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The Telegraph

Questor: our German property trust comes in from the cold after Berlin rent freeze is overruled

A cloud that had long lingered over Phoenix Spree Deutschland, the Berlin property trust first tipped by this column in 2017, was finally lifted last week. Germany’s constitutional court ruled that Berlin’s rent freeze, which came into law in February last year and punished shares in the trust, was unconstitutional. Its shares have rallied by 4pc on the news but the emphatic nature of the ruling, and its impact on Phoenix Spree’s residential property portfolio, mean there should be much more to come. The trust had produced solid returns for this column until, two years after our tip, the proposal from local politicians in Berlin to introduce a rent freeze in the city sent its shares tumbling. The new law hit the rental income generated by Phoenix Spree and continued to weigh on its shares. The freeze knocked around 4pc off Phoenix Spree’s rental income last year but was expected to reduce it by a fifth in 2021 as the full force of the law was felt. The cap, which initially affected only new rentals, was applied to all Berlin residential rents in November. Following last week’s ruling, Phoenix Spree Deutschland’s rents can now revert to the levels at which they stood before the rent freeze. Not only that but the higher rents that would have been in place were it not for the cap are now “legally due”, according to the trust’s board. Phoenix Spree estimates that it is owed about €1.8m (£1.6m) from tenants.

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