According to final figures Peach Property Group's profits soar to CHF 16 million in first half-year 2017
- Significant expansion of investment portfolio and asset management progress as main profit drivers
- Rental income up by 61 percent to CHF 6.8 million
- Market value of investment portfolio totals CHF 332 million, up 48 percent on year-end 2016; total portfolio at market value of CHF 414 million compared to CHF 318 million at end of 2016
- NAV at market value increases to CHF 185 million, up from CHF 165 million at end of 2016
- Peach Property launches its new corporate design with this first half-year report; new website follow in October 2017
Zurich, 22 August 2017 - Peach Property Group has quadrupled its net profits to CHF 16.0 million in the first half of 2017 according to final figures. The strong expansions to the investment portfolio as well as rental and renovation progress in asset management were the major contributors to this growth. Sales in the remaining project developments and the strong Euro also had a positive impact on earnings growth during the period under review. The Group recorded earnings before taxes of CHF 20.6 million in the first six months of 2017, which is more than two and a half times the earnings recorded in the first half-year 2016 (CHF 7.9 million). Diluted earnings per share totaled CHF 2.80 compared to CHF 0.57 in the previous year. Operating income increased to CHF 48.5 million, up from CHF 28.5 one year before.
During the period under review, Peach Property Group increased its portfolio of residential properties by 36 percent compared to the end of 2016 - up to 4,246 units. This figure includes the recent acquisition of a portfolio of 1,114 apartments, mostly located in Oberhausen close to Essen and Düsseldorf. Annualized target rent is thus up by CHF 6.1 million to a new high of CHF 22.4 million. With a share of 85 percent of the nominal rent, the portfolio is focused on residential properties offering stable values in line with the Group's strategy. The market value of the investment portfolio increased to CHF 332 million at the end of 2017, up by 48 percent compared to the end of 2016.
The remaining project developments showed good progress. Additional apartments were sold and handed over in Hamburg, Berlin and Rorschach, which means that just 3 units are still available in these legacy projects. Sales in the "Wollerau Park" project near Zurich reached almost 80 percent in the first half of 2017. As a result of the early adaption of IFRS 15, the new revenue recognition standard, it is now possible to record the income of the units sold proportionately according to construction progress and not just when the keys are handed over as it was previously the case. This results in more balanced recording of income and earnings over the project's duration. As a result of the sales and the adaption of IFRS 15 the percentage of development properties in the total portfolio fell to around 16 percent (compared to 24 percent at the end of the year) or CHF 62.4 million compared to 71.1 million at the end of 2016.
On the income side, the Group's actual rental income increased to CHF 6.8 million in the first six months. This is mostly due to the integration of the portfolios acquired in 2016 and in the first half of 2017 in the Rheinland region, Kaiserslautern and Oberhausen, as well as the progress made in both renovation and reducing vacancies. Vacancies fell to 17.9 percent as of 30 June 2017 compared to 20.2 percent at the end of 2016. Total operating income increased from CHF 28.5 million in the first half-year 2016 to CHF 48.5 million. In addition to higher rental income, the contributing factors were, in particular, value increases from purchases and success in asset management as well as sales of the remaining development projects.
Efficiency gains in the property management and the further optimization of business processes have allowed Peach Property Group to maintain its operating costs at the previous year's level of around CHF 5 million despite the continued increases to the portfolio. The repayment of both bonds in the first half of 2016, reduced refinancing and lower currency translation costs allowed a substantial reduction of financing costs in the first half of 2017 to CHF 3.6 million.
Equity and Net Asset Value (NAV) at market values totaled CHF 185.2 million on 30 June 2017, which also marks a significant increase compared to the end of 2016 at CHF 165.3 million. This corresponds to CHF 25.10 per share compared to CHF 23.25 at the end of December 2016. According to IFRS equity totaled CHF 173 million, up from CHF 149 million at end of 2016. Due to the substantial investments to the portfolio both non-current assets and total assets have increased significantly. The equity ratio is thus lower than at the end of 2016 - at market values 40.0 percent after 46.1 percent, or according to IFRS 38.3 percent after 43.5 percent.
Peach Property Group is confident that its positive business growth will continue in the remainder of 2017, however it believes that the valuation result will not grow at the same rate as in the first half of 2017. Based on the existing investment portfolio rental income will increase substantially year-on-year.
The Group's focus continues to be on the expansion of the investment portfolio, focusing on B cities and regions in Germany in which the Group already holds properties. This allows for additional synergy effects in the management of the properties.
Peach Property Group is presenting its first half-year report 2017 in its new corporate design for the first time. This new image emphasizes the Group's positioning as a portfolio holder for residential properties focusing on sustainable real estate products. The new claim was also created in this connection: "Growing with Values." Peach Property Group's new image will be rolled out step by step during the remainder of 2017 and will be accompanied by enhanced digital communication. The new website will go live in October 2017 and will in later stages be supplemented by a central rental offering for all of the Group's available units and a state-of-the-art tenant portal.
Thomas Wolfensberger, Peach Property Group's CEO, commented on the positive outlook: "Solely based on the existing investment portfolio our rental income will increase substantially throughout the whole of 2017. However, we want to continue our growth. We expect to hit the 5,000 apartment-mark by the end of 2017. Our new image emphasizes our transformation to a portfolio holder, and it also visually highlights our core corporate values: Peach Property Group stands for sustainable growth in properties' value with state-of-the-art, tenant-focused management of residential properties. "
The 2017 semi-annual report can be downloaded from the Peach Property Group's website: www.peachproperty.com/HJB2017
Details of the real estate portfolio can also be downloaded as part of the asset report: http://investoren.peachproperty.com/websites/peachproperty/English/5300/asset-reporting.html
Media, investors and analysts
Dr. Thomas Wolfensberger, Chief Executive Officer und Dr. Marcel Kucher, Chief Financial Officer
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About Peach Property Group AG
Peach Property Group is a property investor and developer focused on investments in Germany and Switzerland. The Group stands for long time experience, competence and quality. Innovative solutions for modern housing needs, strong partnerships and a wide value chain complete the profile of the Group. The portfolio consists of an increasing number of high yield investment properties, typically in B-cities in close reach to metropolitan areas. In addition, the Group develops properties for its own portfolio or for the sale as condominium. Developments for sale focus on A-locations and encompass attractive architecture and high level furnishing for an international clientele. The business activities of the Group cover the entire value chain, from property acquisition and site selection to active asset management and finally to the sale or lease of properties.
Peach Property Group AG is headquartered in Zurich and has its German Group headquarters in Cologne. Peach Property Group AG is listed on the SIX Swiss Exchange (PEAN, ISIN CH0118530366). Its Board of Directors consists of Reto Garzetti (President), Peter Bodmer and Dr. Christian De Prati.
For more information, see www.peachproperty.com