LONDON, UK: Phoenix Spree Deutschland Limited has acquired an apartment complex in Brandenburg for €24.2 million. The acquisition will initially be financed by existing cash resources and assumes outstanding bank debt of €16.4 million. It is intended that this will be refinanced in the new year.
The property is a former barracks, comprising 259 residential units, one commercial unit and 210 parking spaces. It was redeveloped in 2018/2019 and benefits from efficient floor plans and new build technical standards.
The Property is attractively located in Blankenfelde‐Mahlow, a municipality 7 km south of Berlin. The population in Blankenfelde has increased by 32% within the last 10 years and it is anticipated this will increase further as the deficit of housing supply in central Berlin will lead to a higher demand in the surrounding metropolitan area.
The stock of above standard rental housing has lagged demand and asking rents in the surrounding area are estimated to have increased by 13% within the last 12 months.
The property has benefitted from its redevelopment in 2018/19 and a refurbishment programme which has seen 155 units receive new facades and insulation, new windows, balconies, electricity, pipes and outside facilities.
A further refurbishment of 40 units is ongoing and expected to be completed to the same standard by the end of Q1/2020. The last part of the housing complex will be vacated before the end of 2020, after which the redevelopment of another 65 units is expected to be completed within a twelve-month period. The entire complex is heated by a thermal power station.
In January 2021 a further commercial unit will become vacant with outline planning permission for a new three-storey building with approximately 15 units. Outline planning permission has been sought for the construction of a further residential building and the complex offers further densification potential. In total, the whole complex offers new build potential for approximately 60 additional units which is not reflected in the current underlying IRR targets.
Robert Hingley, Chairman of Phoenix Spree Deutschland Limited, commented: “We are delighted to announce this acquisition which demonstrates continued opportunity, despite the uncertain current regulatory environment. The property meets our strict investment criteria, is well-located with strong population and demographics, and there is significant potential to add value through our active asset management strategies.
“In addition to enabling us to take advantage of acquisition opportunities, our recent refinancing has also enabled us to deliver further value to shareholders through share buy-backs at a significant discount to EPRA NAV. Our condominium strategy also continues to progress well.”
The Company expects to announce the year-end 2019 valuation for its Portfolio of investment properties in late January 2020.