UK Edition
Questor: this German property company offers growth and income - in euros
Quoted investment companies or investment trusts - as opposed to unit trust-type funds - offer legions of advantages, particularly to investors wanting exposure to niche or illiquid assets.
Property is one such asset.
The post-Brexit UK commercial property shock posed a real threat to the unit trusts that owned property directly: they had to sell buildings in order to meet investors' withdrawals.
Quoted investment companies, on the other hand, are safe from such sentiment swings. Departing investors can simply sell their shares. The investment company itself continues to own the property assets and can wait for their values to stabilise and recover.
Longer-term shareholders who don't wish to sell are not harmed. Questor has tipped several real estate investment trusts: we like F&C Property Trust (tipped in Oct 2016).
Today we highlight a quirkier, and perhaps riskier, London-listed trust that focuses on a highly specialist market: residential property in Germany: Phoenix Spree Deutschland.
The asset class is attractive. As in Britain, some German cities are experiencing rapid population growth and there is a chronic shortage of housing.
But German housing is far cheaper than in Britain, France and elsewhere, both in real terms and on other measures including price relative to incomes.
This is true even after significant German house price inflation in recent years.
There are other draws. Low interest rates prevail. And, in a process quite the reverse of what is happening in Britain, low German home ownership rates appear now to be rising.
Ownership is becoming more fashionable. The company owns 130 properties, which comprise 2,800 residential apartments and 240 commercial premises. Three quarters of the assets are in Berlin.
To accommodate its population growth - driven both by job creation and immigration, neither of which appear likely to diminish - Berlin needs 40,000 extra homes per year, yet manages to build only 7,000.
Prices are rising and so are rents. In most cases, Phoenix Spree's managers buy apartment blocks, refurbish them and re-let them at far higher rents.
In limited cases they refurbish and sell, as a play on the rising popularity of ownership, and to capitalise on the "price arbitrage between the market value of an apartment block as a whole and the value of the property sold as single apartments".
The company has been going since 2007 but listed in London only in 2015.
Is Phoenix Spree Deutschland a "bargain"?
Well, not quite. German property has been popular of late and demand for exposure is strong.
As with all property companies, valuations are undertaken periodically and so "net asset value" - the underlying value of the portfolio, usually expressed per share - can quickly become out of date.
The latest net asset value per share for Phoenix Spree Deutschland is €2.73 (243p) as of 2016 year-end.
The share price today of 290p translates into €3.27, suggesting shares are trading at a premium to net asset value of around 18pc. That sounds very far from bargain territory.
However, the underlying value of Phoenix Spree's portfolio is growing staggeringly fast: it registered growth of 49.5pc during 2016, its first full year listed on the main London market.
Previous years' growth were 16pc (2015) and 5pc (2014). If growth in 2017 has continued at its breakneck 2016 rate, today's share price - which looks rich on the €2.73 valuation - would in fact represent a discount.
There is another, better-known, London-listed company investing in German residential property: the £187m Taliesin Property Fund. This gives us some benchmark of value.
Its latest NAV figure - again from the end of December 2016 - is some 10pc below the estimated NAV, according to data provided by broker Hargreaves Lansdown.
On the latest estimated NAV, Taliesin currently trades at a pc premium. On its December 2016 NAV, Taliesin is on a premium of 20pc.
This comparison suggests Phoenix is cheaper - irrespective of any growth since the latest official valuation.
The company paid a €0.063 dividend for the full year (5.3p) giving a not hugely attractive 1.8pc yield. But there is a commitment to a "secure and progressive" dividend and there is good reason to hope cashflow from the company's operating model will support this.
It is not a mainstream holding. But it could offer a handy way to diversify asset exposure and income.
Questor says: buy
Ticker: PSDL
Share price at close: 290p