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 Stuart Young	+44 (0)20 3937 8760
Deutsche Bank AG (Corporate Broker) Hugh Jonathan	+44 (0)20 7260 1263
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 value1,2	Premium / discount to asset carry value1,3
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 Portfolio		Condominium Sales Portfolio		PRS 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 rents	Cash balances remained positive throughout, and did not fall below internal minimum liquidity thresholds at any point.
Sales execution	Reduced condominium sales volumes and lower achieved pricing relative to base case	Disposal proceeds remained sufficient to fund operating requirements and debt 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.