table (Mietspiegel), expected to be released in May 2024 and
to support in-place rent growth.
Condominium sales momentum and further disposals
· Condominiums notarised for sale during H2 2023 of €5.2 million, a
203 per cent increase versus H2 2022, resulting in total condominium sales of
€7.2m for 2023.
· Since the financial year-end, the Company has notarised a further 9
condominiums, with an aggregate value of €3.4 million.
· Reservations for a further 5 units, with a combined value of €1.7
million, have recently been received and are pending notarisation.
· Two rental properties sold for €7.3 million during 2023. Two
further buildings have been notarised for sale since year end, with a value of
€7.4 million.
· Termination of forward funding commitment to the Erkner development,
removing the requirement to invest €13m and with €1.2m real estate
transfer tax reclaimed.
UPDATED CONDOMINIUM STRATEGY
Context
· Although only 6 per cent of the Company's Portfolio is currently
being marketed for sale as condominiums, PSD is unusual among its listed peers
in that 78 per cent of its Portfolio is already legally split into
condominiums.
· Conditions in the German real estate investment market have been
challenging and are expected to remain so in the near term. This contrasts
with the condominium market where, despite some reductions, sales prices and
market volumes, particularly for vacant units, remain robust.
· In the current Berlin market, there is now a significant valuation
gap between the average per sqm value of an apartment block and the resale
value of an individual apartment as a condominium.
· During 2023, the average sales value of a vacant condominium unit was
€5,345 per sqm, compared to a Portfolio average valuation of €3,587 per
sqm for rental units and €2,600 per sqm for the whole Portfolio implied by
the current PSD share price.
Considering these factors, the Company intends to pivot its business model
further from the Private Rented Sector (PRS) to condominium sales.
Updated Strategy
· The Company plans to materially increase condominium sales and unlock
the inherent value within its Portfolio. Initially, the proceeds will be used
to reduce debt, creating a platform to refinance the current debt facility on
more beneficial terms ahead of maturity in September 2026. Once this has been
achieved, the Company plans to return excess capital to shareholders.
· To facilitate this, the Company plans to modify its financing
arrangements, which currently limit the number of units that can be offered to
the market to around 6 per cent of the Portfolio. The Company is in advanced
discussions with its principal lender, Natixis, and aims to conclude these
discussions within the next few months.
· If the proposed amendment to its financing arrangements can be
concluded, around half the split Portfolio is expected to be made available
for sale as condominiums, increasing the number of buildings that could be
sold as condominiums by over 500 per cent. Units will be sold as they become
vacant, and occupied units will be offered for sale to both tenants and
investors. The Company aims to achieve annualised condominium sales in excess
of €50m by 2025.
· Properties not part of the condominium pool will continue to operate
on a PRS model, receiving targeted investment to improve their energy
efficiency and raise EPC ratings to a minimum of C in the medium term. This
investment is expected to enhance property values, lower running costs and
facilitate more favourable longer-term financing. By improving energy
performance of these buildings, the pool of potential buyers, such as pension
funds and insurance companies, will expand when market conditions improve.
· The Company will continue to review the possible sale of rental
properties and portfolios at discounts to carrying value, where the board
believes it is in shareholders' interest to do so, particularly with the aims
of i) facilitating the modification of the Company's current financing
arrangements so as to increase the number of units which can be offered for
sale as condominiums; ii) reducing overall debt levels and enhancing the
Company's ability to obtain new longer-term financing on acceptable terms; and
iii) providing sufficient capital for targeted investments in existing
condominium properties to optimise their values.
Outlook
· The Company's rental business is expected to continue to perform
well, driven by structural imbalances that support strong and accelerating
rental growth.
· The tight rental market has caused market churn rates to decline and,
consequently, the number of new lettings in 2024 is expected again to decline,
with a greater proportion of growth expected to be achieved through in-place
rental growth.
· Rental growth is expected to be supplemented by further rent
increases for qualifying tenants in the second half of 2024, following the
introduction of the new Mietspiegel.
· Subject to the successful conclusion of revised financing
arrangements, the Company plans a significant uplift in condominium sales.
· Vacant condominium sales values are expected to be at a significant
premium to the average per sqm valuation across the Portfolio, and an even
larger premium to values implied by the current share price.
· Although conditions in the investment market are expected to remain
challenging for the remainder of 2024, the Company will continue to actively
market single blocks of apartments and portfolios of buildings.
· The Company plans to use cash generated from future asset sales
principally to pay down debt and to provide capital for targeted investment in
existing condominium properties.
Robert Hingley, Chairman of Phoenix Spree Deutschland, commented:
"Our core rental business has remained resilient, despite the ongoing
challenges posed by economic and geopolitical uncertainty. The supply-demand
imbalances in the Berlin rental market are currently at their widest in recent
memory, leading to record market rents.
Our strategy of increasing asset sales, reducing debt and, ultimately,
returning excess capital to investors from disposals remains the Company's
priority. There now exists a significant gap in in the Berlin residential
market between the average per square metre value of an apartment as a rental
unit and the resale value per square metre of an apartment to a private buyer
as a condominium. Reflecting this, the Company now intends to place a
greater emphasis on condominium sales."
Annual Report and Accounts
The full Annual Report and Accounts will shortly be available to download from
the Company's webpage: www.phoenixspree.com (http://www.phoenixspree.com) .
All page references in this announcement refer to page numbers in the Annual
Report and Accounts. The Company will submit its Annual Report and Accounts to
the National Storage Mechanism in the required format in due course, and it
will be available for inspection
at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
For further information, please
contact:
Phoenix Spree Deutschland Limited +44 (0)20 3937 8760
Stuart
Young
Numis Securities Limited (Corporate Broker) +44 (0)20 3100 2222
David Benda
Teneo (Financial PR) +44 (0)20 7353 4200
Lizzie Snow / Annushka Shivnani
CHAIRMAN'S STATEMENT
Our core rental business has remained resilient, despite the ongoing
challenges posed by economic and geopolitical uncertainty. The supply-demand
imbalances in the Berlin rental market are currently at their widest in recent
memory, leading to record market rents. New lettings across PSD's Portfolio
have been signed at an average premium of 31 per cent to passing rents and
vacancy levels are at an all-time low.
While our core rental business continues to thrive, historically high interest
rates and a weakening German economy have continued to impact buyer sentiment
and investment transaction volumes. Rental yields have increased further
during the financial year and the Company has reported a decline in the
valuation of its properties. As at 31 December 2023, the Portfolio was valued
at €675.6 million, representing a like-for-like decline of 11.9 per cent
versus the prior year. Reflecting this decline, the Euro EPRA NTA total return
per share for the financial year was negative 22.4 per cent, and the Sterling
return was negative 24.0 per cent.
Although buyer sentiment in the investment market for single buildings and
portfolios of buildings remains fragile, I am pleased to report that our
condominium sales activity has shown a marked pick-up, both in the second half
of the financial year and during the first four months of 2024.
Adapting our strategy
Our strategy of increasing asset sales (both as individual condominiums and
multi-unit assets), reducing debt and, ultimately, returning excess capital to
investors from disposals remains the Company's priority. During 2023, the
Company marketed a significant proportion of its Portfolio as single-building
sales. However, market conditions were not conducive to achieving sales at
prices which the Board believes represent fair value for assets.
Reflecting the current weakness in the transaction market, the Company now
intends to place a greater emphasis on condominium sales. Our Property Advisor
is in discussions with the Company's primary debt provider which, on
conclusion, are intended to significantly increase the number of buildings
that can be brought to market for sale as condominiums.
Further details can be found in the Report of the Property Advisor.
Our tenants
In the past financial year, the Company has reinvested over 34 per cent of its
gross revenues into making improvements to our buildings, ensuring
high-quality living spaces for tenants. The results of our latest tenant
satisfaction survey in the first half of 2023 continue to indicate high levels
of satisfaction with both the quality of apartments and the rental process. We
understand the challenges posed by the current cost of living crisis and
always prioritise the health and wellbeing of our tenants. We aim to provide
our tenants with a reliable and friendly rental service and remain dedicated
to working constructively with those in greatest need.
Environmental Stewardship
We recognise the impact that our business has on the natural environment and
local communities. As a member of the European Public Real Estate Association
(EPRA), we are committed to transparency in sustainability reporting. We have
implemented EPRA's Best Practice Recommendations to carefully measure and
minimise our environmental footprint and social impacts. I am pleased to
announce that our efforts in this area were recognised for the second
consecutive year with a Gold award at the 2023 EPRA Sustainability Awards.
This underscores our commitment to industry-leading reporting standards and to
balancing business performance with responsible stewardship of natural
resources and support for the communities in which we operate.
Charitable Initiatives
The Company and its Property Advisor have made a significant impact through
financial support initiatives for our charity partners. In Berlin, PSD's
support for The Intercultural Initiative and Laughing Hearts helps provide
crucial assistance to women, children, and those in social care. In London,
our Property Advisor's support for homeless charities SPEAR and SHP is
addressing the needs of homeless individuals through accommodation, health
support, and employability programmes. Additionally, our Property Advisor's
support for Home-Start is contributing to the well-being of families with
young children in the UK.
Responsible Business
The Board is committed to upholding ethical and transparent practices in all
its operations, recognising the significance of accountability to all
stakeholders. Our Corporate Responsibility Plan, "Better Futures", serves as a
guiding framework, encompassing five key pillars that are integral to our
business practices.
Environmental Stewardship is a top priority, as we strive to minimise our
impact on the environment. Social Responsibility underscores our commitment to
respecting all individuals affected by our operations. Tenant Satisfaction
remains a focal point, as we endeavor to provide exceptional services and
spaces. Community Investment drives our efforts to contribute to local
communities, while Robust Governance ensures diligent oversight and
accountability.
Board
The Board recognises the importance of a strong corporate governance culture
and follows the principles of good corporate governance as set out in the
Association of Investment Companies Code of Corporate Governance ("AIC Code").
Further details on how the Company has put into practice the provisions of,
and complied with, the AIC Code can be found in the Directors' Report.
Property Advisor
Last year, the Board and the Property Advisor, with shareholders' approval,
agreed to change the fees payable to the Property Advisor to align their
incentives with the Company's short-term strategic priorities. The key element
of the new agreement was to further incentivise the Property Advisor to
evaluate and implement a variety of disposal strategies, including condominium
sales, while reducing the level of annual management fees paid.
The Board is in the process of concluding its discussions with the Property
Advisor with regard to the arrangements post July 2024 and it is expected that
new arrangements will reduce the cap on fees paid for management, capital
expenditure monitoring and investor relations to €4.3 million. This
represents a 14 per cent year-on-year reduction and a 40 per cent reduction
compared to the end-2022 run rate. Additionally, QSix has informed the Company
that it will use the post-tax proceeds of any future disposal fee received
from the Company to buy shares in PSD. The Board believes these new proposed
arrangements further align the interests of the Property Advisor and the
Company. The Board intends to consult its shareholders and formalise the
arrangements before the expiration of the current agreement at the end of June
2024.
In February 2024, our Property Advisor announced the appointment of Christian
Daumann as Chief Executive Officer of its German operations. Christian
succeeds Jörg Schwagenscheidt, who has been CEO of QSix Germany since 2015.
Jörg will remain a partner of QSix Group, focusing on steering QSix Germany's
strategic initiatives and leveraging his extensive experience, industry
contacts and political relationships. Christian brings with him over 25 years
of experience in the real estate and asset management sector and has built a
formidable global network. He joins QSix from Ivanhoé Cambridge, where he
spent the previous four years as Head of Investments, Germany. His appointment
reflects QSix's commitment to maintaining a strong leadership team and
furthering the Company's strategic objectives in the German market.
Outlook
The outlook for our rental business remains positive, driven by structural
imbalances that continue to grow. Moreover, following the introduction of the
new Mietspiegel, expected to be published in May 2024, we expect further rent
increases for qualifying tenants to be permissible, supporting strong and
accelerating rental growth.
While we will continue to actively market single blocks of apartments and
portfolios of buildings, we expect conditions in the investment market to
remain challenging for the remainder of the year.
There are signs that buyer sentiment in the condominium market has already
improved, as evidenced by the acceleration in PSD's condominium sales since
the first half of 2023, and we plan a further significant uplift in
condominium sales if revised financing arrangements can be successfully
concluded.
REPORT OF THE PROPERTY ADVISOR: STRATEGY
Background
Although the Company's PRS business continues to perform strongly, with
rental values and growth well supported by the positive trends that continue
to exist within the Berlin residential property market, it remains too early
to predict when the real estate valuation cycle will reach its inflexion
point. Since the beginning of the current downturn in real estate values, the
Company's primary focus has been optimising asset sales and debt reduction.
However, conditions across the German real estate market for whole building
and portfolio sales have been challenging and are expected to remain so in the
near term. This contrasts with the condominium market, where liquidity
remains, particularly for vacant units. Given this, the Company now believes
that the best way to maximise shareholder returns in the medium term is to
focus on exploiting the significant arbitrage that currently exists in the
Berlin residential market between the average per square metre value of an
apartment as a rental unit and the resale value per square metre of an
apartment to a private buyer as a condominium.
German Federal Government legislation enacted in 2022 has placed significant
restrictions on the ability of landlords to split their properties into
condominiums. This legislation is, however, not retrospective and does not
impact assets that have already been split into condominiums. These measures
will inevitably increase the scarcity of condominiums available for sale in
the future, further exacerbating the supply-demand imbalance which currently
exists. With over 1,900 units, representing 78 per cent of its Portfolio,
already legally split in the land registry, the Company is well placed to
benefit from this trend over the longer term.
Proposed condominium sales expansion
Contingent upon the finalisation of revised financing arrangements, the
Company plans to pursue a significant expansion of condominium sales. Although
the Company has no debt maturing until September 2026, the current terms of
its financing arrangements allow only a relatively small number of buildings
from the Portfolio to be marketed as condominiums at any given time. At
present, whilst over 78 per cent of the portfolio is legally split into
condominiums, only 6 per cent is being marketed for sale. However, it is hoped
that a successful conclusion to the Company's revised financing arrangements
will permit a significant increase in the number of condominium units that can
potentially be made available for sale.
Vacant condominiums, which command a significant premium compared to occupied condominiums and rental units, will be made available for sale through a process of natural churn. Realised sales prices for vacant condominiums in 2023 were €5,345 per square metre, a 48.6 per cent premium to the 2023 average per sqm valuation of the Portfolio as a whole and a 106 per cent premium to the valuation of the Portfolio implied by the current share price. These sales will be supplemented with sales of occupied units to tenants and investors. When the condominium strategy is fully implemented, the Company aims to achieve an annualised sales rate in excess of €50 million.
The Company will continue to review the possible sale of rental properties
and portfolios at discounts to carrying value, where the Board believes it is
in shareholders' interests to do so, particularly with the aims of i)
facilitating the modification of the Company's current financing arrangements
so as to increase the number of units which can be offered for sale as
condominiums; ii) reducing overall debt levels and enhancing the Company's
ability to obtain new longer-term financing on acceptable terms; and iii)
providing sufficient capital for targeted investments in existing condominium
properties to optimise their values.
Energy-focused capital expenditure to improve values of PRS properties
Investors in residential real estate are increasingly placing a premium on
sustainable practices, not only for environmental benefits but also for their
potential to generate more stable returns and mitigate future regulatory
risks. Reflecting this, PSD is increasingly integrating energy efficiency
criteria into its capital expenditure decisions.
PSD's housing stock is primarily comprised of Altbau buildings, notable for
their pre-World War II origins, distinctive architectural features, and
historical importance. These buildings are typically centrally located and
carry a valuation premium compared to more generic "out of town" housing
schemes constructed in the latter half of the 20th century. However, older
construction methods used for Altbau buildings typically result in higher
energy usage and carbon output when compared to new-build properties designed
with modern construction techniques and materials. To mitigate the
environmental impact of these historic structures and optimise the value of
PRS units within its Portfolio, the Company plans to strategically invest in
capital improvements aimed at reducing emissions, enhancing energy efficiency
and improving buildings and their surroundings. Environmental capital
expenditure is focused, with consideration given to apartment accessibility,
potential future regulatory requirements, state support initiatives and
potential future returns. Enhancements include:
· Smart controls and thermostats: Implementing advanced controls to
allow residents to manage heating more effectively, thereby reducing
unnecessary energy consumption and emissions.
· LED lighting: Switching to LED lighting, which uses less energy than
traditional bulbs and lasts longer, lowering both emissions and ongoing
maintenance costs.
· Procurement: Using products and materials that have a low
environmental impact, so long as their technical performance meets the
required standards.
· Insulation upgrades: Enhancing insulation in walls and floors to
improve energy retention.
· Window replacement: Installing modern, energy-efficient windows with
double or triple glazing to minimize heat loss.
· Heating system upgrades: Transitioning to more efficient heating
solutions, including boilers, access to renewable energy district heating,
plumbing upgrades and more efficient radiators.
REPORT OF THE PROPERTY ADVISOR: FINANCIAL AND OPERATIONAL HIGHLIGHTS
Financial highlights for the twelve months to 31 December 2023
€ million (unless otherwise stated) Year to Year to
31-Dec-23 31-Dec-22
Gross rental income 27.5 25.9
Investment property fair value loss (97.3) (42.2)
Loss before tax (111.8) (17.5)
Reported EPS (€) (1.07) (0.17)
Investment property value 675.6 775.9
Net debt (Nominal balances)(1) 313.0 303.3
Net LTV (%) 46.3 39.1
IFRS NAV per share (€) 3.43 4.50
IFRS NAV per share (£)(2) 2.97 3.99
EPRA NTA per share (€)(3) 3.96 5.10
EPRA NTA per share (£)(2) 3.43 4.52
Dividend per share in respect of the period (€ cents) - 2.35
Dividend per share in respect of the period (£ pence) - 2.09
€ EPRA NTA per share total return for the period (%) (22.4) (8.4)
£ EPRA NTA per share total return for the period (%)(2) (24.0) (3.2)
(1 - Nominal loan balances as per note 22 rather than the loan balances on the
Consolidated Statement of Financial Position which consider Capitalised
Finance Arrangement Fees in the balance as per IAS 23.)
(2 - Calculated at FX rate GBP/EUR 1.153 (2022: GBP/EUR 1:1.128))
(3 - Further EPRA Net Asset Measures can be found in note 28 & 29)
( )
Financial results
Revenue for the financial year to 31 December 2023 was €27.5 million (2022:
€25.9 million). The Company recorded a loss before tax of €111.8 million
(2022: loss before tax €17.5 million), reflecting the non-cash impact of a
revaluation loss of €97.3 million (2022: revaluation loss of
€42.2 million).
Property expenses were marginally up by 1.1 per cent over the year, due
primarily to service charge increases and related energy/utility price
movements. Administration costs and legal and professional fees increased by
15.4% over the year, with higher legal costs from transactional activity.
Reported loss per share for the period was (€ 1.07) (2022: (€ 0.17)).
Reported EPRA NTA per share declined by 22.4 per cent in the period to
€3.96 (£3.43) (2022: €5.10 (£4.52)). The Euro EPRA NTA total return
for the period was (22.4) per cent (2022: (8.4) per cent). The sterling EPRA
NTA per share total return was (24.0) per cent (2022: (3.2) per cent),
reflecting a strengthening of the £ against the € during the financial
year.
Table: Portfolio valuation and breakdown
31 December 2023 31 December 2022
Total sqm ('000) 187.8 188.8
Valuation (€m) 675.6 775.9
Like-for-like valuation (decline) (%) (11.9) (3.1)
Value per sqm (€)(1) 3,598 4,082
Fully occupied gross yield (%) 3.3 3.0
Number of buildings 95 96
Residential units 2,489 2,553
Commercial units 140 135
Total units 2,629 2,688
1 - Value per sqm provided by JLL based on portfolio valuation excluding
assets under construction of €5.3 million in 2022.
Berlin market: transaction volumes and valuations
2023 was characterised by historically high interest rates and a weakening
German economy. Buyer sentiment and investment transaction volumes, which have
declined by over 70 per cent from their 2021 peak, have remained fragile, and
values have fallen as rental yields rise. Against this backdrop, the Company
has reported a decline in the valuation of its properties during the financial
year.
Like-for-like decline in Portfolio valuation of 11.9 per cent
As at 31 December 2023, the Portfolio was valued at €675.6 million (2022:
€775.9 million). This valuation represents an average value per square metre
of €3,598 (2022: €4,082) and a gross fully occupied yield of 3.3 per cent
(2022: 3.0 per cent). Included within the Portfolio are seven multi-family
properties valued as condominiums, with an aggregate value of €35.1 million
(2022: six properties; €30.1 million).
On a like-for-like basis, after adjusting for the impact of disposals, the
Portfolio valuation declined by 11.9 per cent during the year to 31 December
2023 and by 5.3 per cent during the second half of the financial year.
Cumulatively, the like-for-like decline in the valuation of the Portfolio
since peak prices in June 2022 has totalled 18 per cent.
With the exception of Donaustrasse, which was sold after the reporting period,
all rental assets within the Portfolio experienced valuation declines driven
by yield expansion, partially offset by rental growth.
Table: Rental income and vacancy rate
31 Dec 2023 31 Dec 2022
( )
Total sqm ('000) 187.8 188.8
Annualised Net Rental Income (€m) 22.3 21.4
Net Cold Rent per sqm (€) 10.4 10.0
Like-for-like rent per sqm growth (%) 4.1 3.9
Vacancy % 5.0 6.2
EPRA Vacancy % 2.0 2.4
Like-for-like rental income per square metre growth of 4.1 per cent
After considering the impact of acquisitions and disposals, like-for-like
rental income per square metre grew 4.1 per cent compared with 2022.
Like-for-like total rental income grew 5.6 per cent over the same period,
driven by vacancy reduction and the leasing of 39 new rental units which were
brought to market for the first time. Net cold rent was €10.4 per sqm as at
31 December 2023, an increase from €10.0 per sqm as at 31 December 2022.
The Company welcomed the release by The Senate Department for Urban
Development, Building and Housing of a new transitional Berlin Mietspiegel
(rent index) announced on 15 June 2023. This replaces the previous rent index
of 2021 and all rents for all qualifying tenants have been adjusted to reflect
permissible increases. A new Mietspiegel is scheduled to be released in May
2024 and it is expected that this will provide scope for further permissible
rent increases to qualifying tenants, supporting rental growth from the third
quarter of 2024 onwards.
The Company has always managed rent-to-income multiples for new tenants
conservatively and, notwithstanding current cost of living pressures, rent
collection levels have remained stable.
EPRA vacancy remains low
Reported vacancy as at 31 December 2023 was 5.0 per cent (2022: 6.2 per cent).
On an EPRA basis, which adjusts for units undergoing development and
refurbishment, the vacancy rate was 2.0 per cent (2022: 2.4 per cent). In
Berlin, which excludes Brandenburg properties, EPRA vacancy of 1.6 per cent
(2022: 2.4 per cent) was at a record low.
Reversionary re-letting premium steady at 31 per cent
Market rents are at record levels, with new lettings across the Portfolio
signed at an average premium of 31.3 per cent to passing rents (2022: 31.8 per
cent) or €13.7 per sqm (2022: €13.0 per sqm).
The continuing shortage of apartments becoming available for reletting is
expected to result in fewer new lettings in 2024. Therefore, it is expected
that in-place rent increases will be a more important driver of overall rental
growth going forward.
During the year to 31 December 2023, 255 new leases were signed (2022: 319 new
leases), representing a letting rate of approximately 10.1 per cent of
occupied units. (2022: 12.9 per cent). The year-on-year decline reflects the
shortage of available rental property that currently exists in the Berlin
rental market, with tenants therefore more reluctant to relocate within the
city.
Historically, the reversionary rental premium for the Portfolio overall has
been dampened by the inclusion of lettings from the acquisition in Brandenburg
in 2020, where rents were lower than those achieved in central Berlin.
However, in 2023, both rental values and the reversionary premium in
Brandenburg matched those recorded in central Berlin.
Table: EPRA Net Initial Yield (NIY)
( )
All figures in € million unless otherwise stated 31 Dec 2023 31 Dec 2022
Investment property 675.6 775.9
Reduction for NCI share and property under development (5.5) (12.3)
Completed property portfolio 670.1 763.6
Estimated purchasers' costs 55.0 63.2
Grossed up completed property portfolio valuation 725.1 826.8
Annualised cash passing collected rental income 22.3 21.4
Property outgoings (3.8) (3.6)
Annualised collected net rents 18.6 17.8
EPRA NIY (%) 2.6 2.1
Portfolio investment
Excluding acquisitions, in the year ended 31 December 2023, a total of €9.4
million was invested in the Portfolio (2022: €16.4 million). This investment
is recorded as capital expenditure in the financial statements. Additionally,
there was a further €1.8 million (2022: €1.5 million) spent on maintaining
the assets, which is expensed through the Profit and Loss account. The
decrease in capital expenditure from the previous year is attributed to a
decline in renovation and modernisation activity for vacant apartment
improvements, reflecting a decline in unit churn, as well as a lower level of
renovation expenditure on the assets in Brandenburg.
The Company will continue to carefully consider all elements of discretionary
capital expenditure, in line with the Company's strategy to balance investment
against the intention to reduce debt levels.
Table: EPRA Capital Expenditure (€m)
31 Dec 2023 31 Dec 2022
Acquisitions 5.6 11.6
Like-for-like portfolio 5.9 7.4
Development 3.0 8.5
Other 0.5 0.5
Total Capital Expenditure 15.0 28.0
Disposals of rental properties
During the financial year, the Company completed the sale of two properties
for €7.3 million. These buildings were acquired in 2008 for €2.3 million
and, prior to notarisation, had a carrying value of €7.9 million.
The Company marketed a significant proportion of its Portfolio as
single-building sales and portfolios of apartment blocks. However, market
conditions were not conducive to achieving sales at prices which the Board
believed represented fair value for the assets, with the few transactions that
were agreed generally failing to proceed to sales. The beginning of 2024 has
shown some signs of buyer sentiment improving, with offers notarised on two
buildings with a combined value of €7.4 million.
In December 2023, the Company terminated its forward funding commitment to the
Erkner development, a portfolio of development properties in Brandenburg. The
Company elected not to continue with the project given the decline in property
values that has been observed across Berlin during the past 18 months and more
expensive financing conditions.
The Company had made an initial payment of €5.5 million after notarisation
in March 2022. The termination of the agreement resulted in a loss on disposal
of €4.1 million net of real estate transfer tax and removed the requirement
to fund a further €13 million of development payments in 2024. No penalty
payments were attached to the cancellation of the project and no further
payments will be made by the Company. The negative impact on EPRA NTA
resulting from the termination of the Erkner project was 1.1 per cent.
The Company will not seek to undertake further acquisitions and the Portfolio
remains under continuous review for potential disposals.
Condominium sales
The second half of 2023 saw a material upturn in condominium sales. This was
driven by tentative signs of an improvement in buyer sentiment, an increase in
the number of condominiums made available for sale, targeted price adjustments
and greater visibility in forward bank lending rates for buyers.
During the year to 31 December 2023, 25 condominium units were notarised for
sale for an aggregate value of €7.2 million (2022: € 4.7 million). This
represents a 53 per cent increase versus the prior year, with notarisations in
the second half of the financial year increasing significantly (H1 2023:
€2.0 million). Since the year-end, the Company has notarised a further 9
condominiums, with an aggregate value of €3.4 million.
The average achieved notarised value per sqm for the residential units in 2023
was €3,976, representing a 7.2 per cent premium to their average carrying
value as at 31 December 2022, with vacant units achieving an average sale
value of €5,345 per sqm. This premium is lower than has been achieved
historically, following price reductions in the second half of the financial
year to stimulate demand.
Debt and gearing
The Company has loan facilities with two principal lenders, Natixis
Pfandbriefbank AG and Berliner Sparkasse, with an average remaining duration
of the loan book exceeding 2.8 years and none of the Company's debt reaching
maturity until September 2026. Despite interest rate rises during 2023, the
Company's interest rate hedging policy has largely negated the impact on our
cash borrowing costs.
As at 31 December 2023, PSD had gross borrowings of €324.0 million (2022:
€315.8 million) and cash balances of €11.0million (2022: €12.5 million),
resulting in net debt of €313.0 million (2022: €303.3 million) and a net
loan-to-value ratio on the Portfolio of 46.3 per cent (2022: 39.1 per cent).
The change in gross debt in the period resulted from an additional drawdown
from the Natixis facility, which includes borrowings to fund historical
capital expenditure and the acquisition of Donaustrasse. Partly offsetting
this drawdown were repayments of debt following the sale of properties and
condominiums, alongside amortisation of debt held with Berliner Sparkasse.
The majority of PSD's debt effectively has a fixed interest rate through
hedging. As at 31 December 2023, the blended interest rate of PSD's loan book
was 2.5 per cent (2022: 2.2 per cent). The increase in the blended rate is a
direct result of the movement in 3-month Euribor rates from 1.6 per cent (31
December 2022) to 3.9 per cent applied to the unhedged debt.
OUTLOOK
The long-term outlook for Berlin residential property remains well
underpinned. The current landscape of the residential construction industry
across Germany suggests a significant decrease in new construction activity in
the coming years which will exacerbate the existing market dynamics. Despite
a longstanding shortage of housing, there has been a notable reduction in the
initiation of new residential projects, with many existing projects facing
postponement or cancellation. The ifo Institute estimate the number of
residential construction companies operating in Germany, and building
residential units, experiencing the termination of development projects in
2023 to be the highest since records began in 1991. As a result, the ifo
Institute projects a decrease in apartments completed in Germany to 175,000
per annum by 2025, versus a Federal Government target of 400,000.
The economics of new construction are being challenged, following a 25 per
cent increase in construction costs over the past three years. This contrasts
with sales prices for new-build residential, which have risen by an average of
only 7 per cent over the same period. These dynamics have resulted in a
situation where, in many parts of Germany, tenanted multi-family properties
are trading at values which are up to 40 per cent lower than the cost of new
construction. To the extent that new build is occurring, it is highly
polarised, with a focus on high-end buildings commanding rental values that
are out of reach for most tenants, or on social housing initiatives. The
larger "middle-market" in central Berlin continues to be poorly served by new
construction activity.
Absent a significant shift in German government policy to incentivise new
build for the mid-market PRS sector, the supply-demand imbalance which
currently exists will only grow wider. In a constrained Berlin rental market,
characterised by positive net inward migration and vacancy which is currently
near record lows, investors can be confident of the enduring stability of
their rental income.
By contrast, a combination of "higher-for-longer" interest rates and a
weakening German economy have presented significant headwinds for real estate
values and transaction volumes. The Covid pandemic and the war in Ukraine
heralded the onset of monetary tightening across the globe and prime
residential yields have risen, from a starting point of below 2 per cent in
2021, to 3.7 per cent currently. Rental yields during the era of low
interest rates had fallen to a lower level in Germany than in most European
countries, and the adjustment in pricing as interest rates have risen has
consequently been more pronounced. Notwithstanding the health of the rental
market, growth in rental income has been insufficient to offset a broad-based
decline in asset values.
Whilst consensus expert opinion now predicts that monetary tightening has come
to an end, soon to be replaced by interest rate cuts, current transaction
volumes and observed transaction values across the residential market have yet
to recover. Real estate owners generally remain "net sellers" of assets as
they seek to deleverage following asset value declines and refinance at rates
which are likely to remain at more elevated levels than before the onset of
the current real estate downturn. At the same time, uncertainty about the
extent and duration of the interest rate cycle and associated correction in
property values continues to weigh on capital deployment decisions for most
potential institutional buyers.
The disequilibrium between investor sentiment on the one hand, and the robust
health of the rental market on the other, will inevitably come to an end at
some point. However, whilst declining interest and risk-free rates will be
helpful, the precise timing of this remains difficult to predict.
The Company has not been immune from these trends and it is against this
backdrop that the Company intends to pivot its strategy towards enhanced
condominium sales. Whilst the institutional buyer market for apartment blocks
and portfolios of apartments could remain challenging for the foreseeable
future, there currently exists a liquid market for vacant single apartments
sold to private buyers. Moreover, given that legislation passed in 2021 has
made any future splitting of buildings in Berlin into condominiums extremely
difficult, it is expected that future supply shortages will increase.
With over 78 per cent of its portfolio already split as condominiums the
Company is in a strong position to accelerate condominium sales. In so doing,
it is hoped the value within the Portfolio which the Property Advisor and
Board strongly believe exists can be clearly demonstrated. During 2023, the
average achieved sales value of a vacant condominium was €5,345 per square
metre. At 150 pence per PSD share, equity markets currently value the
Portfolio at €2,600 per square metre. Whilst the number of units that have
historically been made available for sale has been constrained, the Company
is, subject to the successful conclusion of current debt renegotiations,
targeting condominium sales in excess of €50 million per annum in 2025. By
demonstrating the condominium potential within the Portfolio through
accelerating condominium sales, it is hoped that the discount to Net Asset
Value currently ascribed by the equity market can be addressed.
Key Performance Indicators
The Company has chosen Key Performance Indicators (KPIs), which the Board
believes will help investors understand the performance of the Company and the
underlying portfolio:
· The value of the Portfolio declined by 11.9 per cent on a
like-for-like basis during the year to 31 December 2023 (2022: 3.1 per cent
decrease).
· The EPRA vacancy of the Portfolio stood at 2.0 per cent (2022: 2.4
per cent).
· The Group continued with its targeted condominium programme,
notarising sales of €7.2 million in the year to 31 December 2023 (2022:
€4.7 million).
· EPRA NTA per share decreased by 22.4 per cent to €3.96 as at 31
December 2023 (2022: €5.10).
· In line with the Company's strategy of conserving cash, no dividend
was paid in relation to the financial year ended 31 December 2023. (Financial
year 2022: 2.35 € cents per share (2.09 £ pence per share)).
· Like-for-like Portfolio rent per sqm increased by 4.1 per cent as at
31 December 2023 (2022: 3.9 per cent).
Key Performance Indicator 31 December 2023 31 December 2022
Like-for-Like Portfolio valuation decline (per cent) (11.9) (3.1)
EPRA vacancy (per cent) 2.0 2.4
Condominium notarisations (€m) 7.2 4.7
EPTA NTA per share decline (per cent) (22.4) (8.4)
Dividend in relation to the financial year € cents (£ pence) - 2.35 (2.09)
Portfolio rent per sqm € 10.4 10.0
PRINCIPAL RISKS AND UNCERTAINTIES
The Board recognises the importance of effective risk evaluation and
management. The Board acknowledges that the Company currently faces increased
risks, including challenging macroeconomic conditions characterised by high
interest rates, adversely affecting property values and yields and resulting
in weak investor demand for property compared to other types of investment.
In conjunction with the Property Advisor, key risks and risk mitigation
measures are reviewed regularly and discussed formally during Board meetings.
RISK IMPACT MITIGATION MOVEMENT
Economic and geopolitical risk The global economic and political environment remains uncertain. Although the Board and Property Advisor cannot control external macro-economic Increased
risks, economic indicators are constantly monitored by both the Board and
Property Advisor and Company strategy is tailored accordingly.
The German economy remains weak. After contracting in 2023, current forecasts
predict only modest GDP growth for 2024.
The Company monitors costs and cash balances closely at all times and plans
budgets for capital expenditure that take into consideration the potential for
cost inflation. The Company has suspended dividend payments to preserve cash.
Increased tensions in the Middle East have significant implications for
investment risk. Heightened geopolitical instability in the region can lead to
market volatility, increased oil prices, and potential disruptions to global
supply chains. The Board receives regular performance and market trend reports from Property
Advisor.
The ongoing war in Ukraine has negatively impacted gas, energy and raw
material supplies to Germany and the rest of Europe. This could again lead to
a sustained period of cost inflation for the Company and its tenants.
Rising inflation has directly impacted the cost of building materials and the
construction workforce, which could again negatively impact the Company's
renovation and modernisation projects.
Financing and interest rate risk The Company relies on borrowing to finance the portfolio of properties. The Company seeks to manage its loan to value ratio through the property cycle Increased
Changes in interest rates can therefore affect financing costs and to ensure that, in the event of a significant decline in property values, its
profitability. financial position remains robust.
Difficult market conditions, falling property prices and higher interest rates Interest rate risk is managed through the use of derivative instruments with
can reduce the availability of financing, increase financing costs and cause matching maturity or fixed-rate debt. At least 80 per cent of drawn loan
higher than planned leverage. These issues could affect the Company's ability facilities are hedged.
to obtain new/extended financing on acceptable terms when its current loan
facilities mature in September 2026.
The Company continues to model expected revenues, property values and covenant
levels, and these are reported to the Board as part of its annual Viability
Covenant testing on the Company's loan facilities could be negatively impacted Assessment.
if asset valuations decline further. This could potentially trigger
requirements for additional security, repayment of facilities or higher
borrowing costs.
The Company took on new covenants when signing its facility with Natixis in
January 2022: Interest coverage ratio (ICR), debt yield and loan-to-value
covenants. Only the debt yield and ICR covenants are "hard" covenants,
Inadequate management of financing risks could lead to insufficient funds for resulting in an event of default in case of breach. The loan-to-value covenant
sustaining business operations and timely repayment of existing debt is a "cash trap" covenant (the requirement to hold all related rental income
facilities. in Natixis accounts until sufficient debt is repaid to return within the
covenant level), with no event of default. The Company carried out extensive
sensitivity analysis before signing this facility and, even in the most
stressed rent scenarios, no covenants were breached.
Current financing arrangements limit the number of buildings within the
Portfolio that can be designated as condominium sales at any given time.
If rent levels or property values were to fall to a point where the covenants
were in danger of being breached, the Company would use its surplus
cash and seek to make further property sales to pay down debt balances.
The Company is in regular contact with its financing partners and regularly
reviews its financing covenants. They are subject to biennial valuations, the
next of which is due in 2024.
The Company is seeking to renegotiate financing terms with Natixis which would
significantly increase the number of buildings within the Portfolio that can
be designated for condominium sales.
Disposal activity within the Portfolio is closely monitored in the light of
underlying property market conditions to ensure that the Company's
loan-to-value ratio and debt refinancing schedules remain appropriate.
In light of weak current market conditions, the Company has suspended dividend
payments to preserve cash and will prioritise the reduction of debt from the
proceeds of any property disposals, to facilitate renegotiation of its
financing arrangements which mature in September 2026.
Valuation risk Macroeconomic uncertainty and higher interest rates pose a risk to the The Company monitors the macroeconomic environment and market conditions Increased
Company's asset valuations. closely to identify potential risks at an early stage and take mitigating
actions where feasible.
The Company's Portfolio valuation is subject to valuation movements as a
result of changes in yields and market conditions. If property yields increase The Company maintains a diversified portfolio of assets across different
and valuations fall as a result of macroeconomic uncertainty, or rising Berlin locations and tenants to reduce over-reliance on any single part of the
interest rates, this could have a negative impact. Portfolio.
The viability of investment projects can be hampered if capital values and Modernisation and renovation projects for individual units are typically short
achievable sale prices fall. This could lead to delays, budget overruns or in duration, giving good visibility on expected costs, rents and values at
project cancellations. completion. Timeframes are continually assessed to optimise timing.
A material and/or unplanned decline in the value of the Portfolio could impact The Company seeks to maintain appropriate levels of financial flexibility
the Company's ability to refinance on acceptable terms or breach financial through available cash, committed credit facilities and access to debt
covenants (see Financing and interest rate risk). markets.
Inability to sell properties including condominiums During the 2023 financial year, there has been a significant deterioration in The Company continually monitors the Portfolio to ascertain the potential for Increased
investor and consumer confidence in reaction to inflationary pressures and disposals of buildings.
consequential interest rate rises.
The Company regularly reviews whether any current or future changes in the
A higher cost of financing has seen investor appetite for German residential property market outlook present risks which should be reflected in the
assets weaken, particularly for single building and portfolio sales. In execution of its asset management and capital position.
parallel with this, a number of larger market participants are now net sellers
of assets as they seek to reduce leverage. As pricing expectations between
buyers and sellers have differed, transaction volumes have dropped.
The Company is in regular contact with its independent valuers who provide
regular assessments of the property market outlook.
Higher mortgage rates combined with economic and geopolitical uncertainty can
hurt buyer sentiment for condominiums.
The Property Advisor maintains a strong network of Berlin residential
investors and actively monitors valuation and liquidity trends in the Berlin
residential market.
Asset disposals at a discount to book value may undermine confidence in the
published EPRA NTA.
The Company has been actively marketing single buildings, portfolios of
buildings and condominiums across a wide variety of platforms.
The Company can flex asking prices, in order to stimulate demand in instances
when it considers it is in the is in the best interests of shareholders to do
so.
The Company is in discussions with its principal lenders to amend its
financing arrangements to enable it to sell condominiums in a significantly
larger number of buildings than is currently permissible.
Share price discount to NAV In 2023, the Company's share price has traded consistently at a significant The Company receives regular advice from its Property Advisor, corporate Increased
discount to EPRA NAV. broker and financial public relations company, with a view to securing new
investor demand for PSD shares. Additionally, the shareholder register is
regularly reviewed to identify investor underweight holdings and/or sellers of
the shares. The Property Advisor makes every effort to reach out to these
Lack of liquidity or low market capitalisation may make the Company less investors to ensure that they are fully informed when making investment
attractive to institutional investors and cause the shares to be excluded from decisions.
relevant market indices.
The Company has a dedicated Investor Relations resource that is available to
In March 2024, the Company was excluded from the FTSE EPRA index, leading to discuss share price movements, industry developments and the performance of
several investors having to sell shares, with a consequent adverse impact on the Company.
the share price.
The Company has mandated Edison Research to provide additional coverage of the
Company.
Legal and regulatory Risk Changes in legislation or regulation affecting property rights, rental laws, The Company reviews and monitors emerging policy and legislation to ensure Unchanged
zoning, environmental regulations, and taxation can have implications for the that appropriate steps are taken to ensure compliance.
ability of the company to successfully implement its strategy. Regulatory
risks can additionally impact operational costs and the costs of legal
compliance.
The Company engages with external advisors to advise on potential policy and
regulatory implications of political events.
The Federal Government introduced laws which allow States to block the
splitting of apartment blocks into condominiums. The Berlin Government has
adopted these proposals. Blocking the ability of landlords to split assets at the land registry is
likely to be a net positive for the Company since the supply of condominiums
will be materially reduced, increasing the value of the existing stock. With
78 per cent of the Company's Portfolio already split in the land registry as
Further tightening of the Mietpreisbremse laws, which limit the amount that condominiums, the Company is likely to benefit from this.
landlords can increase rent in apartments in certain zoned areas, could
negatively impact the Company's reversionary reletting strategy.
Tenant and tenancy law risk Property laws remain under constant review by both the Federal Government and The Company has historically been able to adapt its business model to Unchanged
the coalition government in Berlin. accommodate new rent regulations.
During the 2023 financial year, there has been increasing use of online The Property Advisor regularly monitors the impact that existing and proposed
platforms by tenants to ascertain if rents prescribed by landlords are laws or regulations could have on future rental values.
compliant with all tenancy laws and regulations. If the Company is shown to be
non-compliant, this could lead to litigation. The Property Advisor maintains regular contact with a broad network of
professional advisors and industry participants to ensure that it is kept up
A significant increase in the cost of living has reduced net disposable income to date on property tenancy laws and regulations, both current and future.
and placed more pressure on vulnerable tenants, which could lead to defaults
on rents. This, in turn, could place financial pressure on the Company. The Property Advisor is in constant dialogue with the Company's property
manager (Core Immobilien) to ensure that tenants are notified on a timely
basis of any changes to tenancy laws and rental levels.
The Company, through its Property Advisor and Property Manager, maintains
close contact with tenants. The creditworthiness of new tenants is closely
monitored and strict income-to-rent criteria for incoming tenants are
maintained.
The Company has in place a Vulnerable Tenant Policy which maintains a
vulnerable tenant list which is reviewed by the Board. In instances of
hardship, the Company seeks to support its tenants, both residential and
commercial.
IT and Cyber Security risk As cybercrime remains prevalent, this is considered a significant risk by the IT systems and infrastructure relied on by the Company are subject to review. Unchanged
Company. A breach could lead to the illegal access of commercially sensitive Service providers are required to report to the Board on request, and at least
information and the potential to impact investor, supplier, and tenant annually, on their IT controls and procedures.
confidentiality and disrupt the business of the Company.
A detailed review has been undertaken of the cyber security of the Company and
The Russian and Chinese states have been linked to cyber-attacks on government its outsourced processes. As part of this review, the Company has required all
and international infrastructure and the risk of an increase in these attacks its key service providers to confirm to the Company their procedures and
is highly likely now that Russia is subject to international sanctions due to protocols around cyber security on an annual basis. Additionally, the Company
its invasion of Ukraine. has requested that all service providers carry out cyber penetration testing
and report back to the Board with any significant observations. No material
concerns have arisen from these reviews.
Service providers are also required to hold detailed risk and control
registers regarding their IT systems. The Property Advisor and the Board
review service organisations' IT reports as part of Board meetings each year.
No material concerns have arisen from these reviews.
The Board believes that, while the risk of cyber-attacks has increased due to
the sanctions imposed on Russia, the risk to its service providers directly
remains relatively low. The secondary risk from cyber-attacks on digital
infrastructure, such as payment systems, remains high and the Board, and the
Property Advisor, will continue to monitor the situation.
Outsourcing risk The Company's future performance depends on the success of its outsourced Since the Company listed on the London Stock Exchange, the Property Advisor Unchanged
third-party suppliers, particularly the Property Advisor, QSix, but also its has expanded headcount through the recruitment of several additional
outsourced property management to Core. IFRS (International Financial experienced London and Berlin-based personnel. Additionally, senior Property
Reporting Standards) and German GAAP accountants and its administrative Advisor personnel and their families retain a significant stake in the
functions. The departure of one or more key third-party providers may harm the Company, aligning their interests with other key stakeholders.
performance of the Company.
The key third parties responsible for property management, accounting and
administration are continually monitored by the Property Advisor and must
respond annually to a Board assessment questionnaire regarding their internal
controls and performance. These questionnaires are reviewed annually by the
Board.
ESG risk A failure to anticipate and respond to energy performance and climate All investment in the modernisation of assets is undertaken with a view to the Unchanged
legislation could damage the Company's reputation and lead to unplanned energy efficiency impact and is performed on an asset-by-asset basis.
capital expenditure.
The Company maintains its own ESG consultant to advise and assist in the
Future investor expectations for ESG compliance could result in diminished implementation of ESG related activity and has mandated an external specialist
asset values and/or illiquidity in the resale market if assets are not deemed to advise on current and future climate and energy performance legislation.
compliant.
The Company seeks to ensure accurate reporting of its ESG related activities
and, in 2023, was awarded a gold medal for its sustainability reporting by the
European Public Real Estate Association (EPRA).
Going concern
The Directors have reviewed projections for the period up to 30 April 2025,
using assumptions which the Directors consider to be appropriate to the
current financial position of the Group with regard to revenues, its cost
base, the Group's investments, borrowing and debt repayment plans. These
projections show that the Group should be able to operate within the level of
its current resources and expects to manage all debt covenants for a period of
at least 12 months from the date of approval of the financial statements. The
Group's business activities together with the factors likely to affect its
future development and the Group's objectives, policies and processes for
managing its capital and its risks are set out in the Strategic Report.
The Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future,
and, therefore, continue to adopt the going concern basis in the preparation
of these financial statements.
Viability Statement
The Directors have assessed the viability of the Group over a three-year
period to 30 April 2027. The Directors have chosen three years because that is
the period that broadly fits within the strategic planning cycle of the
business.
The Viability Statement is based on a robust assessment of those risks that
would threaten the business model, future performance, solvency or liquidity
of the Group, as set out in the assessment of principal risks in this document
on pages 29 to 33.
For the purposes of the Viability Statement, the Directors have considered, in
particular, the impact of the following factors affecting the projections of
cash flows for the three-year period ending 30 April 2027:
a) the potential operating cash flow requirement of the Group;
b) amending the existing debt facilities to allow greater condominium sales
flexibility;
c) seasonal fluctuations in working capital requirements;
d) property vacancy rates during the period;
e) capital and corporate expenditure during the period;
f) condominium, whole asset and SPV sales proceeds;
g) refinancing the existing debt facilities prior to their maturity in
September 2026.
The model assumes stressed scenarios a) through to g) in the above list.
Financial modelling and stress testing was carried out on the Group's
cashflows, taking into account the following assumptions, which the Directors
believe to reflect the conditions present in a reasonable 'low case' scenario
over the forecast period:
· If it proves not possible to amend the existing debt facilities such
that condominium disposals are limited to those
currently permitted; and
· Capex is maintained and self-funded
After applying the assumptions above, there was no scenario by which the
viability of the Company over the next 12 months was brought into doubt from a
cashflow perspective. Under the stresses set out above, cashflow mitigation
would not be required during the three-year period. However, should mitigation
be necessary, it may be obtained in the following ways:
· Increase whole asset disposals at a discount to carrying values; and
· Further reduction in capital expenditure
Under these stressed assumptions, the Group remains able to manage all
existing banking covenant obligations during the period using the available
liquidity to reduce debt levels, as appropriate.
The projection of cash flows includes the impact of already contracted
property acquisitions. On the basis of this assessment, and assuming the
principal risks are managed or mitigated as expected, the Directors have a
reasonable expectation that the Group will be able to continue in operation
and meet its liabilities as they fall due over the three-year period of their
assessment.
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2023
Year ended Year ended
Notes 31 December 2023 31 December 2022
€'000 €'000
Continuing operations
Revenue 6 27,454 25,934
Property expenses 7 (17,315) (17,119)
Gross profit 10,139 8,815
Administrative expenses 8 (3,766) (3,264)
Loss on disposal of investment properties (including investment property held 10 (4,282) (185)
for sale)
Investment property revaluation loss 11 (97,298) (42,241)
Performance fee due to property advisor 25 - 343
Operating loss (95,207) (36,532)
Net finance charge (before (loss) / gain on interest rate swaps) 12 (9,353) (7,937)
(Loss) / gain on interest rate swaps 12 (7,240) 26,920
Loss before taxation (111,800) (17,549)
Income tax credit 13 13,045 1,739
Loss after taxation (98,755) (15,810)
Other comprehensive income - -
Total comprehensive loss for the year (98,755) (15,810)
Total comprehensive income attributable to:
Owners of the parent (98,112) (15,435)
Non-controlling interests (643) (375)
(98,755) (15,810)
Earnings per share attributable to the owners of the parent:
From continuing operations
Basic (€) 28 (1.07) (0.17)
Diluted (€) 28 (1.07) (0.17)
Consolidated Statement of Financial Position
At 31 December 2023
As at As at
Notes 31 December 2023 31 December 2022
€'000 €'000
ASSETS
Non-current assets
Investment properties 16 614,973 761,377
Property, plant and equipment 18 11 12
Other financial assets at amortised cost 19 828 828
Derivative financial instruments 24 8,796 16,036
624,608 778,253
Current assets
Trade and other receivables 20 12,834 10,068
Cash and cash equivalents 21 10,998 12,485
23,832 22,553
Investment properties - held for sale 17 60,594 14,527
Total assets 709,034 815,333
EQUITY AND LIABILITIES
Current liabilities
Borrowings 22 1,432 820
Trade and other payables 23 11,990 15,130
Current tax 13 856 808
14,278 16,758
Non-current liabilities
Borrowings 22 319,811 311,264
Deferred tax liability 13 57,311 70,920
377,122 382,184
Total liabilities 391,400 398,942
Equity
Stated capital 26 196,578 196,578
Treasury shares 26 (37,448) (37,448)
Share based payment reserve 25 - -
Retained earnings 155,937 254,049
Equity attributable to owners of the parent 315,067 413,179
Non-controlling interest 27 2,567 3,212
Total equity 317,634 416,391
Total equity and liabilities 709,034 815,333
Consolidated Statement of Changes in Equity
For the year ended 31 December 2023
Attributable to the owners of the parent
Stated capital Treasury shares Share based payment reserve Retained earnings Total Non-controlling interest Total equity
€'000 €'000 €'000 €'000 €'000 €'000 €'000
Balance at 1 January 2022 196,578 (33,275) 343 276,394 440,040 3,587 443,627
Comprehensive income:
Loss for the year - - - (15,435) (15,435) (375) (15,810)
Other comprehensive income - - - - - - -
Total comprehensive income for the year - - - (15,435) (15,435) (375) (15,810)
Transactions with owners -
recognised directly in equity:
Dividends paid - - - (6,910) (6,910) - (6,910)
Performance fee - - (343) - (343) - (343)
Acquisition of treasury shares - (4,173) - - (4,173) - (4,173)
Balance at 31 December 2022 196,578 (37,448) - 254,049 413,179 3,212 416,391
Comprehensive income:
Loss for the year - - - (98,112) (98,112) (643) (98,755)
Other comprehensive income - - - - - - -
Total comprehensive income for the year - - - (98,112) (98,112) (643) (98,755)
Balance at 31 December 2023 196,578 (37,448) - 155,937 315,067 2,567 317,634
Consolidated Statement of Cash Flows
For the year ended 31 December 2023
Year ended Year ended
31 December 2023 31 December 2022
€'000 €'000
Loss before taxation (111,800) (17,549)
Adjustments for:
Net finance charge (before loss / (gain) on interest rate swaps) 9,353 7,937
Loss / (gain) on interest rate swaps 7,240 (26,920)
Loss on disposal of investment property 4,282 185
Investment property revaluation loss 97,298 42,241
Depreciation 55 8
Performance fee due to property advisor (share based payment) - (343)
Operating cash flows before movements in working capital 6,428 5,559
Decrease / (increase) in receivables 479 (2,882)
Increase / (decrease) in payables 456 (463)
Cash generated from operating activities 7,363 2,214
Income tax paid (516) (521)
Net cash generated from operating activities 6,847 1,693
Cash flow from investing activities
Proceeds on disposal of investment property (net of disposal costs) 6,142 17,310
Proceeds on disposal of investment property received in advance 101 3,700
Interest received 413 474
Capital expenditure on investment property (9,400) (16,437)
Property additions (4,930) (13,229)
Additions to property, plant and equipment (54) -
Net cash used in investing activities (7,728) (8,182)
Cash flow from financing activities
Interest paid on bank loans (8,366) (7,296)
Loan arrangement fees paid - (499)
Repayment of bank loans (5,904) (6,354)
Drawdown on bank loan facilities 13,664 33,765
Dividends paid - (6,910)
Acquisition of treasury shares - (4,173)
Net cash (used in) / generated from financing activities (606) 8,533
Net (decrease) / increase in cash and cash equivalents (1,487) 2,044
Cash and cash equivalents at beginning of year 12,485 10,441
Exchange gains / (losses) on cash and cash equivalents - -
Cash and cash equivalents at end of year 10,998 12,485
Reconciliation of Net Cash Flow to Movement in Debt
For the year ended 31 December 2023
Year ended Year ended
Notes 31 December 2023 31 December 2022
€'000 €'000
Cashflow from increase in debt financing 7,760 27,411
Loan arrangement fees paid - (499)
Non-cash changes from increase in debt financing 1,399 1,017
Change in net debt resulting from cash flows 9,159 27,929
Movement in debt in the year 9,159 27,929
Debt at the start of the year 312,084 284,155
Debt at the end of the year 22 321,243 312,084
Notes to the Financial Statements
For the year ended 31 December 2023
1 - General information
The Group consists of a Parent Company, Phoenix Spree Deutschland Limited
('the Company'), incorporated in Jersey, Channel Islands and all its
subsidiaries ('the Group') which are incorporated and domiciled in and operate
out of Jersey and Germany. Phoenix Spree Deutschland Limited is listed on the
premium segment of the Main Market of the London Stock Exchange.
The Group invests in residential and commercial property in Berlin, Germany.
The registered office is at IFC 5, St Helier, Jersey, JE1 1ST, Channel
Islands.
2 - Summary of material accounting policies
The principal accounting policies adopted are set out below.
2.1 Basis of preparation
The consolidated financial statements have been prepared under UK
International Accounting Standards and in accordance with International
Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board (IASB) and applicable law.
The consolidated financial statements are presented to the nearest €1,000.
In accordance with Section 105 of the Companies (Jersey) Law 1991, the Group
confirms that the financial information for the year ended 31 December 2023 is
derived from the Group's audited financial statements and that these are not
statutory accounts and, as such do not contain all information required to be
disclosed in the financial statements prepared in accordance with
International Financial Reporting Standards ("IFRS").
The statutory accounts for the year ended 31 December 2023 have been audited
but have not yet been filed.
The Group's audited financial statements for the period ended 31 December 2023
received an unqualified audit opinion and the auditor's report contained no
statement under Section 113B (3) and (6) of The Companies (Jersey) Law 1991.
The financial information contained within this preliminary statement was
approved and authorised for issue by the Board on 29 April 2024.
2.2 Going concern
The Directors have prepared projections for three years from the signing of
this report. These projections have been prepared using assumptions which the
Directors consider to be appropriate to the current financial position of the
Group as regards to current expected revenues and its cost base and the
Group's investments, borrowing and debt repayment plans and show that the
Group should be able to operate within the level of its current resources and
expects to comply with all covenants for the foreseeable future. The Group's
business activities together with the factors likely to affect its future
development and the Group's objectives, policies and processes for managing
its capital and its risks are set out in the Strategic Report and in notes 3
and 30. After making enquiries the Directors have a reasonable expectation
that the Group has adequate resources to continue in operational existence for
the foreseeable future. The Group has considered the current economic
environment alongside its principal risks in its going concern assessment.
Further information can be found in the viability statement on page 40 to 42.
The Group therefore continues to adopt the going concern basis in preparing
its consolidated financial statements.
2.3 Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries). The
Company controls an entity when the Group is exposed to, or has rights to,
variable returns through its power over the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the Group. They
are deconsolidated from the date that control ceases.
Profit or loss and each component of other comprehensive income are
attributable to the owners of the Company and to the non-controlling
interests. Total comprehensive income of the subsidiaries is attributable to
the owners of the Company and to the non-controlling interests even if this
results in the non-controlling interests having a deficit balance.
Accounting policies of subsidiaries which differ from Group accounting
policies are adjusted on consolidation. All intra-group transactions,
balances, income and expenses are eliminated on consolidation.
Non-controlling interests in subsidiaries are identified separately from the
Group's equity therein. Those interests of non-controlling shareholders that
represent ownership interests entitling their holders to a proportionate share
of net assets upon liquidation may initially be measured at fair value or at
the non-controlling interests' proportionate share of the fair value of the
acquiree's identifiable net assets. The choice of measurement is made on an
acquisition-by-acquisition basis. Other non-controlling interests are
initially measured at fair value. Subsequent to acquisition, the carrying
amount of non-controlling interests is the amount of those interests at
initial recognition plus the non-controlling interests' share of subsequent
changes in equity.
Changes in the Group's interests in subsidiaries that do not result in a loss
of control are accounted for as equity transactions. The carrying amount of
the Group's interests and the non-controlling interests are adjusted to
reflect the changes in their relative interests in the subsidiaries. Any
difference between the amount by which the non-controlling interests are
adjusted and the fair value of the consideration paid or received is
recognised directly in equity and attributed to the owners of the Company.
2.4 Revenue recognition
Revenue includes rental income, service charges and other amounts directly
recoverable from tenants. Rental income and service charges from operating
leases are recognised as income on a straight-line basis over the lease term.
When the Group provides incentives to its tenants, the cost of incentives are
recognised over the lease term, on a straight-line basis, as a reduction of
rental income.
2.5 Foreign currencies
(a) Functional and presentation currency
The currency of the primary economic environment in which the Group operates
('the functional currency') is the Euro (€). The presentational currency of
the consolidated financial statements is also the Euro (€).
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions. At each
reporting date, monetary assets and liabilities that are denominated in
foreign currencies are retranslated at the rates prevailing at that date.
Foreign exchange gains and losses resulting from such transactions are
recognised in the consolidated statement of comprehensive income.
Non-monetary items carried at fair value that are denominated in foreign
currencies are translated at the rates prevailing at the date when the fair
value was determined. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated.
2.6 Segment reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating-decision maker. The chief
operating-decision maker, who is responsible for allocating resources and
assessing performance of the operating segments, has been identified as the
Board of Directors. The Board has identified the operations of the Group as a
whole as the only operating segment.
2.7 Operating profit / (loss)
Operating profit / (loss) is stated before the Group's net finance charges and
gains/losses on derivative financial instruments and after the revaluation
gains or losses for the year in respect of investment properties and after
gains or losses on the disposal of investment properties.
2.8 Administrative and property expenses
All expenses are accounted for on an accruals basis and are charged to the
consolidated statement of comprehensive income in the period in which they are
incurred. Service charge costs are accounted for on an accruals basis and
included in property expenses.
2.9 Separately disclosed items
Certain items are disclosed separately in the consolidated financial
statements where this provides further understanding of the financial
performance of the Group, due to their significance in terms of nature or
amount.
2.10 Property Advisor fees
The element of Property Advisor fees for management services provided are
accounted for on an accruals basis and are charged to the Consolidated
Statement of Comprehensive Income. These fees are detailed in note 7 and
classified under 'Property advisors' fees and expenses'. The settlement of the
Property Advisor performance fees is detailed in note 25. Due to the nature of
the settlement of the performance fee, any movement in the amount payable at
the year end is reflected within the share based payment reserve in the
consolidated statement of financial position.
2.11 Investment property
Property that is held for long-term rental yields or for capital appreciation,
or both, which is not occupied by the Group, is classified as investment
property.
Investment property is measured initially at cost, including related
transaction costs. After initial recognition, investment property is carried
at fair value, based on market value.
The change in fair values is recognised in the consolidated statement of
comprehensive income for the year.
A valuation exercise is undertaken by the Group's independent valuer, Jones
Lang LaSalle GmbH ('JLL'), at each reporting date in accordance with the
methodology described in note 16 on a building-by-building basis. Such
estimates are inherently subjective and actual values can only be determined
in a sales transaction. The valuations have been prepared by JLL on a
consistent basis at each reporting date.
Subsequent expenditure is added to the asset's carrying amount only when it is
probable that future economic benefits associated with the item will flow to
the Group and the cost of the item can be measured reliably. Repairs and
maintenance costs are charged to the Consolidated Statement of Comprehensive
Income during the financial period in which they are incurred. Changes in fair
values are recorded in the consolidated statement of comprehensive income for
the year.
Purchases and sales of investment properties are recognised on legal
completion.
An investment property is derecognised upon disposal or when the investment
property is permanently withdrawn from use and no future economic benefits are
expected from the disposal. Any gain or loss arising on derecognition of the
property (calculated as the difference between the net disposal proceeds and
the carrying amount of the asset, where the carrying amount is the higher of
cost or fair value) is included in the Consolidated Statement of Comprehensive
Income in the period in which the property is derecognised.
2.12 Current assets held for sale - investment property
Current assets (and disposal groups) classified as held for sale are measured
at the most recent valuation.
Current assets (and disposal groups) are classified as held for sale if their
carrying amount will be recovered through a sale transaction rather than
through continuing use. This condition is regarded as met only when the sale
is highly probable and the asset (or disposal group) is available for
immediate sale in its present condition. Management must be committed to the
sale which should be expected to qualify for recognition as a completed sale
within one year from the date of classification.
The Group recognises an asset in this category once the Board has committed to
the sale of an asset and marketing has commenced.
When the Group is committed to a sale plan involving loss of control of a
subsidiary, all of the assets and liabilities of that subsidiary are
classified as held for sale when the criteria described above are met,
regardless of whether the Group will retain a non-controlling interest in its
former subsidiary after the sale.
If an asset held for sale is unsold within one year of being classified as
such, it will continue to be classified as held for sale if:
(a) at the date the Company commits itself to a plan to sell a non-current
asset (or disposal group) it reasonably expects that others (not a buyer) will
impose conditions on the transfer of the asset that will extend the period
required to complete the sale, and actions necessary to respond to those
conditions cannot be initiated until after a firm purchase commitment is
obtained, and a firm purchase commitment is highly probable within one year;
(b) the Company obtains a firm purchase commitment and, as a result, a buyer
or others unexpectedly impose conditions on the transfer of a non-current
asset (or disposal group) previously classified as held for sale that will
extend the period required to complete the sale, and timely actions necessary
to respond to the conditions have been taken, and a favourable resolution of
the delaying factors is expected;
(c) during the initial one-year period, circumstances arise that were
previously considered unlikely and, as a result, a non-current asset
previously classified as held for sale is not sold by the end of that period,
and during the initial one-year period the Company took action necessary to
respond to the change in circumstances, and the non-current asset is being
actively marketed at a price that is reasonable, given the change in
circumstances, and the criteria above are met;
(d) otherwise it will be transferred back to investment property.
2.13 Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation.
Cost includes the original purchase price of the asset and the costs
attributable to bringing the asset to its working condition for its intended
use. Depreciation is charged so as to write off the costs of assets to their
residual values over their estimated useful lives, on the following basis:
Equipment - 4.50% to 25% per annum, straight line.
The gain or loss arising on the disposal of an asset is determined as the
difference between the sales proceeds and the carrying amount of the asset and
is recognised in the consolidated statement of comprehensive income.
2.14 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or
production of qualifying assets, which are assets that necessarily take a
substantial period of time to get ready for their intended use or sale, are
added to the cost of those assets, until such time as the assets are
substantially ready for their intended use or sale.
All other borrowing costs are recognised in the consolidated statement of
comprehensive income in the period in which they are incurred.
2.15 Tenants deposits
Tenants deposits are held off the consolidated statement of financial position
in a separate bank account in accordance with German legal requirements, and
the funds are not accessible to the Group. Accordingly, neither an asset nor a
liability is recognised.
2.16 Financial instruments
Financial assets and financial liabilities are recognised in the Group's
statement of financial position when the Group becomes a party to the
contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair
value. Transaction costs that are directly attributable to the acquisition or
issue of financial assets and financial liabilities (other than financial
assets and financial liabilities at fair value through profit or loss) are
added to or deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition. Transaction costs
directly attributable to the acquisition of financial assets or financial
liabilities at fair value through profit or loss are recognised immediately in
profit or loss.
Trade and other receivables
Trade receivables are amounts due from tenants for rents and service charges
and are initially recognised at the amount of the consideration that is
unconditional and subsequently carried at amortised cost as the Group's
business model is to collect the contractual cash flows due from tenants. The
Group applies the simplified approach which requires expected lifetime losses
to be recognised from initial recognition of the receivable.
Cash and cash equivalents
Cash and cash equivalents are defined as cash and short term deposits,
including any bank overdrafts, with an original maturity of three months or
less, measured at amortised cost.
Trade and other payables
Trade payables are recognised and carried at their invoiced value inclusive of
any VAT that may be applicable, and subsequently at amortised cost using the
effective interest method.
Borrowings
All loans and borrowings are initially measured at fair value less directly
attributable transaction costs. After initial recognition, all
interest-bearing loans and borrowings are subsequently measured at amortised
cost, using the effective interest method.
Treasury shares
When shares recognised as equity are repurchased, the amount of the
consideration paid, which includes directly attributable costs, is recognised
as a deduction from equity at the weighted average cost of treasury shares up
to the date of repurchase. Repurchased shares are classified as treasury
shares and are presented in the treasury share reserve. When treasury shares
are sold or reissued subsequently, the amount received is recognised as an
increase in equity and the resulting surplus or deficit on the transaction is
presented within retained earnings.
Interest-rate swaps
The Group uses interest-rate swaps to manage its market risk. The Group does
not hold or issue derivatives for trading purposes.
The interest-rate swaps are recognised in the Consolidated Statement of
Financial Position at fair value, based on counterparty quotes. The gain or
loss on the swaps is recognised in the Consolidated Statement of Comprehensive
Income and detailed in note 12.
The interest-rate swaps are valued by an independent third party specialist.
The market value calculation is based on the present value of the counterparty
payments, the fixed interest, the present value of the payments to be
received, and the floating interest.
2.17 Current and deferred income tax
The tax expense for the period comprises current and deferred tax. Tax is
recognised in the Consolidated Statement of Comprehensive Income, except to
the extent that it relates to items recognised in other comprehensive income
or directly in equity. In that case, the tax is also recognised in other
comprehensive income or directly in equity, respectively.
(a) Current tax
The current tax charge is based on taxable profit / (loss) for the year.
Taxable profit / (loss) differs from net profit / (loss) reported in the
Consolidated Statement of Comprehensive Income because it excludes items of
income or expense that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group's liability for
current tax is calculated using tax rates that have been enacted or
substantively enacted by the accounting date.
(b) Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit / (loss). Deferred tax assets are recognised to the extent that it is
probable that taxable profit will be available against which deductible
temporary differences can be utilised.
Deferred tax is charged or credited in the consolidated statement of
comprehensive income except when it relates to items credited or charged
directly in equity, in which case the deferred tax is also dealt with in
equity.
Deferred tax is calculated at the tax rates and laws that are expected to
apply to the period when the asset is realised or the liability is settled
based upon tax rates that have been enacted or substantively enacted by the
accounting date.
The carrying amount of deferred tax assets is reviewed at each accounting date
and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
2.18 New standards and interpretations
The following relevant new standards, amendments to standards and
interpretations have been issued, and are effective for the financial year
beginning on 1 January 2023, as adopted by the European Union and United
Kingdom:
Title As issued by the IASB, mandatory for accounting periods starting on or after
IFRS 17 Insurance Contracts Accounting periods beginning on or after 1 January 2023
Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Accounting periods beginning on or after 1 January 2023
Statement 2
Definition of Accounting Estimates - Amendments to IAS 8 Accounting periods beginning on or after 1 January 2023
Deferred Tax related to Assets and Liabilities arising from a Single Accounting periods beginning on or after 1 January 2023
Transaction - Amendments to IAS 12
The new standards and amendments listed above did not have a material impact
on either the current or prior financial periods.
New and revised IFRS Standards in issue but not yet effective and not early
adopted
The following standards have been issued by the IASB and adopted by the EU:
Title As issued by the IASB, mandatory for accounting periods starting on or after
Amendments to IAS 1 Presentation of Financial Statements: Classification of Accounting periods beginning on or after 1 January 2024
Liabilities as Current or Non-current and Non-current Liabilities with
Covenants
Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback Accounting periods beginning on or after 1 January 2024
Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Accounting periods beginning on or after 1 January 2024 (but not yet endorsed
Disclosures: Supplier Finance Arrangements in the EU)
Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Accounting periods beginning on or after 1 January 2025 (but not yet endorsed
Exchangeability in the EU)
There are no anticipated material impacts to the Group from the above new and
revised IFRS Standards.
3. Financial risk management
3.1 Financial risk factors
The Group's activities expose it to a variety of financial risks: market risk,
credit risk and liquidity risk. The Group's overall risk management programme
focuses on the unpredictability of financial markets and seeks to minimise
potential adverse effects on the Group's financial performance.
Risk management is carried out by the Risk Committee under policies approved
by the Board of Directors. The Board provides principles for overall risk
management, as well as policies covering specific areas, such as interest rate
risk, credit risk and investment of excess liquidity.
3.2 Market risk
Market risk is the risk of loss that may arise from changes in market factors
such as foreign exchange rates, interest rates and general property market
risk. The risks posed by potential changes to rental legislation in Berlin,
as well as general market uncertainty due to the continued conflict in Ukraine
have been identified as material market risk and as such have been disclosed
below.
(a) Foreign exchange risk
The Group operates in Germany and is exposed to foreign exchange risk arising
from currency exposures, primarily with respect to Sterling against the Euro
arising from the costs which are incurred in Sterling. Foreign exchange risk
arises from future commercial transactions, and recognised monetary assets and
liabilities denominated in currencies other than the Euro.
The Group's policy is not to enter into any currency hedging transactions, as
the majority of transactions are in Euros, which is the primary currency of
the environment in which the Group operates. Therefore any currency
fluctuations are minimal.
(b) Interest rate risk
The Group has exposure to interest rate risk. It has external borrowings at a
number of different variable interest rates. The Group is also exposed to
interest rate risk on some of its financial assets, being its cash at bank
balances. Details of actual interest rates paid or accrued during each period
can be found in note 22 to the consolidated financial statements.
The Group's policy is to manage its interest rate risk by entering into a
suitable hedging arrangement, either caps or swaps, in order to limit exposure
to borrowings at variable rates.
(c) General property market risk
Through its investment in property, the Group is subject to other risks which
can affect the value of property. The Group seeks to minimise the impact of
these risks by review of economic trends and property markets in order to
anticipate major changes affecting property values.
(d) Market risk - Rent legislation
Through its policy of investing in Berlin, the Group is subject to the risk of
changing rental legislation which could affect both the rental income, and the
value of property. The Group seeks to mitigate any effect of the changing
legislations using strategies set out in the principal risks and uncertainties
on page 31.
(e) Market risk - Geopolitical
Although the Company has no direct exposure to either Russia, Ukraine or the
Middle East, it is expected that the continuing conflict in Ukraine and rising
tensions within the Middle East will continue to cause an impact on the global
economy. These include the possible effects of higher energy prices, the
possible knock-on impact of inflation, recession and increasing cyber
attacks. Additionally, these circumstances have created a degree of
uncertainty across global equity markets. The conflict in Ukraine, and the
introduction of sanctions against Russia and Belarus, as well as possible
secondary derivative impacts are being closely monitored by the Board and the
Property Advisor.
3.3 Credit risk
The risk of financial loss due to a counterparty's failure to honour their
obligations arises principally in connection with property leases and the
investment of surplus cash.
The Group has policies in place to ensure that rental contracts are made with
customers with an appropriate credit history. Tenant rent payments are
monitored regularly and appropriate action taken to recover monies owed, or if
necessary, to terminate the lease.
Cash transactions are limited to financial institutions with a high credit
rating.
3.4 Liquidity risk
The Group's objective is to maintain a balance between continuity of funding
and flexibility through the use of bank loans secured on the Group's
properties. The terms of the borrowings entitle the lender to require early
repayment should the Group be in default with significant payments for more
than one month.
3.5 Capital management
The prime objective of the Group's capital management is to ensure that it
maintains the financial flexibility needed to allow for value-creating
investments as well as healthy balance sheet ratios.
The capital structure of the Group consists of net debt (nominal borrowings
after deducting cash and cash equivalents) and equity of the Group (comprising
stated capital (excluding treasury shares), reserves and retained earnings).
In order to manage the capital structure, the Group can adjust the amount of
dividend paid to shareholders, issue or repurchase shares or sell assets to
reduce debt.
When reviewing the capital structure the Group considers the cost of capital
and the risks associated with each class of capital. The Group reviews the
gearing ratio which is determined as the proportion of net debt to equity. In
comparison with comparable companies operating within the property sector the
Board considers the gearing ratios to be reasonable.
The gearing ratios for the reporting periods are as follows:
As at As at
31 December 2023 31 December 2022
€'000 €'000
Borrowings (321,243) (312,084)
Cash and cash equivalents 10,998 12,485
Net debt (310,245) (299,599)
Equity 317,634 416,391
Net debt to equity ratio 98% 72%
4. Critical accounting estimates and judgements
The preparation of consolidated financial statements in conformity with IFRS
requires the Group to make certain critical accounting estimates and
judgements. In the process of applying the Group's accounting policies,
management has decided the following estimates and assumptions have a
significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the financial year:
i) Estimate of fair value of investment properties (€675,567,000)
The valuation of the Group's property portfolio is inherently subjective due
to, among other factors, the individual nature of each property, its location
and condition, and expected future rentals. The valuation as at 31 December
2023 is based on the rules, regulations and market as at that date. The fair
value estimates of investments properties are detailed in note 16.
The best evidence of fair value is current prices in an active market of
investment properties with similar leases and other contracts. In the absence
of such information, the Group determines the amount within a range of
reasonable fair value estimates. In making its estimate, the Group considers
information from a variety of sources, including:
a) Discounted cash flow projections based on reliable estimates of future cash
flows, derived from the terms of any existing lease and other contracts, and
(where possible) from external evidence such as current market rents for
similar properties in the same location and condition, and using discount
rates that reflect current market assessments of the uncertainty in the amount
and timing of the cash flows.
b) Current prices in an active market for properties of different nature,
condition or location (or subject to different lease or other contracts),
adjusted to reflect those differences.
c) Recent prices of similar properties in less active markets, with
adjustments to reflect any changes in economic conditions since the date of
the transactions that occurred at those prices.
The Directors remain ultimately responsible for ensuring that the valuers are
adequately qualified, competent and base their results on reasonable and
realistic assumptions. The Directors have appointed JLL as the real estate
valuation experts who determine the fair value of investment properties using
recognised valuation techniques and the principles of IFRS 13. Further
information on the valuation process can be found in note 16.
ii) Judgment in relation to the recognition of assets held for sale
Management has made an assumption in respect of the likelihood of investment
properties - held for sale, being sold within 12 months, in accordance with
the requirement of IFRS 5. Management considers that based on historical and
current experience that the properties can be reasonably expected to sell
within 12 months.
5. Segmental information
The Group's principal reportable segments under IFRS 8 were as follows:
- Residential; and
- Commercial
The Group is required to report financial and descriptive information about
its reportable segments. Reportable segments are operating segments or
aggregations of operating segments that meet the following specified criteria:
- its reported revenue, from both external customers and intersegment sales or
transfers, is 10 per cent or more of the combined revenue, internal and
external, of all operating segments, or
- the absolute measure of its reported profit or loss is 10 per cent or more
of the greater, in absolute amount, of (i) the combined reported profit of all
operating segments that did not report a loss and (ii) the combined reported
loss of all operating segments that reported a loss, or
- its assets are 10 per cent or more of the combined assets of all operating
segments.
Management have applied the above criteria to the commercial segment and the
commercial segment is not more than 10% of any of the above criteria. The
Group does not own any wholly commercial buildings nor does management report
directly on the commercial results. The Board considers that the
non-residential element of the portfolio is incidental to the Group's
activities. Therefore, the Group has not included any further segmental
analysis within these consolidated audited financial statements.
6. Revenue
31 December 2023 31 December 2022
€'000 €'000
Rental income 21,356 20,289
Service charge income 6,098 5,645
27,454 25,934
The total future annual minimum rentals receivable under non-cancellable
operating leases are as follows:
31 December 2023 31 December 2022
€'000 €'000
Within 1 year 1,725 1,201
1 - 2 years 1,179 1,201
2 - 3 years 880 917
3 - 4 years 565 648
4 - 5 years 331 543
Later than 5 years 529 417
5,209 4,927
Revenue comprises rental income earned from residential and commercial
property in Germany. There are no individual tenants that account for greater
than 10% of revenue during any of the reporting periods.
The leasing arrangements for residential property are with individual tenants,
with three months notice from tenants to cancel the lease in most cases.
The commercial leases are non-cancellable, with an average lease period of 3
years.
7. Property expenses
31 December 2023 31 December 2022
€'000 €'000
Property management expenses 1,431 1,233
Repairs and maintenance 1,757 1,525
Impairment charge - trade receivables 952 868
Service charges paid on behalf of tenants 7,370 6,631
Property advisors' fees and expenses 5,805 6,862
17,315 17,119
8. Administrative expenses
31 December 2023 31 December 2022
€'000 €'000
Secretarial and administration fees 680 651
Legal and professional fees 2,872 2,261
Directors' fees 268 275
Bank charges 17 74
Loss on foreign exchange 9 5
Depreciation 55 8
Other income (135) (10)
3,766 3,264
Further details of the Directors' fees are set out in the Directors'
Remuneration Report on page 64.
9. Auditor's remuneration
An analysis of the fees charged by the auditor and its associates is as
follows:
31 December 2023 31 December 2022
€'000 €'000
Fees payable to the Group's auditor and its associates for the audit of the 248 231
consolidated financial statements
Fees payable to the Group's auditor and its associates for other services
- Agreed upon procedures - half year report 35 33
283 264
10. Loss on disposal of investment property (including investment property
held for sale)
31 December 2023 31 December 2022
€'000 €'000
Disposal proceeds 13,027 13,754
Book value of disposals (12,767) (12,982)
Disposal costs (441) (957)
Loss on disposal of investment property excluding disposal of Erkner (181) (185)
development
Real estate transfer tax recoverable from Erkner development 1,202 -
Book value of Erkner development on disposal (5,303) -
(4,282) (185)
11. Investment property fair value loss
31 December 2023 31 December 2022
€'000 €'000
Investment property fair value loss (97,298) (42,241)
Further information on investment properties is shown in note 16.
12. Net finance charge
31 December 2023 31 December 2022
€'000 €'000
Interest income (413) (376)
Finance expense on bank borrowings 9,766 8,313
Net finance charge before gain / loss on interest rate swap 9,353 7,937
Loss / (gain) on interest rate swaps 7,240 (26,920)
16,593 (18,983)
13. Income tax credit
31 December 2023 31 December 2022
The tax credit for the period is as follows: €'000 €'000
Current tax charge 564 817
Deferred tax credit - origination and reversal of temporary differences (13,609) (2,556)
(13,045) (1,739)
The tax credit for the year can be reconciled to the theoretical tax credit on
the loss in the Consolidated Statement of Comprehensive Income as follows:
31 December 2023 31 December 2022
€'000 €'000
Loss before tax (111,800) (17,549)
Tax at German income tax rate of 15.8% (2022: 15.8%) (17,664) (2,773)
Losses not subject to tax: Loss on property disposal 677 29
Losses carried forward not recognised 3,943 1,005
Total tax credit for the year (13,045) (1,739)
Reconciliation of current tax liabilities
31 December 2023 31 December 2022
€'000 €'000
Balance at beginning of year 808 512
Tax paid during the year (516) (521)
Current tax charge 564 817
Balance at end of year 856 808
Reconciliation of deferred tax
Capital gains on properties Interest rate swaps Total
€'000 €'000 €'000
(Liabilities) (Liabilities) (Net liabilities)
Balance at 1 January 2022 (75,198) 1,722 (73,476)
Credited / (charged) to the statement of comprehensive income 6,816 (4,260) 2,556
Deferred tax liability at 31 December 2022 (68,382) (2,538) (70,920)
Credited to the statement of comprehensive income 12,463 1,146 13,609
Deferred tax liability at 31 December 2023 (55,919) (1,392) (57,311)
Jersey income tax
The Group is liable to Jersey income tax at 0%.
German tax
As a result of the Group's operations in Germany, the Group is subject to
German Corporate Income Tax ('CIT') - the effective rate for Phoenix Spree
Deutschland Limited for 2023 was 15.8% (2022: 15.8%).
Factors affecting future tax charges
The Group has accumulated tax losses of approximately €50 million (2022:
€42 million) in Germany, which will be available to set against suitable
future profits should they arise, subject to the criteria for relief.
Accumulated tax losses are carried forward without time limit for German
Corporate Tax. These losses are offset against the deferred taxable gain to
give the deferred tax liability set out above. Accumulated tax losses are
carried forward without time limit for German Corporate Tax.
14. Dividends
31 December 2023 31 December 2022
€'000 €'000
Amounts recognised as distributions to equity holders in the period:
No interim dividend was paid for the year ended 31 December 2023 (2022: - 2,158
€2.35 cents (2.09p) per share).
No final dividend was paid for the year ended 31 December 2022 (2022: €5.15 - 4,752
cents (4.36p) per share for the year ended 31 December 2021).
15. Subsidiaries
The Group consists of a Parent Company, Phoenix Spree Deutschland Limited,
incorporated in Jersey, Channel Islands and a number of subsidiaries held
directly by Phoenix Spree Deutschland Limited, which are incorporated in and
operated out of Jersey and Germany.
Further details are given below:
Country of incorporation % holding Nature of business
Phoenix Spree Deutschland I Limited Jersey 100 Investment property
Phoenix Spree Deutschland VII Limited Jersey 100 Investment property
Phoenix Spree Deutschland X Limited Jersey 100 Finance vehicle
Phoenix Spree Deutschland XI Limited Jersey 100 Investment property
Phoenix Spree Deutschland XII Limited Jersey 100 Investment property
Phoenix Property Holding GmbH & Co.KG Germany 100 Holding Company
Phoenix Spree Mueller GmbH Germany 94.9 Investment property
Phoenix Spree Gottlieb GmbH Germany 94.9 Investment property
PSPF Holdings GmbH Germany 100 Holding Company
Jühnsdorfer Weg Immobilien GmbH Germany 94.9 Investment property
Phoenix Spree Property Fund Ltd & Co. KG (PSPF) Germany 100 Investment property
PSPF General Partner (Jersey) Limited Jersey 100 Management of PSPF
16. Investment properties
31 December 2023 31 December 2022
Fair value €'000 €'000
At 1 January 775,904 801,461
Capital expenditure 9,400 16,437
Property additions 5,631 13,229
Disposals (18,070) (12,982)
Fair value loss (97,298) (42,241)
Investment properties at fair value 675,567 775,904
Assets classified as "Held for Sale" (Note 17) (60,594) (14,527)
At 31 December 614,973 761,377
The property portfolio was valued at 31 December 2023 by Jones Lang LaSalle
GmbH ("JLL"), in accordance with the methodology described below. The
valuations were performed in accordance with the current Appraisal and
Valuation Standards, 8th edition (the 'Red Book') published by the Royal
Institution of Chartered Surveyors (RICS).
The valuation is performed on a building-by-building basis from source
information on the properties including current rent levels, void rates,
capital expenditure, maintenance costs and non-recoverable costs provided to
JLL by the Property Advisors QSix Residential Limited. JLL use their own
assumptions with respect to rental growth (taking account of the complexity of
German rent laws, capital investment levels and churn), and adjustments to
non-recoverable costs. JLL also uses data from comparable market transactions
where these are available alongside their own assumptions.
The valuation by JLL uses the discounted cash flow methodology. Such
valuation estimates using this methodology, however, are inherently subjective
and values that would have been achieved in an actual sales transaction
involving the individual property at the reporting date are likely to differ
from the estimated valuation.
All properties are valued as Level 3 measurements under the fair value
hierarchy (see note 30) as the inputs to the discounted cash flow methodology
which have a significant effect on the recorded fair value are not
observable. Additionally, JLL perform reference checks back to comparable
market transactions to confirm the valuation model.
The unrealised fair value loss in respect of investment property is disclosed
in the Consolidated Statement of Comprehensive Income as 'Investment property
revaluation loss'.
Valuations are undertaken using the discounted cash flow valuation technique
as described below and with the inputs set out below.
Discounted cash flow methodology ("DCF")
The fair value of investment properties is determined using the DCF
methodology.
Under the DCF method, a property's fair value is estimated using explicit
assumptions regarding the benefits and liabilities of ownership over the
asset's life including an exit or terminal value. The DCF valuation by JLL
used ten-year projections of a series of cash flows of each property interest.
The cash flows used in the valuation reflect the known conditions existing at
the reporting date.
To this projected cash flow series, an appropriate, market derived discount
rate is applied to establish the present value of the cash flows associated
with each property. The discount rate of the individual properties is adjusted
to provide an individual property value that is consistent with comparable
market transactions. For properties without a comparable market transaction
JLL use the data from market transactions to adjust the discount rate to
reflect differences in the location of the property, its condition, its
tenants and rent.
The duration of the cash flow and the specific timing of inflows and outflows
are determined by events such as rent reviews, lease renewal and related lease
up periods, re-letting, redevelopment, or refurbishment.
Periodic cash flow includes cash flows relating to gross income less vacancy,
non-recoverable expenses, collection losses, lease incentives, maintenance
costs, agent and commission costs and other operating and management expenses.
The series of periodic net operating cash flows, along with an estimate of the
terminal value anticipated at the end of the ten-year projection period, is
then discounted.
Where an individual property has the legal and practical ability to be
converted into individual apartments (condominiums) for sale as a condominium,
dependent upon the stage of the legal permissions, the additional value
created by the conversion is reflected via a lower discount rate applied.
The principal inputs to the valuation are as follows: Year ended Year ended
31 December 2023 31 December 2022
Range Range
Residential Properties
Market Rent
Rental Value (€ per sq. p.m.) 9.8 - 16.3 9.75 - 15.50
Stabilised residency vacancy (% per year) 0 - 5 1 - 10
Tenancy vacancy fluctuation (% per year) 0 - 9 4 - 10
Commercial Properties
Market Rent
Rental Value (€ per sq. p.m.) 4.58 - 36.83 4.6 - 35.4
Stabilised commercial vacancy (% per year) 2 - 100 0.5 - 89.3
Estimated Rental Value (ERV)
ERV per year per property (€'000) 39 - 2,605 54 - 2,553
ERV (€ per sq. p.m.) 9.67 - 16.95 9.75 - 15.50
Financial Rates - blended average
Discount rate (%) 4.5 4.1
Portfolio Gross yield (%) 3.3 2.8
Having reviewed the JLL report, the Directors are of the opinion that this
represents a fair and reasonable valuation of the properties and have
consequently adopted this valuation in the preparation of the consolidated
financial statements.
The valuations have been prepared by JLL on a consistent basis at each
reporting date and the methodology is consistent and in accordance with IFRS
which requires that the 'highest and best use' value is taken into account
where that use is physically possible, legally permissible and financially
feasible for the property concerned, and irrespective of the current or
intended use.
Sensitivity
Changes in the key assumptions and inputs to the valuation models used would
impact the valuations as follows:
Vacancy: A change in vacancy by 1% would not materially affect the investment
property fair value assessment.
Discount rate: An increase of 0.25% in the discount rate would reduce the
investment property fair value by €47.7 million, and a decrease in the
discount rate of 0.25% would increase the investment property fair value by
€48.4 million.
There are, however, inter-relationships between unobservable inputs as they
are determined by market conditions. The existence of an increase of more than
one unobservable input could amplify the impact on the valuation. Conversely,
changes on unobservable inputs moving in opposite directions could cancel each
other out, or lessen the overall effect.
The Group values all investment properties in one of three ways;
Rental Scenario
Where properties are intended to be held by the Group for the foreseeable
future, they are reported under the "Rental Scenario", and valued using the
discounted cash flow methodology disclosed above. In general the market
participants are willing to pay higher prices for properties where physical
and legal requirements are fulfilled and it is financially feasible to sell
units individually. In these cases the market values are still calculated on
a rental basis but are adjusted to implement the described potential increase
in value. JLL calculates the market value of these assets in what is
referred to as a "Privatisation potential", which includes a deduction to the
rental scenario discount rate for each completed step met when transitioning
from the rental scenario to condominium scenario.
Condominium Scenario
Where properties have the potential or the benefit of all relevant permissions
required to sell apartments individually (condominiums), and have been
approved for sale by the Board, then we refer to this as a 'condominium
scenario'. Properties expected to be sold in the coming year from these assets
are considered held for sale under IFRS 5 and can be seen in note 17. The
market value of the Privatisation potential of these assets is reported under
the Condominium Scenario.
Disposal Scenario
Where properties have been notarised for sale prior to the reporting date, but
have not completed; they are held at their notarised disposal value. These
assets are considered held for sale under IFRS 5 and can be seen in note 17.
The table below sets out the assets valued using these 3 scenarios:
31 December 2023 31 December 2022
€'000 €'000
Rental scenario 614,973 738,554
Condominium scenario 57,610 28,470
Disposal scenario 2,984 8,880
Total 675,567 775,904
The movement in the fair value of investment properties is included in the
Consolidated Statement of Comprehensive Income as 'investment property
revaluation loss' and comprises:
31 December 2023 31 December 2022
€'000 €'000
Investment properties (96,198) (41,647)
Investment properties held for sale (see note 17) (1,100) (594)
(97,298) (42,241)
17. Investment properties - held for sale
31 December 2023 31 December 2022
€'000 €'000
Fair value - held for sale investment properties
At 1 January 14,527 41,631
Transferred from / (to) investment properties 59,453 (14,566)
Capital expenditure 481 1,038
Properties sold (12,767) (12,982)
Valuation loss on properties held for sale (1,100) (594)
At 31 December 60,594 14,527
Investment properties are re-classified as current assets and described as
'held for sale' in three different situations: Properties notarised for sale
at the reporting date, Properties where at the reporting date the group has
obtained and implemented all relevant permissions required to sell individual
apartment units, and efforts are being made to dispose of the assets
(condominium); and Properties which are being marketed for sale but have
currently not been notarised.
Properties which no longer satisfy the criteria for recognition as held for
sale are transferred back to investment properties at fair value.
Properties notarised for sale by the reporting date are valued at their
disposal price (disposal scenario), and other properties are valued using the
rental and condominium scenarios (see note 16) as appropriate.
Investment properties held for sale are all expected to be sold within 12
months of the reporting date based on management knowledge of current and
historic market conditions. While whole properties have been valued under a
condominium scenario in note 16, only units expected to be sold have been
transferred to assets held for sale.
The investment properties held for sale have debt of €28.9m (2022: €6.9m)
that is repayable upon sale of those investment properties.
18. Property, plant and equipment
Equipment
€'000
Cost or valuation
As at 1 January 2022 109
As at 31 December 2022 109
Additions 54
As at 31 December 2023 163
Accumulated depreciation and impairment
As at 1 January 2022 89
Charge for the year 8
As at 31 December 2022 97
Charge for the year 55
As at 31 December 2023 152
Carrying amount
As at 31 December 2022 12
As at 31 December 2023 11
19. Other financial assets at amortised cost
31 December 2023 31 December 2022
Non-current €'000 €'000
At 1 January 828 926
Repayments (24) (122)
Accrued interest 24 24
At 31 December 828 828
The Company entered into a loan agreement with the minority interest of
Accentro Real Estate AG in relation to the acquisition of the assets as share
deals. This loan bears interest at 3% per annum.
These assets are considered to have low credit risk and any loss allowance
would be immaterial.
20. Trade and other receivables
31 December 2023 31 December 2022
€'000 €'000
Current
Trade receivables 759 932
Less: impairment provision (297) (373)
Net receivables 462 559
Prepayments and accrued income 235 68
Service charges receivable 6,797 6,192
Other receivables 5,340 3,249
12,834 10,068
Other receivables include €1.2m in respect of real estate transfer tax
recoverable in relation to the disposal of the Erkner development.
Other receivables include €2.7m due in respect of investment properties
sold.
Ageing analysis of trade receivables
31 December 2023 31 December 2022
€'000 €'000
Up to 12 months 463 540
Between 1 year and 2 years (1) 19
462 559
Impairment of trade and service charge receivables
The Group calculates lifetime expected credit losses for trade and service
charge receivables using a portfolio approach. Receivables are grouped based
on the credit terms offered and the type of lease. The probability of default
is determined at the year-end based on the aging of the receivables, and
historical data about default rates. That data is adjusted if the Group
determines that historical data is not reflective of expected future
conditions due to changes in the nature of its tenants and how they are
affected by external factors such as economic and market conditions.
On this basis, the loss allowance as at 31 December 2023, and on 31 December
2022 was determined as set out below.
The Group applies the following loss rates to trade receivables.
As noted below, a loss allowance of 50% (2022: 50%) has been recognised for
trade receivables that are more than 60 days past due except for any
receivables relating to the Mietendeckel which are expected to be recovered in
full. Any receivables where the tenant is no longer resident in the property
are provided for in full.
Aging
Trade receivables: 0-60 days Over 60 days Non-current tenant Total 2023
Expected loss rate (%) 0% 50% 100%
Gross carrying amount (€'000) 286 352 121 759
Loss allowance provision (€'000) - (176) (121) (297)
Aging
Trade receivables: 0-60 days Over 60 days Non-current tenant Total 2022
Expected loss rate (%) 0% 50% 100%
Gross carrying amount (€'000) 328 462 142 932
Loss allowance provision (€'000) - (231) (142) (373)
Movements in the impairment provision against trade receivables are as
follows:
31 December 2023 31 December 2022
€'000 €'000
Balance at the beginning of the year 373 315
Impairment losses recognised 952 868
Amounts written off as uncollectable (1,028) (810)
Balance at the end of the year 297 373
All impairment losses relate to the receivables arising from tenants.
21. Cash and cash equivalents
31 December 2023 31 December 2022
€'000 €'000
Cash at banks 9,287 11,156
Cash at agents 1,711 1,329
Cash and cash equivalents 10,998 12,485
22. Borrowings
31 December 2023 31 December 2022
Nominal value Book value Nominal value Book value
€'000 €'000 €'000 €'000
Current liabilities
Bank loans and accrued interest - NATIXIS Pfandbriefbank AG 1,419 405 1,031 19
Bank loans - Berliner Sparkasse 1,027 1,027 801 801
2,446 1,432 1,832 820
Non-current liabilities
Bank loans - NATIXIS Pfandbriefbank AG 262,218 260,502 253,602 250,872
Bank loans - Berliner Sparkasse 59,309 59,309 60,392 60,392
321,527 319,811 313,994 311,264
323,973 321,243 315,826 312,084
The fair value of borrowings approximated their book value at the date of the
consolidated statement of financial position.
The difference between book values and nominal values in the table above
relates to unamortised transaction cost.
The Group has complied with the financial covenants of its borrowing
facilities during the 2023 and 2022 reporting periods.
Financial covenants relating to the Natixis Pfandbriefbank AG loans include a
projected interest cover of at least 150%, minimum debt yield of 4.3% and a
maximum loan to value of 67.5%.
There are no financial covenants relating to the Berliner Sparkasse loans.
The Natixis Pfandbriefbank AG loans mature on 11 September 2026 and the
Berliner Sparkasse loans mature between 31 December 2026 and 31 October 2027.
All borrowings are secured against the investment properties of the Group. The
Group had no undrawn debt facilities as at 31 December 2023 (2022: €39.0m).
Interest rate risk concentration
Interest rate basis Fixed Interest % Fixed Interest % Floating Interest % Total loans Hedged against floating rate loans
Interest rate range 1-2% 2-3% Euribor
€'000 €'000 €'000 €'000 €'000
NATIXIS Pfandbriefbank AG - - 262,218 262,218 219,000
Berliner Sparkasse 39,832 3,800 16,704 60,336 11,684
Total 39,832 3,800 278,922 322,554 230,684
23. Trade and other payables
31 December 2023 31 December 2022
€'000 €'000
Trade payables 4,033 4,525
Accrued liabilities 1,601 1,485
Service charges payable 6,255 5,394
Advanced payment received on account 101 3,700
Deferred income - 26
11,990 15,130
Advanced payment received on account relates to disposal proceeds received
prior to the statement of financial position date for units that proceeded to
change ownership in the first quarter of the following financial year.
24. Derivative financial instruments
31 December 2023 31 December 2022
€'000 €'000
Interest rate swaps - carried at fair value through profit or loss
Balance at 1 January 16,036 (10,884)
Fair value movement through profit or loss (7,240) 26,920
Balance at 31 December 8,796 16,036
The notional principal amounts of the outstanding interest rate swap contracts
at 31 December 2023 were €231,049,375 (2022: €214,878,750). At 31 December
2023 the fixed interest rates vary from 0.775% to 3.21% with the floating
interest based on 3 month Euribor (2022: 0.775% to 1.287%) and mature between
September 2026 and February 2027.
The interest-rate swaps are valued by an independent third party specialist.
The market value calculation is based on the present value of the counterparty
payments, the fixed interest, and the present value of the payments to be
received, and the floating interest.
The amounts disclosed in the tables below are the contractual undiscounted
cash flows. Undiscounted cash flows in respect of balances due within 12
months generally equal their carrying amounts in the consolidated statement of
financial position, as the impact of discounting is not significant.
Maturity analysis of interest rate swaps
31 December 2023 31 December 2022
€'000 €'000
Less than 1 year 5,416 4,686
Between 1 and 2 years 2,190 5,055
Between 2 and 5 years 1,441 7,261
More than 5 years - -
9,046 17,002
Maturity analysis of interest rate swaps as of 31 December 2023
Year Pay Fixed Receive Floating Net
€'000 €'000 €'000
2024 (2,775) 8,191 5,416
2025 (2,765) 4,955 2,190
2026 (2,397) 3,816 1,418
2027 (13) 36 22
Total (7,951) 16,997 9,046
25. Share based payment reserve
Performance fee
€'000
Balance at 1 January 2022 343
Fee charge for the year (343)
Balance at 31 December 2022 -
Fee charge for the year -
Balance at 31 December 2023 -
The share based payment reserve was established in relation to the issue of
shares for the payment of the performance fee to the property advisor.
Property Advisor performance fee
The Property Advisor is entitled to an asset and estate management performance
fee, measured over consecutive three year periods, equal to 15% of the excess
by which the annual EPRA NTA total return of the Group exceeds 8% per annum,
compounding (the 'Performance Fee'). The Performance Fee is subject to a high
watermark, being the higher of:
(i) EPRA NTA per share at 1 January 2021; and
(ii) the EPRA NTA per share at the end of a Performance Period in relation to
which a performance fee was earned in accordance with the provisions contained
with the Property Advisor and Investor Relations Agreement.
Should a fee be due, the fee will be settled shortly after the release of the
2023 annual report in shares of the Company and, being determined by reference
to an equity based formula, meets the definition of a share based payment
arrangement. There is no fee due to be settled for the current period.
The right to the payment of a performance fee was waived by the Property
Advisor in July 2023 as part of an amended fee arrangement (note 32).
26. Stated capital
31 December 2023 31 December 2022
€'000 €'000
Issued and fully paid:
At 1 January 196,578 196,578
At 31 December 196,578 196,578
The number of shares in issue at 31 December 2023 was 100,751,410 (31 December
2022: 100,751,410).
Treasury shares
The reserve for the Company's treasury shares comprises the cost of the
Company's shares held by the Group. At 31 December 2023, the Group held
8,924,047 of the Company's shares (2022: 8,924,047). During the year no
further shares were purchased in the market.
27. Non-controlling interests Non-controlling interest % 31 December 2023 31 December 2022
€'000 €'000
Phoenix Spree Mueller GmbH 5.1% 1,359 1,571
Phoenix Spree Gottlieb GmbH 5.1% 1,143 1,307
Jühnsdorfer Weg Immobilien GmbH 5.1% 65 334
2,567 3,212
The following is summarised financial information for the subsidiaries which
have material NCI, prepared in accordance with IFRS. The information is before
inter-company eliminations with other companies in the Group.
Phoenix Spree Mueller GmbH Phoenix Spree Gottlieb GmbH Jühnsdorfer Weg Immobilien GmbH 31 December 2023
€'000 €'000 €'000 €'000
Revenue 1,272 1,218 2,194 4,684
Loss (4,137) (3,191) (5,286) (12,614)
Loss attributable to NCI (211) (162) (270) (643)
Non-current assets 30,400 28,300 48,500 107,200
Current assets 4,921 7,604 11,031 23,556
Non-current liabilities (8,098) (12,943) (47,415) (68,456)
Current liabilities (565) (533) (10,845) (11,943)
Net assets 26,658 22,428 1,271 50,357
Net assets attributable to NCI 1,359 1,143 65 2,567
Cashflows from operating activities 117 141 387 645
Cashflows from investing activities (2) (4) (2,073) (2,079)
Cashflows from financing activities (68) (332) 2,351 1,951
Net increase in cash and cash equivalents 47 (195) 665 517
28. Earnings per share and EPRA earnings per share
31 December 2023 31 December 2022
Earnings per share
Earnings for the purposes of basic earnings per share being net profit (98,112) (15,435)
attributable to owners of the parent (€'000)
Weighted average number of ordinary shares for the purposes of basic earnings 91,827,363 92,139,098
per share (Number)
Effect of dilutive potential ordinary shares (Number) - -
Weighted average number of ordinary shares for the purposes of diluted 91,827,363 92,139,098
earnings per share (Number)
Earnings per share (€) (1.07) (0.17)
Diluted earnings per share (€) (1.07) (0.17)
31 December 2023 31 December 2022
EPRA earnings per share
Earnings for the purposes of basic earnings per share being net profit (98,112) (15,435)
attributable to owners of the parent (€'000)
Changes in value of investment properties 97,298 42,241
Loss on disposal on investment properties 4,282 185
Changes in fair value of financial instruments 7,240 (27,263)
Deferred tax adjustments (13,609) (2,556)
Change in Non-controlling interest (391) (13)
EPRA Earnings (3,292) (2,841)
Weighted average number of ordinary shares for the purposes of basic earnings 91,827,363 92,139,098
per share (Number)
EPRA Earnings per Share (€) (0.04) (0.03)
Diluted EPRA Earnings per Share (€) (0.04) (0.03)
29. Net asset value per share and EPRA net asset value
31 December 2023 31 December 2022
Net assets (€'000) 315,067 413,179
Number of participating ordinary shares 91,827,363 91,827,363
Net asset value per share (€) 3.43 4.50
EPRA NRV (Net Reinstatement Value) - this includes transfer duties of the
property assets.
EPRA NTA (Net Tangible Assets) - the Company buys and sells assets leading to
taking account of certain liabilities.
EPRA NDV (Net Disposal Value) - the value for the shareholder in the event of
a liquidation.
The net asset value calculation is based on the Group's shareholders' equity
which includes the fair value of investment properties, properties held for
sale as well as financial instruments.
The number of diluted shares does not include treasury shares.
EPRA NRV EPRA NTA EPRA NDV
€'000 €'000 €'000
At 31 December 2023
IFRS Equity attributable to shareholders 315,067 315,067 315,067
Diluted NAV 315,067 315,067 315,067
Diluted NAV at Fair Value 315,067 315,067 315,067
Exclude*:
Deferred tax in relation to revaluation gains / losses of Investment Property 57,311 57,311 -
and derivatives
Fair value of financial instruments (8,796) (8,796) -
Include*:
Fair value of fixed interest rate debt 3,712
Real estate transfer tax 60,345 -
NAV 423,927 363,582 318,779
Fully diluted number of shares 91,827,363 91,827,363 91,827,363
NAV per share (€) 4.62 3.96 3.47
EPRA NRV EPRA NTA EPRA NDV
€'000 €'000 €'000
At 31 December 2022
IFRS Equity attributable to shareholders 413,179 413,179 413,179
Diluted NAV 413,179 413,179 413,179
Diluted NAV at Fair Value 413,179 413,179 413,179
Exclude:
Deferred tax in relation to revaluation gains / losses of Investment Property 70,920 70,920 -
and derivatives
Fair value of financial instruments (16,036) (16,036) -
Include:
Fair value of fixed interest rate debt - - 2,829
Real estate transfer tax 63,176 - -
NAV 531,239 468,063 416,008
Fully diluted number of shares 91,827,363 91,827,363 91,827,363
NAV per share (€) 5.79 5.10 4.53
30. Financial instruments
The Group is exposed to the risks that arise from its use of financial
instruments. This note describes the objectives, policies and processes of the
Group for managing those risks and the methods used to measure them. Further
quantitative information in respect of these risks is presented throughout the
consolidated financial statements.
Principal financial instruments
The principal financial instruments used by the Group, from which financial
instrument risk arises, are as follows:
• Cash and cash equivalents
• Trade and other receivables
• Other financial assets
• Trade and other payables
• Borrowings
• Derivative financial instruments
The Group held the following financial assets at each reporting date:
31 December 2023 31 December 2022
€'000 €'000
Amortised cost
Trade and other receivables - current 12,599 10,000
Cash and cash equivalents 10,998 12,485
Other financial assets at amortised cost 828 828
24,425 23,313
Fair value through profit or loss
Derivative financial asset - interest rate swaps 8,796 16,036
8,796 16,036
33,221 39,349
The Group held the following financial liabilities at each reporting date:
31 December 2023 31 December 2022
€'000 €'000
At amortised cost
Borrowings payable: current 1,432 820
Borrowings payable: non-current 319,811 311,264
Trade and other payables 11,990 15,130
333,233 327,214
333,233 327,214
Fair value of financial instruments
The fair values of the financial assets and liabilities are not materially
different to their carrying values due to the short term nature of the current
assets and liabilities. Due to the commercial variable rates applied to the
long term liabilities, and the relatively short term nature, the fair value of
these positions are not considered to be materially different from their
carrying value. Fixed rate long term liabilities account for approximately
13% of total borrowing, and while the fair value of these positions would
likely differ more than the fair value of borrowing at commercial variable
rates, given the relatively short term nature of the lending maturing within
the next 4 years and the projected gradual decrease in Euribor rates over the
same period, bringing the rates back down to similar rates to the current
fixed lending rates, it is also considered that the fair value of these
position would not be materially different from their carrying value.
The interest rate swap was valued by the respective counterparty banks by
comparison with the market price for the relevant date.
The interest rate swaps are expected to mature between September 2026 and
February 2027.
The Group uses the following hierarchy for determining and disclosing the fair
value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or
liabilities;
Level 2: other techniques for which all inputs which have a significant effect
on the recorded fair value are observable, either directly or indirectly; and
Level 3: techniques which use inputs which have a significant effect on the
recorded fair value that are not based on observable market data.
During each of the reporting periods, there were no transfers between
valuation levels.
Group Fair Values
31 December 2023 31 December 2022
Financial assets/ (liabilities) €'000 €'000
Interest rate swaps - Level 2 - current - -
Interest rate swaps - Level 2 - non-current 8,796 16,036
8,796 16,036
Financial risk management
The Group is exposed through its operations to the following financial risks:
• Interest rate risk
• Foreign exchange risk
• Credit risk
• Liquidity risk
The Group's policies for financial risk management are outlined below.
Interest rate risk
The Group's interest rate risk arises from certain of its borrowings.
Borrowings issued at variable rates expose the Group to cash flow interest
rate risk. Borrowings issued at fixed rates expose the Group to fair value
interest rate risk. The Group is also exposed to interest rate risk on cash
and cash equivalents.
Under interest rate swap contracts, the Group agrees to exchange the
difference between fixed and floating rate interest amounts calculated on
agreed notional principal amounts. Such contracts enable the Group to mitigate
the risk of changing interest rates on the cash flow exposures on the issued
variable rate debt held.
Sensitivity analysis has not been performed as all variable rate borrowings
have been swapped to fixed interest rates, and potential movements on cash at
bank balances are immaterial.
The Group gives careful consideration to interest rates when considering its
borrowing requirements and where to hold its excess cash. The Directors
believe that the interest rate risk is at an acceptable level.
Foreign exchange risk
The Group is exposed to foreign exchange risk on sales, purchases, and
translation of assets and liabilities that are in a currency other than the
functional currency (Euros).
The Group does not enter into any currency hedging transactions and the
Directors believe that the foreign exchange rate risk is at an acceptable
level.
The carrying amount of the Group's foreign currency (non Euro) denominated
monetary assets and liabilities are shown below, all the amounts are for
Sterling balances only:
31 December 2023 31 December 2022
€'000 €'000
Financial assets
Cash and cash equivalents 215 75
Financial liabilities
Trade and other payables (377) (494)
Net position (162) (419)
At each reporting date, if the Euro had strengthened or weakened by 10%
against GBP with all other variables held constant, post-tax profit / loss for
the year would have increased/(decreased) by:
Weakened by 10% Increase/(decrease) in post-tax profit / loss and impact on Strengthened by 10% Increase/(decrease) in post-tax profit / loss and impact
equity on equity
€'000 €'000
31 December 2023 (16) 16
31 December 2022 (42) 42
Credit risk management
Credit risk refers to the risk that the counterparty will default on its
contractual obligations resulting in financial loss to the Group. Credit risk
arises principally from the Group's trade and other receivables and its cash
balances. The Group gives careful consideration to which organisations it uses
for its banking services in order to minimise credit risk. The Group has an
established credit policy under which each new tenant is analysed for
creditworthiness and each tenant is required to pay a two month deposit.
At each reporting date the Group had no tenants with outstanding balances over
10% of the total trade receivables balance.
The Group holds cash at the following banks: Barclays Private Clients
International Jersey Ltd, Deutsche Bank AG, Berliner Sparkasse, UniCredit Bank
AG and Hausbank. The split of cash held at each of the banks respectively at
31 December 2023 was 22% / 59% / 6% / 4% / 9% (31 December 2022: Barclays
Private Clients International Jersey Ltd, Deutsche Bank AG, Berliner
Sparkasse, UniCredit Bank AG and Hausbank the split was 36% / 50% / 7% / 2% /
5%). Barclays and Berliner Sparkasse have a credit rating of A+, Deutsche Bank
has a credit rating of A, UniCredit Bank AG has a credit rating of A-2 and
Hausbank has a credit rating of AA-.
The Group holds no collateral as security against any financial asset. The
carrying amount of financial assets recorded in the financial statements, net
of any allowances for losses, represents the Group's maximum exposure to
credit risk.
Details of receivables from tenants in arrears at each reporting date can be
found in note 20 as can details of the receivables that were impaired during
each period.
An allowance for impairment is made using an expected credit loss model based
on previous experience. Management considers the above measures to be
sufficient to control the credit risk exposure.
The credit risk on liquid funds and derivative financial instruments is
limited because the counterparties are banks with high credit-ratings assigned
by international credit-rating agencies.
The carrying amount of financial assets recorded in the financial statements,
which is net of impairment losses, represents the Group's maximum exposure to
credit risk as no collateral or other credit enhancements are held.
Liquidity risk management
Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as they fall due. The Group's approach to managing
liquidity risk is to ensure that it will always have sufficient liquidity to
meet its liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or damage to the Group's reputation.
The Directors manage liquidity risk by regularly reviewing cash requirements
by reference to short term cash flow forecasts and medium term working capital
projections prepared by management.
The Group maintains good relationships with its banks, which have high credit
ratings.
The following table details the Group's remaining contractual maturity for its
non-derivative financial liabilities with agreed maturity periods. The table
has been drawn up based on the undiscounted cash flows of the financial
liabilities based on the earliest date on which the Group can be required to
pay. The tables include both current interest payable and principal cash
flows.
Maturity analysis for financial liabilities
Less than 1 year Between 1 - 2 years Between 2 - 5 years More than 5 years Total
€'000 €'000 €'000 €'000 €'000
At 31 December 2023
Borrowings payable: current 2,446 - - - 2,446
Borrowings payable: non-current - - 321,527 - 321,527
Trade and other payables 11,990 - - - 11,990
14,436 - 321,527 - 335,963
Less than 1 year Between 1 - 2 years Between 2 - 5 years More than 5 years Total
€'000 €'000 €'000 €'000 €'000
At 31 December 2022
Borrowings payable: current 1,832 - - - 1,832
Borrowings payable: non-current - - 313,994 - 313,994
Trade and other payables 15,130 - - - 15,130
16,962 - 313,994 - 330,956
Loans are due to mature in September 2026 for the Natixis loan facility and
between 31 December 2026 and October 2027 for the Berliner Sparkasse loan
facilities.
31. Capital commitments
31 December 2023 31 December 2022
€'000 €'000
Contracted capital commitments at the end of the year - 26,750
Capital commitments include contracted obligations in respect of the
acquisition, enhancement, construction, development and repair of the Group's
properties.
32. Related party transactions
Related party transactions not disclosed elsewhere are as follows:
Property Advisor Fees
In November 2018 the Company signed a new contract with the Property Advisor,
which superseded the previous property advisor agreement. Under the Property
Advisory Agreement for providing property advisory services, the Property
Advisor will be entitled to a Portfolio and Asset Management Fee as follows:
(i) 1.2% of the EPRA NTA of the Group where EPRA NTA of the Group is equal to
or less than €500 million; and
(ii) 1% of the EPRA NTA of the Group greater than €500 million.
The Property Advisor is entitled to receive a finance fee equal to:
(i) 0.1% of the value of any borrowing arrangement which the Property Advisor
has negotiated and/or supervised; and
(ii) a fixed fee of £1,000 in respect of any borrowing arrangement which the
Property Advisor has renegotiated or varied.
The management fee will be reduced by the aggregate amount of any transaction
fees and finance fees payable to the Property Advisor in respect of that
calendar year.
The Property Advisor is entitled to a capex monitoring fee equal to 7% of any
capital expenditure incurred by any Subsidiary which the Property Advisor is
responsible for managing.
The Property Advisor is entitled to receive a transaction fee fixed at £1,000
in respect of any acquisition or disposal of property by any Subsidiary.
The Property Advisor shall be entitled to a fee for Investor Relations
Services at the annual rate of £75,000 payable quarterly in arrears.
Effective from 1 July 2023 for a period of 12 months, the Property Advisor fee
was amended as follows:
(i) For a period of 12 months from the 1 July 2023, the amount payable to the
Property Advisor in respect of the Portfolio and Asset Management Fee, the
Capex Fee, the Finance Fees, the Transaction Fees, the Letting Fees and the
Investor Relations Fees, in each case, inclusive of VAT shall be subject to a
cap of €5.0 million.
(ii) The Property Advisor shall be entitled to a disposal fee equal to one (1)
per cent. of the Gross Value of Assets Sold over the period of 12 months
commencing on 1 July 2023
QSix Residential Limited is the Group's appointed Property Advisor. Partners
of QSix Residential Limited formerly sat on the Board of PSD and retain a
shareholding in the Group. During the year ended 31 December 2023, an amount
of €5,805,068 (€5,720,759 Management Fees and €84,309 Other expenses and
fees) (2022: €6,861,680 (€6,773,608 Management Fees and €88,072 Other
expenses and fees)) was payable to QSix Residential Limited. At 31 December
2023 €1,259,889 (2022: €1,584,505) was outstanding. Fees payable to the
Property Advisor in relation to overseeing capital expenditure during the year
of €489,829 (2022: €492,859) have been capitalised.
The Property Advisor is also entitled to an asset and estate management
performance fee. The charge for the period in respect of the performance fee
was €Nil (2022: €Nil). Please refer to note 25 for more details.
Apex Financial Services (Alternative Funds) Limited, the Company's
administrator provided administration and company secretarial services. During
the period, fees of €680,000 were charged (2022: €651,000) with €Nil
(2022: €Nil) outstanding.
Fees payable to Directors during the year amounted to €268,000 (2022:
€275,000).
Dividends paid to directors in their capacity as a shareholder amounted to
€Nil (2022: €937).
33. Events after the reporting date
Since the reporting date, the Company has exchanged contracts on 9 residential
condominium units for a total value of €3.4 million. In March 2024, the
Company exchanged contracts to sell two multi-family assets, comprising 41
residential and 3 commercial units, for a total value of €7.4 million.
In January 2024, the sale of one asset completed for which contracts had been
exchanged in 2023.
Professional Advisors
Property Advisor QSix Residential Limited
54-56 Jermyn Street
London SW1Y 6LX
Administrator, Company Secretary and Registered Office
Apex Financial Services (Alternative Funds) Limited
IFC 5
St Helier
Jersey JE1 1ST
Registrar Link Asset Services (Jersey) Limited
IFC 5
St. Helier
Jersey JE1 1ST
Principal Banker Barclays Bank Plc, Jersey Branch
13 Library Place
St. Helier
Jersey JE4 8NE
UK Legal Advisor Stephenson Harwood LLP
1 Finsbury Circus
London EC2M 7SH
Jersey Legal Advisor Mourant
22 Grenville St.
St. Helier
Jersey JE4 8PX
German Legal Advisor Mittelstein Rechtsanwälte
as to property law Alsterarkaden 20
20354 Hamburg
Germany
German Legal Advisor as Taylor Wessing Partnerschaftsgesellschaft mbB
to German partnership law Thurn-und-Taxis-Platz 6
60313 Frankfurt a.M.
Germany
Sponsor and Broker Numis Securities Limited
45 Gresham Street
London
EC2V 7BF
Independent Property Valuer Jones Lang LaSalle GmbH
Rahel-Hirsch-Strasse 10
10557 Berlin
Germany
Auditor RSM UK Audit LLP
25 Farringdon Street
London EC4A 4AB
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