REG - Phoenix SpreeDeutsch - Financial results for the year ended 31 Dec 2025
Today 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20260423:nRSW5662Ba&default-theme=true
RNS Number : 5662B Phoenix Spree Deutschland Limited 23 April 2026
Phoenix Spree Deutschland Limited
(the "Company" or "PSD")
Results for the year ended 31 December 2025
First return of capital to shareholders under Portfolio realisation strategy
Phoenix Spree Deutschland Limited (LSE: PSDL.LN), the UK-listed investment
company specialising in German residential real estate, announces its results
for the year ended 31 December 2025. The Board also provides an update on the
execution of the Company's managed Portfolio realisation strategy, approved by
shareholders at the Extraordinary General Meeting on 12 March 2025.
HIGHLIGHTS
€ million (unless otherwise stated) Year to 31 Dec 2025 Year to 31 Dec 2024
Income Statement
Gross rental income 22.7 28.1
(Loss) before tax (13.6) (39.5)
Balance Sheet
Portfolio valuation (€m) 540.1 552.8
EPRA NTA per share (€)¹ 3.40 3.55
EPRA NTA per share (£)¹ ² 2.97 2.93
EPRA NTA per share total return (€%) (4.2) (10.4)
IFRS NAV per share (€) 2.94 3.01
IFRS NAV per share (£) ² 2.56 2.49
IFRS NAV per share total return for the period (€%) ⁴ (2.3) (12.2)
Net LTV (%)³ 41.0 40.3
Operational
Portfolio valuation per sqm (€) 3,686 3,633
Condominium sales notarised (€m) 36.0 9.4
Condominium sales notarised per sqm (€) 4,132 4,295
Vacant condominiums notarised per sqm (€) 4,585 5,027
Occupied condominiums notarised per sqm (€) 3,909 3,430
Annual like-for-like rent per sqm growth (%)⁴ 0.8 1.6
EPRA vacancy (%) 4.1 1.5
1 - EPRA metrics defined and calculated in the notes to the financial
statements.
2 - Calculated at FX rate GBP/EUR 1:1.146416 as at 31 December 2025 (31
December 2024: GBP/EUR 1:1.2097).
3 - Net LTV uses nominal loan balances 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 disposals in the period.
Strategy implementation on track
· The Compulsory Redemption Facility was approved at the EGM in June
2025, establishing a clear framework for capital returns.
· In November 2025, the Company completed the refinancing of all
borrowings, securing a new €255m, five-year, interest-only facility.
· The refinancing removed previous restrictions on condominium pool
expansion and shareholder distributions, materially enhancing operational
flexibility.
· The Condominium Sales Pool was expanded to 40 properties (861 units
remaining available for sale at 31 December 2025), with a further 227 units
expected to be added in H1 2026.
2025 condominium sales ahead of target
· During 2025, 122 units were notarised for €36.0m, exceeding the
€30m target by 20%, and up from €9.4m in 2024.
· Average achieved pricing before disposal costs was at a 4.1%
premium to the most recent property valuation prior to sale. Vacant units
achieved a 18.6% premium to carrying values, while occupied units were sold at
a 2.8% discount.
· Since year-end, a further 56 units have been notarised
(€16.5m), with 35 units (€10.3m) under reservation.
· The Company is targeting condominium notarisations of at least
€55m in 2026 and, with €16.5m already notarised since year-end and a
further €10.3m under reservation, remains on track to deliver this target.
First capital return to shareholders
· The Board is delighted to announce that an aggregate of £17.5m
will be returned to shareholders - the first return of capital under PSD's
managed Portfolio realisation strategy.
· This will be effected by means of a pro rata Compulsory Redemption
of Ordinary Shares. All shareholders will have shares redeemed automatically,
in proportion to their holdings.
· The Compulsory Redemption Price per Ordinary Share to be redeemed
will be £2.56.
· Subject to continued successful implementation of the managed
Portfolio realisation strategy and retention of prudent cash balances, the
Board aims to make two returns of capital to shareholders annually. Further
details are set out in a separate RNS announcement released today.
Portfolio valuation stabilising
· The total Portfolio was valued at €540.1m at 31 December 2025,
representing a like‑for‑like increase of 1.5% on a per sqm basis.
· The Condominium Sales Portfolio was valued at an average of
€4,191 per sqm, a like‑for‑like per sqm increase of 3.1%, reflecting the
pricing premium achievable through individual unit sales.
· The PRS Portfolio was valued at an average of €3,288 per sqm, up
0.8%, representing the first annual like‑for‑like valuation increase since
2022 and indicating stabilisation in the Berlin residential market.
Cost reduction - a priority for 2026
· Cost reduction is a priority for 2026 as the Portfolio contracts
through condominium sales.
· Property‑level and administrative costs are expected to reduce
progressively as assets are sold and net asset value declines.
· Administrative expenses in 2025 were elevated by non‑recurring
items, including legal, lender and other professional fees associated with the
refinancing (facility negotiation, documentation and related advisory work),
the acceleration of condominium sales and the continuation vote at the
AGM/EGM.
· Following completion of these discrete actions, the related cost
burden is expected to reduce materially.
· Capital expenditure in 2025 reflected the front‑loaded
preparation of four condominium tranches and is expected to fall materially in
2026 and beyond.
Outlook
· The Company enters 2026 with positive momentum, supported by an
expanded condominium sales pool, completed refinancing and a clear capital
return framework.
· The Berlin condominium market continues to demonstrate resilience,
underpinned by structural supply‑demand imbalance and improving financing
conditions.
· Regular capital returns are expected to be made from net sale
proceeds, subject to cash availability, associated debt repayment and covenant
headroom.
· The cost base is expected to reduce materially as one‑off items
do not recur and the Portfolio continues to contract.
· The Board remains mindful of external uncertainties, including
ongoing geopolitical tensions and conflict in the Middle East, which may
affect interest rates and broader market sentiment. However, the Company's
strategy is underpinned by long‑dated financing, operational flexibility and
the ability to calibrate sales pacing in response to market conditions.
Robert Hingley, Chair of Phoenix Spree Deutschland, commented:
"2025 marked the shift from planning to execution, with accelerated
condominium sales, completion of the refinancing and the launch of a capital
return framework. Results to date support our strategy: condominium sales
achieved premiums to latest carrying values.
With refinancing complete, an expanded pool of condominium assets and a clear
cost reduction trajectory, the Company enters 2026 focused on disciplined
delivery - maximising value from the condominium sales programme, returning
capital to shareholders and reducing the cost base as the Portfolio
contracts."
Annual Report and Accounts
The full Annual Report and Accounts will shortly be available to download from
the Company's webpage 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.
For further information, please
contact:
Phoenix Spree Deutschland Limited +44 (0)20 3937 8760
Stuart
Young
Deutsche Bank AG (Corporate Broker) +44 (0)20 7260 1263
Hugh Jonathan
Teneo (Financial PR) +44 (0)20 7645 3591
Robert Yates
CHAIRMAN'S STATEMENT
Overview
In the year ended 31 December 2025, Phoenix Spree Deutschland made significant
progress in executing its strategy.
During the year, shareholders approved the Company's managed Portfolio
realisation strategy, implementation of the condominium sales programme
accelerated, and the Company completed a comprehensive refinancing. Together,
these provide a strong foundation as the Company enters the next phase of its
realisation programme.
Shareholder approval of strategy
At the Extraordinary General Meeting held on 12 March 2025, shareholders voted
overwhelmingly to approve the Company's managed Portfolio realisation strategy
and the continuation of the Company. This decision provided the Board with a
clear mandate to accelerate condominium sales, reduce leverage and return
capital to shareholders.
In June 2025, shareholders approved the Compulsory Redemption Facility at the
EGM. The Facility establishes a transparent and equitable mechanism for
returning capital to shareholders on a pro‑rata basis as sale proceeds are
realised.
Condominium sales
The condominium sales programme became the central operational focus during
the year. Condominium sales in 2025 exceeded the Company's original targets,
with achieved pricing validating independent balance sheet valuations. During
the year, the Condominium Sales Pool was expanded significantly, providing
improved visibility on future sales volumes and supporting the acceleration of
the programme into 2026.
Refinancing and capital structure
In November 2025, the Company completed the refinancing of all borrowings,
securing a new €255m, five‑year, interest‑only facility.
The new facility removed previous restrictions on condominium sales volumes
and shareholder distributions, materially enhanced operational flexibility,
and provides a stable debt platform aligned with the expected duration of the
realisation programme.
Portfolio valuation and market conditions
Portfolio valuations stabilised during the year, reflecting improving
conditions in the Berlin residential market. As at 31 December 2025, the total
Portfolio recorded a like‑for‑like valuation increase, the second
full‑year increase since 2022. The Condominium Sales Portfolio continued to
benefit from the premium achievable through individual unit disposals, while
the Private Rental Sector ("PRS") Portfolio also recorded its first annual
like‑for‑like valuation increase since 2022.
These valuation movements provide encouraging evidence that the Berlin
residential market is stabilising following the correction experienced in
recent years.
Costs
Cost discipline is a central focus. Expense levels in 2025 reflect several
clearly identifiable, non‑recurring items linked to shareholder approvals,
refinancing, and the acceleration of condominium sales, alongside
front‑loaded capital expenditure to prepare four tranches of properties for
sale.
These costs are expected to decline as the programme matures and the Portfolio
contracts, and the Board expects the cost base to reduce materially over time.
Responsible business and governance
Responsible business practices continue to underpin the execution of the
Company's strategy. The Board and the Property Advisor remain committed to
fair and transparent engagement with tenants throughout the condominium sales
process, fully respecting statutory protections and offering tenants the right
of first refusal to buy their home.
As the Company progresses through a managed realisation of its Portfolio, the
Board recognises that strong governance and responsible conduct remain
essential. Oversight of environmental, social and governance ("ESG") matters
continues to form part of the Board's stewardship, with particular focus on
tenant engagement, regulatory compliance and the orderly management of the
Portfolio during transition.
The Company has maintained its commitment to community engagement and
charitable initiatives consistent with its footprint in Berlin, reflecting the
Board's view that responsible behaviour and social contribution remain
important throughout the wind‑down period. Further detail on ESG priorities,
stakeholder engagement and charitable activity is provided in the Corporate
Responsibility section of this report.
Outlook
The Board's focus is firmly on disciplined delivery. The priorities for 2026
are to accelerate condominium sales, commence capital returns to shareholders,
and ensure that the cost base contracts in line with the reducing Portfolio.
With refinancing complete, an expanded sales pipeline, improving market
conditions and a clear capital return framework in place, the Board believes
the Company is well positioned to execute its strategy and deliver value for
shareholders.
The Board remains mindful of external uncertainties, including ongoing
geopolitical conflict in the Middle East, which may affect broader market
sentiment. Nevertheless, the Company's strategy is underpinned by operational
flexibility, long‑dated financing and a conservative capital structure,
allowing execution to be adapted as market conditions evolve.
On behalf of the Board, I would like to thank our shareholders, partners and
advisers for their continued support.
Robert Hingley
Chairman
THE CONDOMINIUM SALES STRATEGY
Portfolio realisation strategy
The Company's managed Portfolio realisation strategy is centred on the
disposal of residential assets through individual condominium sales. The
objective is to maximise aggregate net sale proceeds over the life of the
programme by capturing the structural pricing premium achieved through
individual unit disposals relative to institutional PRS valuations, while
maintaining full compliance with German tenant protection legislation.
Relative to bulk PRS disposals, individual condominium sales allow the Company
to monetise assets at materially higher €/sqm values, while retaining
flexibility over timing and execution. The strategy prioritises return
optimisation, with sales activity calibrated to balance pricing outcomes,
timing and risk. Sales are delivered through an integrated operating platform,
enabling the Company to coordinate legal preparation, tenant communications,
broker activity and building‑level governance across multiple assets
concurrently, while maintaining consistent oversight and control.
Structural pricing differentiation
Berlin's residential market continues to demonstrate a persistent pricing
differential between individual condominium transactions and institutional PRS
portfolio valuations. This differential reflects distinct buyer profiles,
financing dynamics, regulatory considerations and exit flexibility, and has
remained evident across market cycles, including periods of weaker
institutional investor demand.
Realised outcomes remain dependent on buyer demand, financing availability,
interest rate conditions-shaped in part by geopolitical events such as
conflict in the Middle East-and regulatory constraints at the time of sale.
Given the Company's scale, condominium sales represent only a very modest
share of total annual transaction volumes in Berlin. This supports our
approach to disciplined execution without exerting pressure on local market
pricing. It also supports a controlled, data‑led approach to pacing, where
sales can be adjusted in response to observed pricing and buyer demand
signals.
Vacant, occupied and PRS pricing dynamics
Vacant units consistently achieve materially higher prices than occupied
units, reflecting broader buyer appeal and the absence of tenancy‑related
constraints.
Occupied units are sold either to tenants or to third‑party investors and
are priced at a discount to vacant units to reflect statutory tenant
protections. Both vacant and occupied condominium sales achieve prices above
equivalent PRS portfolio valuations, underscoring the structural pricing
premium associated with individual unit disposals.
This hierarchy directly informs the Company's execution strategy, with sales
pacing calibrated to maximise the proportion of vacant sales over time, while
remaining fully compliant with tenant protections. The calibration requires
active management of multiple workstreams - tenancy status, legal readiness,
marketing sequencing and broker capacity - to optimise aggregate outcomes
rather than accelerate volume at the expense of value.
Table: Pricing dynamics - vacant, occupied and reference valuations
Category Average price per sqm Premium to PRS Portfolio valuation per sqm
Vacant condominiums notarised in 2025 €4,585 39.4%
Occupied condominiums (tenant purchasers) notarised in 2025 €4,018 22.2%
Occupied condominiums (investor purchasers) notarised in 2025 €3,647 10.9%
JLL PRS Portfolio valuation as at 31 December 2025 €3,288 -
Gross sale prices before tax; excludes approximately 7% broker fees. Sources:
notarised transaction data and JLL Portfolio valuation as at 31 December 2025.
Premiums shown relative to JLL PRS portfolio valuation as at 31 December 2025.
Tenant law, vacancy creation and timing
German residential tenancy law provides strong statutory protections,
including in many cases the right of first refusal for tenants to purchase
their own unit and security of tenure. The Company cannot require or encourage
tenants to vacate and must rely on natural vacancy creation. Historically,
tenant turnover across the Portfolio has averaged approximately 8-10% per
annum.
This rate of vacancy creation is a critical input into sales strategy. Vacant
units typically achieve materially higher prices than occupied units;
extending the sell-down period therefore increases the proportion of vacant
units available for sale, improving blended pricing and aggregate proceeds.
While this constrains sales pace, it supports value maximisation for
shareholders over time.
The Board therefore currently considers that shareholder returns are most
likely to be maximised through a disciplined, multi‑year execution approach,
which balances pricing outcomes against the timing of cash realisation. The
Board does not believe that a rapid disposal of assets would be
value‑maximising, as it would materially reduce achieved pricing and overall
returns.
Execution pacing and sales sequencing therefore remain under active Board
oversight and are calibrated to prevailing market conditions, achieved pricing
evidence and the evolving mix of vacant and occupied units, with the objective
of delivering orderly, value‑led realisation rather than maximising
short‑term disposal volumes.
Sales velocity and execution discipline
Sales velocity is actively managed using the Average Annualised Sales Rate
("AASR"), which measures the pace at which available inventory is absorbed.
AASR provides a consistent framework for calibrating execution speed in
response to market conditions, pricing signals and the evolving mix of vacant
and occupied sales.
Sales pacing is adjusted both in response to observed buyer demand and as a
deliberate tool to optimise pricing outcomes. Where demand signals soften, the
Company has the flexibility to defer launches without compromising solvency or
covenant compliance, reflecting its long‑dated, non‑amortising debt
structure.
Following programme‑wide tenant notification in 2025, initial tenant
take‑up was strong, resulting in an elevated AASR during the year. This
reflected a one‑off demand response to tenant notifications rather than a
structural increase in underlying market absorption.
As tenant priority purchase windows expire and vacancy increases, execution
pace is expected to moderate towards a disciplined, multi‑year sell‑down
profile. This transition supports a higher proportion of vacant sales and
improved aggregate outcomes. Effective delivery depends on active monitoring
of lead quality, conversion timelines and achieved €/sqm.
Table: Condominium Average Annualised Sales Rate (AASR)
Period Opening units Notarisations New units added Closing units AASR
Q1 2025 104 23 258 339 42.1%
Q2 2025 339 28 0 311 38.3%
Q3 2025 311 37 282 556 36.8%
Q4 2025 556 34 294 816 32.6%
Q1 2026 816 43 0 773 28.5%
Average annualised sales rate is calculated by dividing the number of units
sold in a given month by the total number of units available for sale at the
beginning of that month. This result is then annualised, based on the number
of days in the month, and averaged across historical months. To reduce
volatility in the calculation, newly listed units are only included one month
after marketing begins. This adjustment accounts for the typical delay before
sales commence. AASR reflects observed absorption of available inventory in
each period and is influenced by the timing of tenant notifications, tranche
additions and the mix of vacant and occupied units. It is not a target metric
and should not be extrapolated as a steady‑state execution rate.
Condominium sales pipeline
Properties are introduced into the Condominium Sales Pool in defined tranches,
reflecting legal and operational readiness and the timing and scale of
required preparatory works. This tranche‑based approach provides clear
visibility over the evolving sales pipeline while preserving flexibility to
calibrate execution pace in response to market conditions, pricing outcomes
and tenant processes.
Table: Condominium preparation and pipeline
Property Group Added to Sales Pool As at 31 December 2025 Units at Launch
Units Sqm Properties Units Sqm Properties
Tranche 1 On market 2024 84 7,571 5 108 9,291 6
Tranche 2 December 2024 213 16,563 10 258 19,711 10
Tranche 3 June 2025 270 18,771 12 282 19,549 12
Tranche 4 Q4 2025 294 19,760 12 294 19,760 12
Total Tranches 1-4 2024 - 2025 861 62,665 39 942 68,311 40
Tranche 5 Commencing Q2 2026 227 14,968 8 227 14,968 8
Total Tranches 1-5 2024 - H1 2026 1,088 77,633 47 1,169 83,279 48
1. The unit count, sqm and number of properties shown at
launch and at 31 December 2025 are based on the legal completion date
(transfer of title), not the notarisation date..
2. The number of properties in Tranche 1 decreased from 6 to 5
following the sale of all units within one property.
3. Inclusion of properties within a tranche reflects legal and
operational readiness and does not constitute a commitment to execute sales
within any fixed timeframe. Tranche sequencing and sales pacing remain subject
to market conditions, pricing outcomes, tenant processes and Board discretion.
By the end of 2025, all properties included in Tranches 1 to 4 had completed
the required legal, technical and operational preparations and had been
brought to market, as reflected in the as at 31 December 2025 columns of the
Condominium Preparation and Pipeline table above. The "units at launch"
columns reflect the initial introduction of properties and units rather than a
single point‑in‑time snapshot.
Tranche 5 is expected to be added to the Condominium Sales Pool from Q2 2026
and comprises 8 properties, representing approximately 227 units and 14,968
sqm, as shown in the table above. As with earlier tranches, inclusion reflects
the completion of property‑specific preparatory works and confirmation of
legal and operational readiness, rather than a commitment to execute sales
within any fixed timeframe.
Tranche sequencing and sales pacing remain subject to market conditions,
pricing outcomes, tenant processes and Board discretion. The tranche framework
is designed to support orderly execution, disciplined capital allocation and
effective governance throughout the realisation programme.
Condominium preparation process
Each property entering the condominium sales programme is subject to a
structured, building‑specific preparation process prior to the first unit
being offered for sale. The process is overseen and executed by the Property
Advisor and is designed to ensure assets are brought to market in a legally
compliant and sale‑ready condition.
Preparatory capital expenditure is assessed on a property‑by‑property, and
unit by unit basis against defined cost‑benefit thresholds, with proposed
works evaluated by reference to expected €/sqm value uplift relative to
cost. Where projected returns do not meet the required threshold, works are
reduced, deferred or excluded. Capital commitments above defined limits are
subject to explicit Board oversight and approval, with authority levels
calibrated to execution phase and asset specific risk.
Pricing oversight and controls
The condominium sales programme is implemented through a panel of specialist
residential brokers, appointed, coordinated and overseen by the Property
Advisor. The broker panel was expanded during 2025 to increase execution
resilience and geographic market coverage in line with the scale and
complexity of the sales pipeline. Execution is subject to defined authority
limits, with broker appointments, mandates and changes governed by agreed
parameters and reported to the Board.
Achieved pricing is continuously benchmarked against modelled assumptions,
recent transaction evidence and prevailing market conditions. The performance
of each broker is monitored against defined KPIs, including sales velocity,
achieved €/sqm, conversion timelines and lead quality. Performance data are
reviewed regularly by the Property Advisor and reported to the Board as part
of ongoing oversight.
Where sales performance diverges from expectations, corrective actions are
implemented, including re‑pricing, revised marketing strategies, asset
reallocation across brokers or the appointment of additional agents. This
on-the-ground oversight reduces execution risk and supports orderly sales
progression, particularly as unit disposals increase third-party ownership and
WEG (Wohnungseigentümergemeinschaften, being the statutory owners'
associations governing common property and building‑level decision‑making)
governance becomes more complex.
The Board considers this continuous feedback loop - pricing evidence,
conversion data and active intervention where required - to be an important
governance control feature of the programme.
Tenant sales and statutory compliance
In accordance with German residential property law, some tenants benefit from
a statutory right of first purchase (Vorkaufsrecht). Prior to any
open‑market sale, all tenants are notified and offered the opportunity to
purchase their apartment.
Tenant sales are treated as an integral part of the sell‑down programme,
reflecting both statutory requirements and a rational trade‑off between
pricing, timing and execution risk. While tenant sales typically generate
lower per‑unit pricing than vacant open‑market transactions, they reduce
void exposure, avoid refurbishment costs and support constructive tenant
engagement during the sell‑down process. In practice, sales to tenant
purchasers often achieve higher pricing than sales of occupied units to
investor purchasers, reflecting lower risk, reduced execution friction and the
absence of third‑party yield requirements. Accordingly, tenant sales reduce
aggregate execution risk and support orderly progression of the programme,
notwithstanding lower per‑unit pricing relative to vacant open‑market
sales.
On‑the‑ground oversight and WEG governance
The Property Advisor's Berlin‑based team undertakes regular, systematic site
inspections across the condominium sales pool to monitor building condition,
presentation standards and operational readiness. This on‑the‑ground
oversight enables early identification of maintenance, compliance or
presentation issues, with remediation coordinated across contractors, property
managers and owners' associations as WEG governance becomes progressively more
complex.
For properties within the condominium sales programme, the Property Advisor
manages WEG governance on the Company's behalf as majority owner, in
accordance with Board‑approved governance arrangements. This includes
representation at owners' assemblies, oversight of Hausgeld budgets,
supervision of property managers and coordination of decision‑making across
multiple stakeholder groups. As third‑party ownership increases through
individual unit sales, governance complexity rises materially, requiring
active management to ensure service continuity, compliance with WEG
requirements and the orderly progression of sales.
This governance workstream will become increasingly critical as unit ownership
fragments, with consistent representation, documentation discipline and
continuity of building‑level decision‑making being required over an
extended period. The Board considers the integrity and continuity of this
on‑the‑ground governance function to be fundamental to protecting service
quality, maintaining saleability and managing execution risk during the
realisation programme.
2025 condominium sales outcome
Condominium sales outperformed the Company's original target in 2025, with
notarisations exceeding the €30m level communicated at the start of the
year. The Company notarised 122 units for €36.0m (2024: €9.4m),
representing a 20% outperformance versus plan.
Sales pricing remained resilient during the year. Achieved transaction pricing
continues to support the latest balance sheet valuations prepared by JLL, the
Company's independent valuer, taking account of the mix of vacant and occupied
sales. The average notarised price of €4,132 per sqm equates to a 4.1%
premium to their most recently obtained property valuation. Vacant units
achieved an average price of €4,585 per sqm, an 18.6% premium to carrying
values, while occupied units achieved €3,909 per sqm, representing a 2.8%
discount to carrying values.
Sales mix
In 2025, the ratio of vacant to total notarisations was 33.6%, below the
expected long‑run range of 40-50%. This reflected the initial
programme‑wide offering of units to existing tenants. Existing tenant demand
is expected to moderate in 2026 as priority purchase windows expire, partially
offset by new tenant demand from Tranche 5. As at 31 December 2025, 114 vacant
units were available for sale, representing 13.2% of active sales pool stock.
Positive start to 2026
Since the financial year end, a further 56 units have been notarised, with a
combined sales price of €16.5m. A further 35 units (€10.3m) have been
reserved and are pending notarisation. With further units from Tranche 5
expected to be added to the market during H1 2026, the Company enters the year
with a strong pipeline, with sales pacing remaining subject to market
conditions and pricing outcomes.
Table: 2025 condominium notarisations and reservations
Notarisation period / status Units Sales Value (€m) Price per sqm (€) Premium / discount to Portfolio carry value(1,2) Premium / discount to asset carry value(1,3)
Vacant notarisations
Notarised Q1 2025 6 2.2 5,504 51.6% 26.0%
Notarised Q2 2025 10 2.8 4,731 30.3% 21.3%
Notarised Q3 2025 10 2.9 4,031 10.4% 13.0%
Notarised Q4 2025 15 5.3 4,539 24.3% 17.5%
Total vacant notarisations 2025 41 13.2 4,585 25.8% 18.6%
Notarised Q1 2026 17 5.7 4,332 17.3% 13.8%
Notarised Q2 2026 to date 7 2.6 5,296 43.5% 13.1%
Total vacant notarisations 2026 to date 24 8.3 4,594 24.4% 13.6%
Occupied notarisations
Notarised Q1 2025 17 4.3 3,493 -3.8% -8.0%
Notarised Q2 2025 18 5.3 3,819 5.2% -8.1%
Notarised Q3 2025 27 7.0 3,972 8.7% 1.7%
Notarised Q4 2025 19 6.1 4,270 16.9% 1.0%
Total occupied notarisations 2025 81 22.8 3,909 7.3% -2.8%
Notarised Q1 2026 25 6.5 4,225 14.4% -4.0%
Notarised Q2 2026 to date 7 1.7 4,493 21.7% -4.5%
Total occupied notarisations 2026 to date 32 8.3 4,278 15.9% -4.1%
Total notarisations (vacant and occupied) 2025 122 36.0 4,132 13.4% 4.1%
Total notarisations (vacant and occupied) 2026 to date 56 16.5 4,431 20.1% 4.0%
Total outstanding reservations 35 10.3 4,505 22.0% 3.9%
Total reservations and notarisations 2026 to date 91 26.8 4,459 20.8% 4.0%
Notes: 1. Carry value is determined using the most recent JLL valuation per
sqm. For notarisations completed before 30 June 2025, the applicable valuation
is as at December 2024. For notarisations completed on or after 30 June 2025,
the applicable valuation is as at 30 June 2025. 2. The Portfolio carry value
is the average valuation per sqm across all assets within the Company's
Portfolio. 3. The asset carry value refers to the JLL valuation of the
specific properties associated with units being notarised during the period.
PORTFOLIO VALUATION
The Berlin residential market demonstrated early signs of valuation
stabilisation in 2025, following a prolonged period of valuation correction
across German residential real estate.
Condominium values continue to command a significant premium over PRS values.
This pricing differential, which has remained evident across market cycles,
reflects owner-occupier demand, the scarcity of legally divided stock and the
structural premium achievable through individual apartment sales.
While investor demand in the PRS segment remains subdued, PRS valuations have
now stabilised. This indicates that the cyclical correction experienced in
recent years has moderated, notwithstanding continued macroeconomic and
geopolitical uncertainty.
Table: JLL valuation summary
€m (unless stated) Total Condominium Sales Portfolio PRS
Portfolio
Portfolio
2025 2024 2025 2024 2025 2024
Properties 73 74 40 16 33 58
Total units 2,081 2,161 891 366 1,190 1,795
Total sqm ('000) 146.5 152.2 64.7 29.0 81.9 123.2
Valuation (€m) 540.1 552.8 271.0 110.8 269.1 442.0
Value per sqm (€) 3,686 3,633 4,191 3,820 3,288 3,589
LFL growth per sqm (YoY) 1.5% 0.8% 3.1% 10.6% 0.8% (1.4%)
Total Portfolio: Like-for-like increase of 1.5%
As at 31 December 2025, the total Portfolio value was €540.1m, with an
average value of €3,686 per sqm and a gross fully occupied yield of 3.6%. On
a like‑for‑like basis (adjusted for disposals), the Portfolio value
increased by 1.5% during the year, representing the second consecutive year of
like‑for‑like valuation growth since 2022.
Condominium Portfolio: Like-for-like increase of 3.1%
As at 31 December 2025, the Condominium Portfolio (40 properties, 891 units)
was valued at €271.0m (€4,191 per sqm). On a like‑for‑like basis, the
value per sqm of these properties increased by 3.1% during the year. This
uplift is consistent with achieved transaction pricing during the year.
PRS Portfolio: Like-for-like increase of 0.8%
As at 31 December 2025, the PRS Portfolio (33 properties, 1,190 units) was
valued at €269.1m, with an average value of €3,288 per sqm. On a
like‑for‑like basis, the value per sqm of these properties increased by
0.8% during the year, marking the first annual valuation increase since the
market downturn began in 2022.
While PRS values remain below peak levels, this stabilisation should help
reduce downside risk as the Company progresses with its realisation programme.
Strategic context
The valuation outcomes in 2025 reinforce the Company's strategic focus on
individual condominium sales as the primary route to value realisation. The
persistent pricing differential between condominium values and PRS portfolio
valuations continues to underpin the managed realisation strategy, while
stabilisation across the wider Portfolio should help reduce downside risk as
execution progresses.
As the sales programme progresses, valuation outcomes are expected to be
increasingly driven by realised transaction evidence, rather than external
assessments or capital‑market sentiment.
2025 FINANCIAL RESULTS
OVERVIEW
The 2025 financial year represents the first full year of implementation of
the Company's managed realisation strategy, approved by shareholders on 12
March 2025. The year was characterised by a shift from planning to delivery,
including accelerated condominium sales, the completion of a comprehensive
refinancing and the establishment of a framework for capital returns to
shareholders.
The financial statements reflect a business in transition rather than a
steady‑state operating profile. Portfolio disposals and condominium sales
reduced the scale of the rental business during the year, while capital
expenditure increased as properties were prepared for individual unit sales.
Administrative costs were elevated by professional fees associated with the
execution of the strategy, including obtaining shareholder approvals and the
refinancing. These items relate to discrete actions undertaken during the year
and are not indicative of the ongoing cost base.
Asset‑level performance was resilient. The Portfolio recorded its second
consecutive year of like‑for‑like valuation growth, and condominium sales
exceeded the Company's full‑year target.
As the realisation programme progresses, the Board and the Property Advisor
will remain focused on ensuring that the cost base reduces as the Portfolio
contracts. Enhanced disclosure has been provided in this report to explain the
structure, drivers and expected reduction of property‑level and
administrative costs as assets are sold, and to provide shareholders with
clearer visibility on cost trajectories over the wind‑down period.
Table: Financial Highlights
€ million (unless otherwise stated) Year to Year to
31-Dec-25 31-Dec-24
Gross rental income 22.7 28.1
Property expenses (15.3) (15.8)
Administrative expenses (3.3) (3.8)
Investment property fair value loss (2.3) (5.4)
Loss on disposals (2.9) (3.2)
Operating loss (1.1) (0.05)
Reported EPS (€) (0.07) (0.42)
Investment property value 540.1 552.8
Net debt ¹ 222.0 223.1
Net LTV (%) 41.0 40.3
IFRS NAV per share (€) 2.94 3.01
IFRS NAV per share (£) ² 2.56 2.49
EPRA NTA per share (€) ³ 3.40 3.55
EPRA NTA per share (£) ² 2.97 2.93
€ IFRS NAV per share total return for the period (%) ⁴ (2.3) (12.2)
£ IFRS NAV per share total return for the period (%) ² ⁴ (3.1) (16.2)
€ EPRA NTA per share total return for the period (%) ⁴ (4.2) (10.4)
£ EPRA NTA per share total return for the period (%) ² ⁴ (1.1) (14.6)
¹ Net debt is calculated using nominal loan balances rather than the loan
balances on the Consolidated Statement of Financial Position, which include
capitalised finance arrangement fees. ² IFRS NAV per share and EPRA NTA per
share in sterling are calculated using the GBP/EUR exchange rate of 1:
1.146416 as at 31 December 2025 (31 December 2024: 1.2097). ³ EPRA Net
Tangible Assets ("EPRA NTA") is calculated in accordance with the EPRA Best
Practice Recommendations. Further details of the EPRA NTA calculation are set
out in the notes to the financial statements. ⁴ IFRS NAV per share total
return and EPRA NTA per share total return, in euro and sterling, represent
the movement in the relevant net asset value per share during the period,
adjusted for any capital returns made to shareholders, expressed as a
percentage of opening net asset value per share. Sterling returns use the
applicable GBP/EUR exchange rates.
FINANCIAL SUMMARY
Revenue for the year was €22.7m (2024: €28.1m), reflecting the planned
contraction of the rental portfolio as assets were disposed of and units were
sold through the accelerated condominium sales programme. As units are not
re‑let but instead sold as condominiums, rental income received is also
reduced.
Property expenses were €15.3m (2024: €15.8m) and administrative expenses
reduced to €3.3m (2024: €3.8m), reflecting the declining scale of the
Portfolio and the absence of certain elevated costs incurred in the prior
year.
The Company recorded an investment property fair value loss of €2.3m (2024:
€5.4m loss) and losses on disposals of €2.9m (2024: €3.2m), reflecting
valuation movements and the crystallisation of costs associated with asset
sales during the year. Taken together, these items resulted in an operating
loss of €1.1m (2024: operating loss of €0.05m) and reported EPS of
(€0.07) (2024: (€0.42)).
IFRS NAV per share at the period end was €2.94 / £2.56 (2024: €3.01 /
£2.49). EPRA Net Tangible Assets (NTA) per share at the period end were
€3.40 / £2.97 (2024: €3.55 / £2.93).
IFRS NAV and EPRA NTA provide distinct perspectives on value.
IFRS NAV reflects the Group's net asset value under IFRS, including
disposal‑related costs, financing effects and tax items to the extent these
have crystallised (or are required to be recognised) at the reporting date. As
the Company executes its managed Portfolio realisation strategy and sales
complete, these costs and liabilities become realised rather than estimated,
and IFRS NAV is therefore expected to become increasingly representative of
the value ultimately returned to shareholders.
Shareholder returns are expected to be made from net sale proceeds rather than
gross disposal values. Net proceeds represent the cash available for
distribution after deductions for costs of executing sales and managing the
wind‑down, including broker fees and other disposal costs, repayment of debt
and any crystallised tax charges. As these items are incurred and recognised
through execution, IFRS NAV progressively reflects the resulting cash
movements and the settlement (or recognition) of related liabilities.
EPRA NTA, calculated in accordance with the EPRA Best Practice
Recommendations, provides an industry‑standard measure of underlying asset
backing. The Board recognises that EPRA NTA is a widely understood metric and
may remain useful for comparability with other listed real estate companies,
particularly for international investors, even as the Company progresses
through its realisation strategy.
As the sell‑down of the Portfolio advances, the Board expects IFRS NAV and
EPRA NTA to converge over time. This reflects the progressive realisation of
assets, the crystallisation of disposal‑related costs and taxes, and the
simplification of the balance sheet as assets are sold and debt is repaid. As
these effects unwind through execution, the distinction between a hold‑based
valuation framework and a realisation‑based net value measure is expected to
narrow.
Movements in IFRS NAV per share and EPRA NTA per share during the year, and
the resulting total returns, were driven primarily by reported results,
valuation movements, asset disposals and changes in capital structure, as set
out in the financial statements.
RENTAL INCOME
Table: Rental and service charge income
€ million Year to 31-Dec-25 Year to 31-Dec-24
Rental income (net cold rent) 16.8 21.4
Service charge income 5.9 6.7
Gross rental income 22.7 28.1
Gross rental income for the twelve months to 31 December 2025 was €22.7m, a
decline from €28.1m in 2024, reflecting three principal factors.
First, the sale of 16 properties (385 units) in December 2024 permanently
removed their rental contribution from the income statement in 2025. Secondly,
122 units were notarised during the year as part of the accelerated
condominium sales programme, reducing the number of rent‑generating units
within the Portfolio. Thirdly, reported vacancy increased as units were
intentionally held vacant to facilitate refurbishment and sale launch
sequencing ahead of individual unit sales.
These reductions are an expected and intentional consequence of the
realisation strategy. Units generating modest annual net rental income are
being sold for prices that represent a significant multiple of that income,
crystallising substantial accumulated value in a single transaction. As a
result, the reduction in rental income is accompanied by materially higher
capital realisation on a risk‑adjusted basis.
Service charge income for the year was €5.9m (2024: €6.8m) and represents
recovery from tenants of statutory service costs advanced by the Company and
settled through the annual reconciliation. These costs include heating, water,
waste disposal, cleaning, lift maintenance and building insurance. Service
charge income and direct property expenses are therefore closely correlated in
aggregate, with service charge income representing, in substance, the recovery
of direct property‑level operating costs.
Accordingly, service charge income is largely neutral in economic terms, with
the net position reflecting only non‑recoverable elements, principally in
relation to vacant apartments. Both service charge income and the associated
cost base are therefore expected to decline broadly in parallel as the
Portfolio contracts.
Annualised Rental Income and Vacancy
31 Dec 2025 31 Dec 2024
Total sqm ('000) 146.5 152.2
Annualised Net Rental Income (€m) 16.8 18.0
Net Cold Rent per sqm (€) 10.8 10.7
Like-for-like rent per sqm growth (%) 0.8 1.6
Vacancy (%) 11.8 8.0
EPRA Vacancy (%) 4.1 1.5
On an annualised basis, contracted net rental income at 31 December 2025 was
€16.8m, a decline of 6.7% versus the prior year. This reflected the reduced
number of units available for rent following condominium sales and a lower
number of new leases signed during the year.
As at 31 December 2025, net cold rent increased to an average of €10.8 per
sqm, up from €10.7 per sqm the previous year. On a like‑for‑like basis,
rental income per sqm grew by 0.8%, compared with 1.6% in 2024. This
moderation reflects the Company's strategic emphasis on selling vacant units
rather than reletting, which in turn prioritises capital expenditure on sales
preparation over investment into PRS properties.
Other factors include a higher incidence of tenant rental challenges and the
termination of a large lease to a municipal authority in advance of
redevelopment planning and sale. The terminated lease related to the Company's
Jühnsdorfer Weg asset, where the building was previously operated under a
single, letting arrangement for temporary accommodation. Termination enabled
the Company to progress redevelopment planning and reposition the asset for
sale but reduces contracted rental income during the transition period.
The new Mietspiegel, which will provide a mechanism to increase in place rents
for qualifying tenants, is expected to be announced in 2026
Residential reversionary re‑letting premium
Market rents remain at record levels. New lettings across the Portfolio during
the year were signed at an average premium of 27.5% to passing rents (2024:
25.8%), equivalent to €14.0 per sqm (2024: €13.8 per sqm). For residential
units only, new lettings were signed at an average premium of 29.9% (2024:
31.0%), also equivalent to €14.0 per sqm (2024: €13.9 per sqm).
During the year to 31 December 2025, 112 new leases were signed (2024: 146),
representing a letting rate of approximately 9.8% of occupied units (2024:
8.5%).
Vacancy
Vacancy is disclosed and primarily monitored on an IFRS basis, reflecting all
units that are not income‑producing at the period end. Reported vacancy
therefore includes apartments that are vacant due to undergoing refurbishment,
or in the process of being sold as condominiums.
As at 31 December 2025, reported IFRS vacancy was 11.8% (2024: 8.0%). The
increase primarily reflects the impact of the condominium sales programme,
including void periods required for refurbishment, compliance works, rather
than any weakening in underlying rental demand.
For comparability with industry reporting, the Company also discloses EPRA
vacancy, which adjusts for certain categories, including units undergoing
development or refurbishment and units held for vacant sale as condominiums.
EPRA vacancy was 4.1% at 31 December 2025 (2024: 1.5%).
The increase in EPRA vacancy reflects a higher number of vacant, marketable
units at the period end, rising from 18 units in December 2024 to 35 units in
December 2025. The principal driver was the Jühnsdorfer Weg asset, which saw
greater unit churn, with 14 vacant units contributing to EPRA vacancy at
December 2025, compared with 4 units at December 2024.
While EPRA vacancy is disclosed for industry comparability, the Board's focus
in the context of the managed realisation strategy remains on controlling the
absolute level and duration of vacancy and associated void costs, while
progressing sales execution in an orderly and value‑led manner.
PROPERTY‑LEVEL AND ADMINISTRATIVE COSTS
Overview and approach to cost comparability
Total property‑level and administrative costs were €18.7m in 2025 (2024:
€19.6m). These costs reflect the operational requirements of managing a
sizeable, predominantly tenanted Berlin residential portfolio while executing
an accelerated condominium realisation programme. Year‑on‑year
comparability is affected by two factors that limit the usefulness of simple
headline comparisons:
· non‑recurring execution and governance costs, incurred in
connection with discrete corporate and portfolio actions; and
· limited reallocations of costs between expense categories,
undertaken to improve economic attribution as execution activity increased.
The reallocation of costs between categories does not affect total costs,
profit or cash flow, but it does affect presentation between administrative
and property‑level expense lines and therefore warrants explanation.
Non‑recurring execution and governance costs, by contrast, reflect discrete
activity undertaken in each period and these do impact reported costs in those
years.
Accordingly, this section explains how non‑recurring items and
classification movements affect period‑on‑period comparability, before
setting out how the underlying administrative and property‑level cost base
behaves as the Portfolio contracts. Further detail on cost drivers and
elimination dynamics is provided in the sections that follow.
ADMINISTRATIVE EXPENSES
Table: Administrative expenses
€'000 2025 2024
Secretarial and administration fees 760 689
Legal and professional fees 1,926 2,044
Directors' fees 256 272
Bank charges 33 26
Profit / (loss) on foreign exchange (9) 22
Depreciation 30 55
Other administrative expenses 413 797
Other income (91) (94)
Total administrative expenses 3,318 3,811
Administrative expenses were €3.3m in 2025 (2024: €3.8m), as reported in
the consolidated income statement. In both years, reported administrative
costs were influenced by non‑recurring execution and governance activity
associated with discrete corporate and portfolio actions undertaken as the
Company transitioned from a long‑term hold strategy to an active managed
Portfolio realisation strategy.
Simple year‑on‑year comparison of reported administrative expenses is
therefore of limited interpretive value. To assist comparability, the table
below presents an illustrative normalisation of administrative expenses,
removing only clearly identifiable non‑recurring execution and governance
items. This analysis is provided for explanatory purposes only and does not
represent a forecast or guidance on future costs.
Table: Normalisation of administrative expenses (2025 vs 2024)
€'000 2025 2024 Commentary
Reported administrative expenses 3,318 3,811 As reported in the income statement
Less: non‑recurring execution and governance costs: Discrete corporate actions
· Portfolio sale legal and advisory fees (273) (98) Transaction‑related execution activity
· EGM / AGM and governance costs (94) - Shareholder approval activity
· Other non‑recurring advisory (Mourant, ESG) (17) - Discrete professional advice
Total non‑recurring adjustments (384) (98)
Costs belonging to property expenses (347) Amounts paid from central bank accounts
Movement in provisions against rental collection (413) (797) Allocated to Administrative costs under IFRS
Indicative normalised administrative cost base 2,521 2,569 Directional, not a forecast
Note: The normalisation removes only discrete execution and governance items
and does not adjust for recurring operating risks, IFRS provisioning mechanics
or changes in Portfolio scale.
In 2025, non‑recurring administrative costs primarily related to residual
transaction and advisory activity, shareholder approvals at the AGM and EGM,
and discrete professional advice associated with execution. In 2024,
non‑recurring costs were predominantly driven by transaction and advisory
activity associated with portfolio disposals. These items are episodic in
nature and are not expected to recur on a comparable scale.
Separately from the normalisation above, the Company refined its cost
classification approach to ensure expenses are reported in the category that
best reflects their underlying economic driver. Certain property‑specific
legal, valuation and advisory costs were reclassified from administrative
expenses into property‑level expenses. These reclassifications were made in
the current year only and the equivalent for 2024 is included in the cost
bridge above.
Following a peer‑group review, the revised presentation more closely aligns
the Company's cost categories with market practice, improving transparency and
comparability for investors.
Movements in provisions against tenant payments of €(0.4)m in 2025 and
€(0.8)m in 2024 are recognised within administrative expenses under IFRS
presentation but relate to property‑level credit and tenancy risk, rather
than to central corporate governance or overheads. These provision movements
arise from tenant arrears and rent‑reduction claims, are economically linked
to the operation of the rental portfolio and would be treated as
property‑level costs under EPRA reporting, which classifies expenses by
underlying property economics rather than IFRS functional presentation. Such
provision movements are inherently variable between periods and are therefore
not treated as non‑recurring items for the purposes of period‑on‑period
comparability.
PROPERTY‑LEVEL EXPENSE COMPOSITION
Overview
Property‑level expenses were €15.3m in 2025 (2024: €15.8m), reflecting
the operational requirements of managing a predominantly tenanted Berlin
residential portfolio while executing the accelerated condominium realisation
programme.
As the Portfolio contracts through disposals, the property‑level cost base
will reduce and ultimately fully extinguish on completion of the sell‑down.
Movements between categories primarily reflect changes in ownership structure,
execution activity and classification, rather than increases in the underlying
economic cost base.
Table: Property‑level expense composition
Cost category Year to 31 December 2025 (€'000) Year to 31 December 2024 (€'000)
Direct property expenses (excl. WEG) 6,432 5,835
WEG contributions 1,064 364
Repairs and maintenance 1,411 1,957
Property Advisor fee 4,276 4,315
Property management expenses 1,043 1,306
Impairment - trade receivables 121 1,178
Other property operating expenses 1,001 800
Total property expenses 15,348 15,755
Direct property expenses (excluding WEG)
Direct property expenses comprise service charges relating to shared building
infrastructure, including cleaning, heating, water, waste disposal, building
insurance and property taxes. In line with standard German residential leasing
practice, the substantial majority of these costs are recoverable from tenants
through the annual Betriebskostenabrechnung. The Company's net economic
exposure is therefore limited to void periods and prescribed non‑recoverable
elements.
Direct property expenses declined year on year, reflecting the reduction in
tenanted units following Portfolio disposals and condominium sales. Once a
unit is sold, the Company ceases to act as landlord and has no residual
exposure. There is no building‑level cost tail once a building is fully
disposed of.
WEG contributions and repairs & maintenance
WEG contributions and Repairs and Maintenance describe the same underlying
communal maintenance activity as buildings transition from single ownership
into condominium ownership structures.
WEG contributions increased materially in 2025 as additional buildings entered
condominium ownership structures. This reflects the establishment of owners'
associations (Wohnungseigentümergemeinschaften, "WEG") and the migration of
communal responsibilities into condominium governance structures.
A significant portion of the increase reflects the reclassification of
maintenance costs from Repairs and Maintenance into Hausgeld, rather than an
increase in the underlying economic cost base. Approximately 60% of Hausgeld
charges are recoverable from tenants.
WEG contributions are transactional and activity‑driven. While elevated
during periods of active sell‑down and condominium formation, they reduce
strictly in proportion to the Company's ownership share and extinguish
entirely on full sale of each building.
Repairs and maintenance costs declined year on year due to (i)
reclassification of communal costs into WEG structures and (ii) the reduction
in the Company's ownership share as units are sold. On sale of the final unit
in a building, all repairs and maintenance costs for that building cease
entirely.
Together, these effects result in a structurally declining Repairs and
Maintenance cost base alongside a temporary increase in WEG contributions
during the condominium formation phase.
Property Advisor fee
Fees payable to the Property Advisor in respect of ongoing management and
execution services are capped at €4.3m. The cap covers annual management
fees and capital expenditure monitoring fees incurred over the life of the
managed realisation programme. Fees reduce progressively as the Portfolio is
realised through asset disposals and mandatory share redemptions, with no
fixed minimum or time‑based continuation.
The capped fee supports the operating capability required to execute the
multi‑asset managed realisation strategy, spanning both the active
condominium sales programme and the ongoing management and subsequent disposal
of the retained PRS Portfolio. This includes integrated oversight of legal
preparation, tenant processes, sales sequencing, broker coordination,
regulatory compliance and on‑the‑ground execution. Transaction‑related
fees are treated separately.
Property management expenses
Property management expenses comprise fees paid to the external property
manager (Core Immobilien) for day‑to‑day portfolio management, including
tenant administration, rent collection, leasing activity and maintenance
coordination.
These costs declined year on year, reflecting the reduction in units under
management. While per‑unit activity may be temporarily elevated during the
active sales phase, this reflects execution timing rather than structural
persistence. Property management fees extinguish entirely on final disposal of
each building.
Impairment - trade receivables
The impairment charge reflects provisions for tenant rent arrears and
Mietminderung claims. The charge declined year on year as the number of active
tenancies reduced. Absolute exposure declines mechanically as the rental
Portfolio contracts and ceases entirely on unit sale.
Other property operating expenses
Other property operating expenses comprise residual property‑level costs,
including legal and court costs, letting fees, valuation costs, EPCs, ESG
expenditure, regulatory filings and certain WEG‑related costs.
These costs increased year on year, reflecting elevated transactional and
execution activity associated with the accelerated condominium sales programme
and increased WEG formation. They are activity‑driven rather than structural
and are expected to decline as execution activity reduces and the disposal
programme completes.
Property cost classification and elimination timing
Property‑level costs are directly related to the Portfolio size and
therefore will reduce in line with the disposal program.
There are no embedded tail costs or continuing contractual obligations beyond
these points. While timing may exhibit short‑term operational lags or
volatility, the structure of the cost base supports a complete unwind to zero
property‑level operating costs on full realisation of the Portfolio.
Table: Property‑level cost drivers and elimination
Cost category Primary driver Recoverability Structural linkage Point of elimination
Direct property expenses Tenanted unit count Substantially recoverable Unit‑linked Unit sale / building sale
Property Advisor fee Net Asset Value Not recoverable Contractual % of NAV or capex NAV extinguished
Repairs and maintenance Ownership share Not recoverable Ownership‑linked Building fully sold
Property management Units under management Not recoverable Unit‑linked Building fully sold
Impairment Active tenancies Not recoverable Tenancy‑linked Unit sale
Other property costs Transaction activity Not recoverable Activity‑driven Sell‑down complete
CAPITAL EXPENDITURE
Capital expenditure by category
Capex category (€m) FY 2025 FY 2024
Like‑for‑like Portfolio 11.4 4.5
Development / held-for-sale 0.4 0.5
Other (incl. capex monitoring fees) 0.8 0.2
Total capital expenditure 12.6 5.2
Notes: Like‑for‑like Portfolio capital expenditure relates to capitalised
investment in properties held throughout the period, excluding acquisitions,
disposals and routine maintenance. FY 2025 capital expenditure of €12.6m
reconciles to the Investment Property note and largely reflects capitalised
preparation works for the accelerated condominium sales programme. Routine
maintenance is expensed through the income statement and shown separately.
Capital expenditure relates primarily to capitalised preparation costs
incurred to ready properties for individual condominium sales. These works
include legal structuring, technical preparation, compliance works and related
project management and are capitalised where they enhance saleability and
value realisation.
Importantly, the activities driving the elevated FY 2025 capital spend of
€12.6m are finite and execution‑specific. The majority of this expenditure
relates to the front‑loaded preparation of four condominium tranches that
were brought into the active sales pool during the year. With these
preparatory works now substantially complete, the principal drivers of FY 2025
capital expenditure have been removed.
Capital expenditure in 2026 and later years
A further tranche of properties is expected to enter the Condominium Sales
Pool during H1 2026, which will require additional preparatory investment.
However, this relates to a smaller, discrete programme and does not replicate
the scale or scope of the FY 2025 preparation phase.
The scope, timing and quantum of future capital expenditure are therefore
linked to defined properties and specific preparatory activities, rather than
to an ongoing or open‑ended investment programme. As a result, capital
expenditure is expected to fall materially from FY 2025 levels as the sales
programme matures. As a growing proportion of the Portfolio is sold,
preparatory requirements reduce materially as initial sales tranches complete,
while free cash flow generation strengthens progressively as capital intensity
declines and sale proceeds are realised.
TAX
The Company's tax position reflects the transition to a managed Portfolio
realisation strategy and the progressive monetisation of its German
residential assets. Tax outcomes are sensitive to the timing, structure and
sequencing of disposals and are managed as an integral component of the
Board's execution and capital allocation framework.
As the Portfolio is sold down, the Company expects to incur cash tax charges
on disposals and related profit realisation. The level of cash tax payable
will depend on the historical tax base of individual assets and the structure
of each sale and may be material in certain cases, particularly where assets
have a low tax base.
As at 31 December 2025, the Company recognised a deferred tax
liability of €46.4m (31 December 2024: €53.9m), primarily in respect
of temporary differences arising from the revaluation of investment property
and derivatives. To the extent that recovery of tax losses is considered
probable and offset is permitted, they are offset against taxable temporary
differences in determining the net deferred tax liability, rather than being
recognised as a separate deferred tax asset.
The Group has accumulated tax losses of approximately €77
million (2024: €59 million) in Germany. These losses principally comprise
carried-forward tax losses generated by the German operations and are
available to be utilised against future taxable profits in Germany, including
profits arising on the realisation of the Portfolio (to the extent such
profits are taxable in the relevant entity). Utilisation is subject to the
availability of suitable taxable profits and any applicable restrictions under
German tax law (for example, limitations on the amount of losses that can be
offset in a given year, and restrictions that may apply following changes in
ownership or business activity).
The value ultimately realised from the accumulated tax losses is therefore
intrinsically linked to the orderly execution of the Company's realisation
strategy and the maintenance of the current corporate and tax structure.
Utilisation is expected to occur progressively over the life of the
realisation programme as assets are sold in a planned sequence and taxable
profits are generated.
The Board keeps the recoverability of tax attributes under review, applying
prudent assumptions based on expected future taxable profits, anticipated
disposal timing and the planned sequencing of realisations. In doing so, the
Board seeks to preserve and maximise the economic value available to
shareholders from the Company's tax attributes.
The deferred tax liability is calculated by applying the rate of German
Corporation Tax expected to be in effect at the time of each anticipated
disposal, including the applicable solidarity surcharge. Under legislation
enacted in Germany, the Corporation Tax base rate is scheduled to decline from
15% to 10% between 2028 and 2032, in increments of 1% per annum. Including the
solidarity surcharge, the effective Corporation Tax rate applied to expected
disposal gains therefore ranges from approximately 15.8% for disposals
expected in 2026 and 2027 to approximately 12.7% for disposals expected from
2030 onwards. The deferred tax liability recognised at 31 December 2025
reflects these rates applied to the Company's expected disposal timetable
under the current realisation strategy.
The deferred tax liability is, therefore, inherently sensitive to the timing
of disposals. Properties sold earlier in the programme will crystallise tax at
higher rates; properties sold later will benefit from progressively lower
rates as the scheduled reductions take effect. The Board factors this dynamic
into its disposal sequencing and capital allocation decisions as part of the
overall realisation framework, balancing tax efficiency against execution
discipline, market conditions and the orderly return of capital to
shareholders. The deferred tax liability should therefore be understood as a
current best estimate based on the expected disposal timetable, rather than a
fixed or certain obligation, and will be reassessed at each reporting date as
the programme progresses.
CAPITAL STRUCTURE, DEBT AND GEARING
Overview
In November 2025, the Company completed a comprehensive refinancing that
de‑risked the balance sheet and aligned the capital structure with the
requirements of the managed realisation strategy. This represented a
structural reset of the Company's financing arrangements, designed to remove
execution constraints and refinancing risk over the life of the programme.
Prior to the refinancing, the Company operated under a multi‑lender
structure with debt maturing in Q4 2026. Although all covenants were met, the
facilities imposed a number of practical constraints that limited execution
optionality, including:
· Operational limits on the number of condominium sales that could
be progressed concurrently;
· Restrictions on shareholder distributions below specified debt
yield thresholds; and
· Increasing refinancing risk as maturity approached.
These constraints introduced uncertainty around execution pacing, capital
allocation and the timing of cash returns. On 26 November 2025, all existing
borrowings were refinanced into a single, long‑dated facility arranged by
Natixis Pfandbriefbank AG, materially simplifying the capital structure and
reducing balance‑sheet‑related risks.
Table: Debt refinancing risk mitigation
Risk prior to refinancing Status Post‑Refinancing
Near‑term refinancing risk (Q4 2026 maturity) Removed: Maturity extended to Q4 2030
Reliance on capital markets during execution Removed: No refinancing required during sales programme
Multi‑lender complexity and coordination risk Removed: Single‑lender facility
Annual amortisation constraining cash flows Removed: Interest‑only structure
Condominium sales capped by debt terms Materially mitigated: Higher sales capacity
Dividend distributions blocked by debt yield tests Removed: No distribution restriction
Mandatory prepayments limiting capital flexibility Materially mitigated: Mandatory prepayments on disposals have been materially
reduced, improving flexibility over capital allocation.
Covenant pressure during execution phase Mitigated: Conservative LTV (~40%) and simple ICR test
Exposure to rising interest rates Mitigated: ≥80% hedged, 5‑year cap at 2.0%
Balance sheet risk gating strategy delivery Removed: Capital structure aligned to realisation
Note: The Company utilises interest rate derivatives to manage its exposure to
interest rate fluctuations on an economic basis. These arrangements are not
designated as hedging instruments under IFRS 9 and therefore hedge accounting
is not applied. Changes in the fair value of these derivatives are recognised
in the Consolidated Statement of Comprehensive Income.
In practical terms, the Company's strategy is no longer dependent on
refinancing, lender consent or capital markets access. Shareholder
distributions are not conditional on covenant resets or external funding
events.
Accordingly, balance‑sheet considerations are no longer expected to be a key
driver of returns. Value realisation is instead governed by asset disposal
execution, pricing discipline and sales timing, consistent with the Board's
stated focus on orderly, value‑led delivery of the realisation strategy.
Borrowings and gearing
As at 31 December 2025, the Company had gross borrowings of €256.0m (31
December 2024: €269.6m) and cash balances of €34.0m (31 December 2024:
€46.5m), resulting in net debt of €222.0m (31 December 2024: €223.1m).
Whilst €36.0m of condominiums were notarised during 2025, the modest
reduction in net debt during the period reflects the timing difference between
notarisation and cash receipt. Additionally, disposal proceeds were utilised
to fund capital expenditure, refinancing costs, and finance costs.
Net loan‑to‑value on the Portfolio was 41.0% (31 December 2024: 40.3%),
reflecting a conservative leverage position following completion of the
November 2025 refinancing.
The net reduction in gross debt during the year was driven by a combination of
mandatory prepayments from condominium sale proceeds and an increase in
borrowings from the refinancing in November to cover the remaining capex
needs. The refinancing also materially extended the debt maturity profile,
increasing the average remaining duration of borrowings to 4.9 years (31
December 2024: 1.8 years).
Table: Borrowings and gearing
31 Dec 2025 31 Dec 2024
Gross borrowings (€m) 256.0 269.6
Cash balances (€m) 34.0 46.5
Net borrowings (€m) 222.0 223.1
Net LTV (%) 41.0 40.3
Average remaining duration (years) 4.9 1.8
Notes: Net LTV uses nominal loan balances rather than the loan balances on the
Consolidated Statement of Financial Position, which include capitalised
finance arrangement fees. Average remaining duration represents the weighted
average maturity of drawn borrowings.
Interest rate hedging
The Company continues to hedge not less than 80% of its outstanding debt
against interest rate movements. Under the previous facilities, hedging was
achieved through multiple interest rate swaps, resulting in a blended interest
rate of 2.8% as at 30(th) June 2025.
In connection with the refinancing, the legacy hedging structure was
simplified and replaced with a single five‑year amortising interest rate cap
at 2.0%. The mark‑to‑market value of existing Natixis swaps was used to
partially offset the premium cost of approximately €3.5m. As at 31 December
2025, the blended interest rate on the Company's borrowings was 4.17%.
Covenant compliance
The Company complied with all debt covenants throughout the year. Under the
new facility, the only hard covenant is a minimum interest coverage ratio
(ICR) of 1.2x, which was met throughout the period.
The ICR is calculated in accordance with the facility agreement using an
agreed cash‑adjusted methodology that differs from IFRS presentation. The
calculation is based on rental income and operating costs as defined in the
facility agreement and excludes non‑cash items recognised under IFRS,
including fair value movements on investment property (€2.3m loss in 2025),
fair value changes on derivatives (€2.1m loss) and non‑recurring
refinancing costs. On this basis, the Company remained in compliance with the
ICR covenant throughout the period.
Soft covenants include LTV and debt yield tests that adjust over the life of
the facility and are aligned with the Company's progressive deleveraging
trajectory as condominium sales proceed. As at 31 December 2025, the Company
complied with all covenant requirements.
Under the terms of the new facility, disposal proceeds are applied in
accordance with the agreed allocation mechanics and include mandatory
prepayment of the loan on disposals. This repayment feature accelerates
deleveraging as the Portfolio is realised and, together with the Company's
capital return framework, supports the Board's ability to return surplus net
proceeds to shareholders once required debt repayment and prudent
liquidity/covenant headroom are maintained.
Capital returns and compulsory redemption facility
The Company's managed Portfolio realisation strategy, approved by shareholders
in March 2025, is designed to convert underlying asset value into cash returns
for shareholders over time. In June 2025, shareholders approved amendments to
the Company's Articles of Association establishing a Compulsory Redemption
Facility, which enables the Board to return surplus capital through mandatory
pro rata redemptions of ordinary shares. Redemptions are effected in
accordance with Jersey company law, the Company's Articles and applicable
regulatory requirements and are intended to operate over the life of the
realisation programme.
Capital returns under the Facility are expected to be considered on a
six‑monthly basis. Any capital returned is funded from net cash proceeds
generated by condominium sales within the Portfolio. In allocating sale
proceeds, the Company prioritises (i) debt reduction in accordance with its
financing arrangements, (ii) the payment of taxes, fees and other
disposal‑related costs, (iii) the retention of prudent cash balances to fund
ongoing operations and implementation costs, and (iv) the return of surplus
capital to shareholders via compulsory redemptions. As a result, the timing
and amount of any redemption will vary between reporting periods and will
depend on the level and phasing of condominium sales, cash availability,
solvency and covenant headroom. Redemption amounts are therefore expected to
be variable rather than uniform or progressive.
The Board has not set redemption targets, whether on an absolute, periodic or
cumulative basis. Instead, the realisation strategy is executed through
condominium sales plans at the asset level, and capital returned to
shareholders is a direct consequence of net cash proceeds realised from those
sales, after the deductions outlined above, rather than a planning assumption
or independently targeted objective.
The first compulsory redemption under the Facility has been announced
simultaneously with the publication of the Company's annual results. This
redemption reflects cumulative condominium sales completed to date, including
sales executed during 2024 and 2025, and should not be regarded as indicative
of the timing or quantum of future redemptions. The detailed terms and
timetable for that redemption (including the amount to be returned, the record
date and the payment date) are set out in a separate RNS announcement.
OUTLOOK
The Board believes the Company is well positioned to continue executing its
managed Portfolio realisation strategy through 2026 and beyond. This
assessment is grounded in the establishment of a proven operating platform, a
strengthened and appropriately structured balance sheet, and a materially
lower capital‑intensity profile following completion of the preparatory
phase of the programme.
The period ahead is expected to be characterised by disciplined, value‑led
execution, declining capital expenditure as front‑loaded preparation
concludes, improving cash generation as capital intensity reduces and cost
trajectory improves, and continued deleveraging through the application of
sale proceeds.
The Board's priorities are therefore centred on maintaining execution
discipline, oversight and risk control as activity levels remain elevated
during the next phase of delivery.
The Board remains mindful of external uncertainties, including geopolitical
instability, ongoing conflict in the Middle East and the Ukraine war,
macroeconomic conditions and the evolving regulatory environment for
residential property in Germany. These factors may influence sentiment or
transaction timings in the short term. However, the structural supply
constraints in Berlin residential markets, combined with a long‑dated, fully
financed capital structure, a declining capital expenditure profile and
flexibility over sales pacing, provide resilience against volatility and allow
execution to be appropriately calibrated in response to market conditions.
This flexibility is reinforced by on‑the‑ground execution capability and
continuous market feedback through the sales platform, enabling the Board to
adjust execution pragmatically while maintaining oversight and control.
The Company is therefore entering the next stage of its strategy from a
position of strength. While external risks remain, the Board expects 2026 to
represent a period of operational progress and financial consolidation,
supporting the continued, orderly conversion of asset value into cash returns
for shareholders.
KEY PERFORMANCE INDICATORS
KPIs applied for the year ended 31 December 2025
For the financial year ended 31 December 2025, the Company has continued to
apply the recalibrated key performance indicators ("KPIs") introduced in 2024.
These KPIs were designed to support the transition from a long‑term asset
holding model to a managed Portfolio realisation strategy, while maintaining
continuity and comparability during the early phases of execution.
The 2025 KPI framework combines asset‑level valuation measures, execution
metrics and balance‑sheet indicators. For this period, performance is
assessed against six KPIs: like‑for‑like Portfolio valuation growth, EPRA
NTA per share, share price discount to EPRA NTA, condominium notarisations,
condominium sales velocity (last twelve months) and net loan‑to‑value.
Together, these indicators provide a balanced assessment of underlying asset
performance, progress within the condominium sales programme and
balance‑sheet resilience during the transition phase.
EPRA‑based measures continue to be applied in 2025 to support comparability
with prior periods and with industry reporting conventions. EPRA NTA provides
an established measure of underlying asset backing and balance‑sheet
strength and remains relevant as the Company progresses through the managed
Portfolio realisation strategy. EPRA metrics are therefore considered
alongside execution and balance‑sheet indicators to provide a comprehensive
view of performance.
Table: 2025 key performance indicators
Key performance indicator 31 December 2025 31 December 2024
LFL Portfolio valuation growth (%) (1) 1.5 0.8
EPRA NTA per share (€) 3.40 3.55
Share price discount to EPRA NTA (%) (2) 43.2 42.2
Condominium notarisations (€m) 36.0 9.4
Condominium sales velocity - LTM (%) 34.0 34.0
Net loan‑to‑value (%) 41.0 40.3
1. Like-for-like (LFL) Portfolio valuation growth measures the change in fair
value of investment properties held throughout the year, excluding the impact
of acquisitions, disposals and transfers to or from assets held for sale. This
differs from the investment property revaluation loss reported in Note 11 of
the financial statements, which reflects total fair value movements across all
investment properties, including those classified as held for sale.2. For any
given year, share price discount to EPRA NTA is calculated using the sterling
share price as at 31 December, the €/£ exchange rate as at 31 December and
the euro EPRA NTA as at 31 December.
KPIs applied from 2026 onwards
As the Company enters a more advanced phase of its managed Portfolio
realisation strategy, the Board has refined the KPI framework to reflect the
increasing importance of execution delivery, realised outcomes and
balance‑sheet discipline, while continuing to report valuation‑based
measures.
In this context, from 2026 the KPI framework places greater emphasis on
execution delivery, capital realisation and realised shareholder outcomes,
reflecting the progressive monetisation of the Portfolio. The Board has
replaced the share price discount to EPRA NTA with share price discount to
IFRS NAV per share, reflecting the increasing relevance of net realisable
value as asset sales and capital returns advance.
Table: Key performance indicators (from 2026 onwards)
Key performance indicator Definition / focus 2025 outcome (for reference)
LFL Portfolio valuation growth (%) Underlying asset performance across the Portfolio during execution 1.5%
IFRS NAV per share (€ / £) Net value after liabilities, taxes and costs relevant to realisation €2.94 / £2.56
Share price discount to IFRS NAV per share (%) Market discount to net realisable value 28.6%
Condominium notarisations (€m) Capital crystallised through individual unit disposals €36.0m
Condominium sales velocity - LTM (%) Pace and throughput of execution 34.0%
Net loan‑to‑value (%) Balance‑sheet leverage and deleveraging progress 41.0%
Cumulative cash returned to shareholders (€m) Realised cash distributions (net of costs and taxes) Nil
PRINCIPAL RISKS AND UNCERTAINTIES
Effective risk management underpins the delivery of the Company's strategy and
the protection of long‑term shareholder value. As the Company executes a
managed Portfolio realisation strategy in the Berlin residential property
market, it is exposed to a range of risks that could affect the timing,
execution and outcomes of that strategy.
Governance, responsibility and control
The Board has overall responsibility for the identification, assessment and
oversight of the Company's principal risks, including emerging risks. The
Board determines the Company's risk appetite, approves the risk framework and
ensures that appropriate systems of internal control and monitoring are in
place.
The Board undertakes a formal review of principal risks at least annually and
considers risk matters regularly as part of its ongoing oversight of strategy,
capital allocation, liquidity and execution. Where appropriate, the Board
applies corrective actions, adjusts strategy or strengthens controls in
response to changes in the risk environment.
Risk identification and management
In accordance with Provision 26 of the AIC Code, an externally facilitated
evaluation of the Board and its Committees was undertaken during the year by
SGN Advisors Ltd (trading as Satori Board Review). The evaluation covered
Board composition, effectiveness, governance processes and decision‑making,
with findings and recommendations discussed by the Board.
This approach ensures that risks are identified close to execution activity
while remaining subject to independent Board scrutiny, challenge and
decision‑making, with clear escalation routes for material issues.
Emerging risks
Emerging risks are assessed at both Company and Portfolio level, including
developments in macroeconomic conditions, financial markets, regulation,
geopolitics and competitive behaviour. Following the shareholder‑approved
transition to a managed Portfolio realisation strategy in 2025, the Company's
risk profile has been recalibrated, with increased emphasis placed on
execution‑related risks, including asset disposals, pricing, timing and
liquidity across both condominium and PRS assets.
Monitoring, reporting and review
The Board receives regular reporting on risk exposures, control effectiveness
and execution progress. The principal risks set out below reflect the Board's
assessment of the most significant risks facing the Company during the year
ended 31 December 2025, together with the associated mitigation and control
frameworks.
To assist the reader, the table below explains how movements in principal
risks should be interpreted. These movements reflect changes in the Board's
assessment of the likelihood and/or potential impact of each risk over the
period, having regard to the effectiveness of mitigating controls and to
changes in external conditions. They are not intended to predict outcomes and
should be read in conjunction with the narrative on impact, mitigation and
controls for each risk.
Table: Interpretation of principal risk movements
Risk movement Meaning
Increased The risk is assessed to have become more significant during the period, due to
an increase in likelihood and/or potential impact, or a deterioration in the
external environment or control effectiveness.
Decreased The risk is assessed to have become less significant during the period,
reflecting improved mitigation, reduced exposure or more favourable external
conditions.
Unchanged The Board's assessment of the risk is broadly consistent with the prior
period, with no material change in likelihood or potential impact.
New risk A risk that has been added to the principal risks disclosure for the first
time, reflecting changes in strategy, operating context or the external
environment.
1. Inability to sell condominiums (volumes, pricing and timing)
Movement: NEW RISK
Impact
· The Company's strategy relies on the orderly sale of individual
condominium units to crystallise value at prices that reflect or exceed
Portfolio carrying values. A sustained deterioration in buyer demand, mortgage
affordability or consumer confidence could reduce sales volumes, extend sales
timelines or require pricing concessions.
· Recent increases in longer‑dated government bond yields, including
5 and 10‑year maturities, could feed through to higher mortgage rates and
reduced affordability for owner‑occupiers and small investors. A sustained
period of higher long‑term rates could therefore place additional pressure
on achievable pricing and absorption rates, particularly for occupied units
and higher‑value segments.
· Execution risk is heightened by the multi‑year, multi‑tranche
structure of the sales programme. Delays in legal preparation, tenant
processes, capital expenditure, marketing activity or broker execution at any
stage could defer sales into less favourable market conditions, affecting
aggregate outcomes even where long‑term demand remains intact.
· Sustained sales below carrying values, or materially slower
execution than anticipated, could reduce total realised proceeds, delay
capital returns and undermine confidence in reported NTA, with potential
second‑order effects on the Company's equity valuation.
Mitigation and controls
· Sales execution is governed through a phased, tranche‑based
programme that allows the Board to calibrate sales pace and supply in response
to prevailing market conditions, prioritising value over volume and deferring
launches where pricing conditions are unfavourable.
· The condominium sales programme is supported by a diversified
panel of specialist residential brokers, providing broad market coverage and
reducing reliance on any single sales channel. Broker performance, pricing
outcomes and sales velocity are monitored continuously.
· Pricing strategy is actively managed and can be adjusted to stimulate
demand where appropriate, while remaining disciplined against carrying values
and return objectives.
· The Board receives regular, detailed reporting on achieved pricing,
sales velocity, pipeline activity and market conditions, enabling execution
decisions to be adjusted dynamically and supported by real‑time evidence.
2. Inability to sell PRS buildings (timing, pricing and liquidity)
Movement: NEW RISK
Impact
· While the primary focus of the realisation strategy is individual
condominium sales, a residual PRS Portfolio remains with a value, as at 31
December 2025, of €269.1m. Over time, the Company will seek to dispose of
PRS assets where appropriate to accelerate value realisation or manage
liquidity.
· PRS disposals are typically more exposed to institutional investor
sentiment, financing conditions and required yields than individual
condominium sales. Recent increases in long‑dated government bond yields
could raise required return thresholds for institutional investors, increasing
yield‑based pricing pressure and reducing liquidity for PRS assets. Periods
of elevated bond yields or constrained debt markets could therefore materially
reduce transaction volumes or require pricing concessions to achieve
execution.
· PRS valuations remain below peak levels and are more sensitive to
changes in capital availability, regulatory risk perception and macroeconomic
conditions. An inability to dispose of PRS buildings on acceptable terms could
extend the duration of the realisation programme, delay capital returns and
increase the relative weight of fixed operating costs.
· Delays or pricing pressure in PRS disposals may also affect the
timing and quantum of shareholder distributions, contributing to a persistent
share price discount where realised cash flows lag expectations.
Mitigation and controls
· The Company retains full discretion over the timing of PRS disposals
and is not reliant on near‑term PRS sales to fund operations or capital
returns.
· The November 2025 refinancing provides a long‑dated,
interest‑only debt structure through to 2030, reducing pressure to dispose
of PRS assets in adverse market conditions and preserving strategic
optionality.
· Conservative leverage and ongoing deleveraging through condominium
sale proceeds reduce balance sheet risk and support liquidity resilience.
· The Board regularly reviews market conditions, valuation evidence
and strategic alternatives for PRS assets, including continued operation
versus disposal, and will not pursue sales where pricing does not reflect
long‑term value considerations.
3. Financing and interest rate risk
Movement: DECREASED
Impact
· While refinancing risk has been materially reduced following the
November 2025 refinancing, sustained increases in longer‑dated interest
rates may continue to influence valuation benchmarks and required investor
returns, with second‑order effects captured primarily within execution and
disposal risks rather than balance‑sheet solvency.
· The ECB maintained its deposit facility rate at 2.0% through early
2026. However, monetary policy remains uncertain given competing pressures
from weak growth and persistent services inflation in the eurozone.
· Covenant testing could be triggered if asset valuations decline,
potentially requiring additional security, facility repayment or higher
borrowing costs.
· The Company's variable-rate exposure is linked to three-month
Euribor. A sustained increase would raise financing costs.
Mitigation and controls
· In November 2025, the Company completed the refinancing of all
borrowings, securing a new €255m, five-year, interest-only facility at 210
basis points over three-month Euribor - eliminating the near-term refinancing
risk under the previous facility (maturing September 2026) and providing a
stable debt platform through to 2030.
· At least 80% of drawn loan facilities are hedged using derivative
instruments or fixed-rate debt.
· The new facility removed previous restrictions on condominium
sales volumes and shareholder distributions.
· The new facility has only one 'hard' covenant: a minimum interest
coverage ratio ("ICR"). This covenant tests the Group's ability to service
interest costs from rental income.
· Net LTV has increased to 41.0% as at 31 December 2025 (up from 40.3%
at 31 December 2024), with reductions expected as sale proceeds repay debt.
· Expected revenues, property values and covenant levels are
modelled and reported to the Board as part of the annual Viability Assessment.
4. German regulatory risk
Movement: UNCHANGED
Impact
· Changes in legislation or regulation affecting property rights,
zoning, landlord practices, environmental standards and taxation can affect
the Company's ability to implement its condominium sales strategy and impact
operational costs.
· The Berlin conversion regulation was renewed in March 2025 for a
further five years, covering 81 designated social preservation areas
(Milieuschutzgebiete), in which conversion of rental apartments to condominium
ownership requires official approval.
· Under the Building Land Mobilisation Act, Berlin has adopted
provisions allowing the state to block the splitting of apartment blocks into
condominiums.
· The nationwide property tax reform, in force from 1 January 2025,
has required a comprehensive reassessment of all properties and may alter
individual property tax burdens.
· The Mietpreisbremse (rent cap) was extended nationwide to 31
December 2029 by the Bundestag in June 2025, limiting re-letting rents to 10%
above the local reference rent (Mietspiegel).
· Proposals to increase penalties for breaches of the Mietpreisbremse
(rent cap) could increase legal and financial exposure where historic rents
are challenged, potentially raising operating costs and requiring additional
resources for compliance, documentation and dispute resolution.
· Berlin has proposed further tightening of rules on short‑term
letting (e.g., holiday/temporary rentals), which could reduce flexibility to
use short‑let strategies to manage vacancy during sales preparation and may
increase compliance and enforcement costs.
· Berlin maintains a ten-year termination blocking period for
converted units, during which the new owner may not serve notice for personal
use - affecting vacant possession timelines and the pricing of occupied
condominium sales.
· Changes to the Mietspiegel could reduce rental values and affect
PRS valuations. Further tightening of tenant protection laws could negatively
impact rental income.
Mitigation and controls
· German lawyers advise on forthcoming changes to relevant laws and
regulations, and the Board is kept informed by the Property Advisor of their
implications for condominium disposals and property values.
· Over 70% of the Portfolio by units is already legally divided as
condominiums. Conversion restrictions therefore act as a supply constraint,
reducing competing condominium supply and supporting the value of the
Company's existing divided stock.
· Importantly, there is currently no proposal that would restrict
the sale of already‑divided (split) condominium units, and the Company's
managed realisation strategy does not rely on any further condominium
divisions to execute the planned sales programme.
· Full compliance is maintained with the conversion regulation in
all designated social preservation areas.
· The Company's pivot to condominium sales progressively reduces
exposure to rental regulation risk as properties are sold rather than retained
for income.
· The ten-year blocking period, which impacts a small number of
units is factored into pricing, with occupied units priced at a discount to
vacant units to reflect this constraint.
5. Tenant affordability and rental challenges
Movement: INCREASED
Impact
· Tenants are increasingly using online platforms to assess whether
rents comply with applicable laws, giving rise to legal challenges that, if
successful, could result in rental reductions.
· Tenant default or unexpected vacancy trends across the Portfolio
could cause a rental income shortfall, adversely affecting the Company's
financial performance while the PRS Portfolio remains a significant revenue
source.
Mitigation and controls
· The Company maintains active oversight of applicable German rental
legislation and case law, with compliance embedded in rent‑setting, leasing
and ongoing tenancy management processes. Legal advisers and the Property
Advisor monitor regulatory developments and emerging tenant challenge trends
to ensure practices remain compliant and up to date.
· Rental challenges are closely monitored, contested where
appropriate, and charges adjusted where claims succeed.
· New tenants are subject to strict creditworthiness and
income-to-rent criteria. Close contact is maintained with existing tenants
through the Property Advisor and property manager.
· The Company maintains a Vulnerable Tenant Policy and cases of
hardship are supported where appropriate.
6. IT and cyber security risk
Movement: INCREASED
Impact
· Cybercrime remains a significant and growing risk. A breach could
result in unlawful access to commercially sensitive information and adversely
affect investor, supplier and tenant confidentiality or disrupt business
operations.
· The threat landscape continues to evolve, with state-linked cyber
actors (including those associated with Russia, China, Iran and North Korea)
identified as ongoing threats to European corporate infrastructure.
· Threat actors' increasing use of artificial intelligence has
heightened the sophistication and frequency of phishing, social engineering
and ransomware attacks.
Mitigation and controls
· IT systems relied on by the Company are subject to regular review.
All service providers are required to report to the Board on their IT controls
at least annually and to carry out penetration testing.
· A detailed review of the cyber security of the Company and its
outsourced processes has been completed. Service providers maintain risk and
control registers that are reviewed by the Board. No material concerns have
arisen from these reviews.
· The Company maintains both business continuity and disaster
recovery plans, which are reviewed periodically and are designed to support
the continuity of critical operations in the event of disruption, including
where the Company relies on key outsourced IT service providers.
7. Reliance on third party service providers
Movement: UNCHANGED
Impact
· The Company relies on third‑party service providers for execution of
its managed Portfolio realisation strategy and day‑to‑day operations.
These include QSix, as Property Advisor, Apex Group as the Company
Administrator, together with property managers, residential brokers and other
specialist advisers. Failure by any material service provider to perform in
accordance with agreed mandates or service standards could adversely affect
execution pace, pricing outcomes, regulatory compliance, financial performance
or the Company's reputation.
· Service delivery risk includes control failures, errors or
omissions, regulatory or legal breaches, operational disruption and increased
costs. Inconsistent performance may also increase demands on management time
and divert Board attention during a critical execution phase.
· There is a risk that QSix or other key providers do not allocate
sufficient resources to the Portfolio, or that deterioration in operational
capability, personnel or financial position adversely affects delivery. Key
person risk is heightened during the execution phase, which is managed by a
relatively small group of experienced individuals.
· The Company operates in Germany through a Master Power of Attorney
and multiple individual Powers of Attorney ("POAs"), primarily granted to QSix
personnel. Risks include ineffective authorisation, non‑compliance with POA
terms, KYC deficiencies or insufficient monitoring of delegated powers.
· In addition, the Company relies on outsourced providers,
including Core Immobilien for tenant engagement and a panel of external
brokers for condominium sales. Deterioration in service quality, continuity or
conduct could adversely affect tenant relationships, rental income, sales
execution and pricing outcomes.
· There is also a risk that actions undertaken by service providers
diverge from the Company's stated investment objectives, guidelines or
regulatory obligations.
Mitigation and controls
· The Board retains ultimate responsibility for oversight of all
material third‑party service providers and operates a structured governance
and control framework to monitor performance, resourcing and compliance. This
includes regular reporting from the Property Advisor covering execution
progress, budgets, cash flows and operational KPIs.
· The Chairman maintains regular engagement with senior principals at
QSix to monitor performance, resourcing, succession planning and key person
risk. Any material changes to service arrangements or mandates are subject to
Board approval.
· QSix is wholly owned by an FCA‑regulated entity and operates
within an established control environment, supported by internal control
reviews and a tested business continuity and disaster recovery framework.
Senior personnel and their families retain a significant equity interest in
the Company, supporting alignment with shareholders. Apex undertakes annual
regulatory and compliance assessments of QSix.
· All POAs are prepared or reviewed by legal advisers, formally
authorised by the Board following completion of KYC procedures and subject to
ongoing monitoring. Apex oversees compliance with POA terms and reports any
deviations to the Board. QSix provides quarterly reporting on compliance with
the Master Power of Attorney.
· The Board regularly reviews investment and disposal activity
against the Company's stated objectives, guidelines and regulatory
requirements. QSix provides formal compliance confirmations in connection with
execution decisions, and the Administrator undertakes periodic file reviews.
· Key third‑party providers are subject to annual Board assessment
questionnaires covering internal controls, service quality and resilience,
supplemented by ongoing monitoring.
· The expansion of the residential broker panel has reduced
concentration risk, with broker performance reported regularly.
8. Environmental and climate risk
Movement: UNCHANGED
Impact
· Failure to anticipate and respond to energy performance and climate
legislation could damage the Company's reputation and lead to unplanned
capital expenditure.
· Investor and buyer expectations for ESG compliance could result in
diminished asset values or reduced demand for condominiums that do not meet
evolving energy efficiency standards. Energy-efficient apartments in Berlin
are reported to command price premiums over comparable less-efficient units.
· Evolving energy efficiency requirements may increase the cost of
holding and managing properties.
Mitigation and controls
· All asset modernisation investment is assessed for energy
efficiency impact on an asset-by-asset basis.
· The Company engages an in-house ESG consultant and an external
specialist to advise on current and future climate and energy performance
legislation.
· The Company was awarded an EPRA Gold Award for sustainability
reporting for the fourth consecutive year in 2025.
· The Company's Altbau housing stock is upgraded with a focus on
heating system efficiency while preserving architectural characteristics.
Heating optimisation systems were piloted during 2025, with the potential to
expand across other parts of the PRS portfolio, subject to detailed
cost-benefit analysis.
GOING CONCERN
The Directors have reviewed detailed financial projections covering a period
of at least 12 months from the date of approval of the financial statements.
The projections have been prepared using assumptions that the Directors
consider to be reasonable and realistic, having regard to the Group's current
financial position, expected revenues, cost base, capital expenditure
requirements, planned asset disposals and financing arrangements.
Following the comprehensive refinancing completed in November 2025, the Group
benefits from a €255m, five‑year, interest‑only debt facility maturing
in 2030. In assessing going concern, the Directors have considered forecast
cash flows, available liquidity and covenant headroom under this facility.
Under the base‑case and stressed projections considered, the Group
maintained positive cash balances throughout the assessment period, with
liquidity not falling below internal minimum thresholds, and remained in
compliance with all banking covenants, with headroom maintained above covenant
minimums. On this basis, the Directors are satisfied that the Group is
expected to operate within its available resources and comply with all banking
covenants for at least 12 months from the date of approval of the financial
statements.
In forming this assessment, the Directors have taken into account the
discretionary nature of shareholder capital returns under the Compulsory
Redemption Facility. Any compulsory redemption may only be effected where the
Board is satisfied that, immediately following such redemption, the Group will
remain solvent, maintain adequate liquidity and retain sufficient covenant
headroom. Capital returns are therefore not assumed in the going concern
assessment and are treated as a use of surplus capital rather than a funding
requirement.
The Group's business activities, strategic objectives, principal risks and the
systems of control applied to manage those risks are set out in the Strategic
Report.
Accordingly, the Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the foreseeable
future, being at least 12 months from the date of approval of the financial
statements, and therefore continue to adopt the going concern basis in
preparing the financial statements.
VIABILITY STATEMENT
The Directors have assessed the viability of the Group over a three‑year
period to 31 December 2028, which they consider appropriate as it aligns with
the Group's strategic planning horizon, provides meaningful coverage of the
active execution phase of the managed Portfolio realisation strategy, and
remains within the maturity of the Group's current debt facilities.
The assessment is based on a robust evaluation of the principal risks that
could threaten the Group's business model, future performance, solvency or
liquidity, as described in the Principal Risks and Uncertainties section of
this report. Following the Group's transition to a managed Portfolio
realisation strategy, particular emphasis has been placed on
execution‑related risks, including asset disposals, pricing, timing and
liquidity across both condominium and PRS assets.
Financial modelling and stress testing
In assessing viability, the Directors considered projected cash flows over the
three‑year period under both base‑case and stressed scenarios. The
analysis incorporated explicit quantitative assumptions in relation to sales
volumes, pricing, operating costs, capital expenditure, liquidity and covenant
compliance, and considered, in particular:
· projected operating cash flow requirements;
· the absence of any requirement to refinance debt facilities prior
to their maturity in 2030;
· working capital requirements during execution of the realisation
strategy;
· property vacancy levels during the disposal programme;
· capital and corporate expenditure requirements;
· the timing and quantum of proceeds from condominium sales and,
where appropriate, PRS asset disposals; and
· the discretionary nature of shareholder capital returns under the
Compulsory Redemption Facility, with no assumption that such redemptions
are required or undertaken to maintain solvency, liquidity or covenant
compliance.
Stress testing applied adverse but plausible downside assumptions, including
reduced sales volumes, lower achieved pricing relative to the base case,
elevated operating and execution costs, and delays in the timing of disposal
proceeds. The modelling also considered broader macroeconomic and geopolitical
uncertainty, including the potential impact of ongoing conflict in the Middle
East on market sentiment, financing conditions and buyer demand.
In the most severe downside scenario modelled, the Company remained liquid,
and covenant headroom remained above minimum requirements by 9% / 0.03x
throughout the assessment period.
Viability assessment - key quantitative assumptions and minimum outcomes
Area Quantitative assumptions applied in stressed scenarios Minimum outcome observed under stressed scenarios
Liquidity Downside cash flow forecasts incorporating delayed sale proceeds and lower Cash balances remained positive throughout, and did not fall below internal
rents minimum liquidity thresholds at any point.
Sales execution Reduced condominium sales volumes and lower achieved pricing relative to base Disposal proceeds remained sufficient to fund operating requirements and debt
case service without reliance on external funding.
Operating costs Elevated property‑level and administrative costs relative to base case Costs remained absorbable within available liquidity, with discretionary
expenditure available to be reduced or deferred if required.
Capital expenditure Continued execution‑related capital expenditure under downside assumptions Capital expenditure remained discretionary and capable of deferral without
breaching liquidity or covenant thresholds.
Debt and covenants Downside valuation, cash flow and cost assumptions The Group remained in compliance with all banking covenants at all times, with
covenant metrics not falling below minimum covenant requirements.
Shareholder returns No assumption of capital returns in base‑case or stressed scenarios Viability was demonstrated without reliance on shareholder capital returns.
Viability assessment and controls
Under the stressed scenarios modelled, the Group was not required to deploy
control actions to remain solvent or liquid over the three‑year assessment
period. In all scenarios considered, the Group remained able to meet its
liabilities as they fell due, maintained positive liquidity throughout, and
complied with all banking covenants, with headroom maintained above minimum
covenant levels at all times.
Shareholder capital returns under the Compulsory Redemption Facility are
entirely discretionary and are not assumed in either the base‑case or
stressed cash flow projections. Any decision to undertake a compulsory
redemption would be subject to the Directors being satisfied, at the time of
authorisation, that the statutory solvency test under Jersey law is met,
including that the Group will be able to discharge its liabilities as they
fall due for a period of at least 12 months following the redemption. Capital
returns are therefore treated as a consequence of successful execution rather
than a determinant of viability.
The Directors note that the Group retains clearly identifiable control actions
should further mitigation be required, including reducing or deferring
discretionary capital expenditure, adjusting condominium pricing and sales
pacing, and disposing of PRS assets where appropriate and where pricing
conditions are acceptable.
The Board receives regular reporting on cash flows, liquidity, covenant
compliance and execution progress and retains full discretion over the timing
and sequencing of asset disposals, capital expenditure and shareholder
distributions.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR PPUGCCUPQPGP
Copyright 2019 Regulatory News Service, all rights reservedRecent news on Phoenix Spree Deutschland
See all newsREG - Phoenix SpreeDeutsch - Financial results for the year ended 31 Dec 2025
AnnouncementREG - Phoenix SpreeDeutsch - First Compulsory Redemption Announcement
AnnouncementREG - Phoenix SpreeDeutsch - Cancellation of Shares held in Treasury
AnnouncementREG - Phoenix SpreeDeutsch - Portfolio valuation and condominium sales update
AnnouncementREG - Phoenix SpreeDeutsch - 2025 Condominium sales exceed expectations
Announcement