Phoenix German property fund launches new share offer

The CISX listed German residential property fund Phoenix Spree Deutschland has launched a new share offer, looking to raise between £6m and £10m.

The money will be invested over three years in renovating and refurbishing the existing properties. The aim is to improve tenant structures, accelerate rent growth and increasing the net asset value of the fund.

PMM, which is acting as property adviser, says Germany’s residential market, especially in its capital, where most of the fund’s assets are concentrated, poses an attractive investment proposition.

Matt Northover, partner at PMM, said: “With residential property in Germany still more affordable than in almost any other European country, we believe there is scope for significant rent inflation.

“Over the last two years we have been taking advantage of a buoyant rental market, upgrading apartment units and letting them out for markedly higher rents. This has been a key driver of the positive valuation momentum we have seen in that time.

“We are now looking to raise funds to enable similar significant refurbishment investments in order to drive additional growth in rents.”

Other fund providers are also seeing the benefits from exposure to Germany’s rental market. Aberdeen Asset Management, for example, launched the latest fund investing in German residential real estate, with an initial seed amount of €115m.

Hartmut Leser, Aberdeen’s head of distribution, Germany and Austria, pointed to BVI statistics, which have seen the fund jump from 8th place in terms of inflows in 2010 to pole position, as of July.

The launch of the Phoenix Spree Deutschland followed a year after the Phoenix Spree Property Fund, on the market since 2006. PMM raised €90m from more than 500 investors through the two investment vehicles.

The total gross property assets value of the two funds is around €190m. Both funds are closed ended and are targeting double digit annual capital growth.

Phoenix Spree Deutschland is an unregulated collective investment scheme, which only certified high net worth individuals and sophisticated investors can access.

After a difficult couple of years during the Lehman crisis the fund’s net asset value remained relatively static, but by 2010 assets jumped 20%. The following years and this year to date have seen increases of 12% and 5%, respectively. As a result, the fund has paid out around 23% paper profit to its shareholders in Sterling terms since launch.

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