Company Announcements

21 March 2022

Phoenix Spree Deutschland Limited

(The "Company" or "PSDL")

 Acquisition of portfolio of properties for €18.5 million

Phoenix Spree Deutschland (LSE: PSDL.LN), the UK listed investment company specialising in German residential real estate (the "Fund"), is pleased to announce that it has exchanged contracts to purchase and forward fund a new development of 34 semi-detached houses ("the Acquisition").

Highlights:

·    Portfolio of 34 semi-detached houses with completion expected in Q4 2024.

·    Asset deal with a purchase price of €18.5 million, excluding acquisition costs, with no broker commission incurred.

·    Price per square metre of €4,323, which represents an estimated prospective gross yield of 3.5% based on current market rents, with significant rental growth anticipated prior to completion.

·    Acquisition located in Erkner (Brandenburg), a location in the Berlin Beltway, adjacent to the new Tesla Giga factory, which is being constructed at cost of Eur 4bn and is expected to employ around 40,000 staff.

·    Technical construction provides high energy-saving standards with geo-thermal heat pumps and electric vehicle charging stations for every unit.

·    Acquisition structured as a forward deal and funded entirely through a new acquisition debt facility agreed with Natixis and announced on 25 January 2022.

·    Forecast investment returns have been rigorously benchmarked against the alternatives of share buy-backs and the Portfolio IRR target.

Strong demographics with potential for rental growth

The property is located in Erkner, part of the Greater Berlin metropolitan area, approximately 30km southeast from the Berlin city centre. QSix ("the Property Advisor") expects that the area will display positive demographic given the shortage of supply in the central Berlin rental market. Likely migration from central Berlin is anticipated to result in increased rents, condominium prices and prices for single-familiy homes, in particular.

Erkner provides S-Bahn and train connections several times an hour (30 minutes to Alexanderplatz) and direct access to the motorway, A10. It is also situated a short drive from the recently opened international airport in Schoenefeld. The town has approximately 12,000 inhabitants and is located adjacent to the new Tesla Giga Factory in Grünheide, which will employ up to 40,000 employees when fully operational.

Each house will have an electric car charging point, triple glazing and heating using a combination of hybrid solar collectors and brine/water heat pumps. These energy saving measures have led to the asset being given a KfW 55 energy efficiency rating, one of the highest ratings that new builds can be given. The energy-efficient nature of the acquisition highlights the Company's commitment to ensuring that new-build acquisitions meet the highest efficiency standards. 

The Company will continue to review future potential acquisition opportunities. These will be pursued only in instances where they meet the Company's strict investment return criteria and screen favourably against the alternative of share buy-backs. 

Mittelstein acted as legal advisors to PSD on the Acquisition.

Jörg Schwagenscheidt, Partner and Chief Executive of QSix Germany commented:

"We are pleased to have exchanged contracts on an attractive portfolio of assets which meet our strict acquisition criteria. With its close proximity to the new Tesla factory, the town of Erkner is likely to experience strong medium-term demographic trends which should underpin long-term rental and property values in the area and, ultimately, deliver value for our shareholders."

Legal Entity Identifier: 213800OR6IIJPG98AG39

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