Record-breaking result in 2018 – earnings before taxes up to almost CHF 57 million according to preliminary figures
=> Residential portfolio up by more than 50 percent to some 8,400 units, acquisition of a further 421 apartments completed in January 2019
=> Actual rental income increased by more than 80 percent to just under CHF 30 million
=> Annualized target rent up by 53 percent to CHF 44 million; further increase as of January 2019 to CHF 46.4 million
=> Vacancy rate reduced from 16.8 to 13.6 percent
=> Operating margin of residential hold portfolio increased from 67 to 71 percent
=> IFRS equity ratio at the end of 2018 expected to be slightly below 37 percent
Peach Property Group, an investor specialising in the management of residential property has recorded the best result in its history in 2018, according to unaudited preliminary figures. Earnings before taxes in the past fiscal year were up by a roughly 10 percent year-on-year to almost CHF 57 million. This was mainly due to operational progress and the further expansion of the existing portfolio. The record result was achieved despite negative currency translation effects due to the weakening of the euro against the Swiss franc, which amounted to approximately CHF 4.5 million. In 2017, positive currency translation effects of around CHF 7.7 million were recorded.
According to initial key data, actual rental income rose by a good 80 percent year-on-year to just under CHF 30 million in 2018, while annualized target rental income rose by 53 percent to CHF 44 million and stood at approximately CHF 46.5 million at the end of January 2019. This was achieved with a more than 50 percent increase in portfolio size to over 8,400 units. The acquisition of a further 421 apartments were completed in January 2019.
In addition to the acquisitions, Peach Property’s active asset management with targeted investments in properties and tenant-oriented property management also had a positive effect. This approach includes the traditional “Peach on Tour” food truck and portfolio-wide gardening festivals in spring, as well as, in particular the opening of the new Peach Points (tenant shops) in Heidenheim and Oberhausen and the new tenant app and tenant Internet portal. This made it possible to implement measures even more efficiently and quickly and to establish a direct dialogue with tenants. In addition, these measures also significantly reduced the vacancy rate, which stood at 13.6 percent ytd at the end of December 2018, compared to 16.8 percent a year earlier.
The operating margin, which puts direct property costs in relation to total actual rental income, was up from 67 percent in the previous year to 71 percent at the end of 2018. Peach Property Group was also able to significantly increase efficiency with regard to overhead costs: As a result of systematic leverage of the existing platform, operating costs increased at a significantly slower rate than revenue growth and were only 7 percent higher than in the previous year.
According to preliminary figures, the market value of Peach Property Group’s existing portfolio increased by a good 53 percent to CHF 694 million in 2018. This was due to acquisitions and value-enhancing asset management, which was reflected in a year-on-year increase of around six percent in the value of properties already included in the real estate portfolio. As a result of the earnings recorded, the equity increased significantly in 2018. Despite the significant increase in total assets as a result of the portfolio growth, the equity ratio according to IFRS is hence expected to be a solid 37 percent at the end of 2018, only slightly below the previous year’s level of 41.6 percent.
For the 2019 fiscal year, Peach Property Group expects a further significant increase in rental income and a further increase in operating efficiency from the systematic use of the existing platform. In addition, Peach Property Group will continue to invest in its existing portfolio in the future and its active management will further increase tenant satisfaction and thus reduce vacancies.
In the medium term, Peach Property Group is set to expand its portfolio to around 11,000 residential units. Given the more than CHF 50 million on hand at the end of 2018, the group is well positioned to achieve this target.
Dr. Thomas Wolfensberger, Peach Property Group’s CEO, commented: “The figures for 2018 show that we have made very good operational progress. Of course, further growth and the expansion of the property portfolio are essential factors, but in our view value-enhancing measures in our existing property portfolio, the tenant satisfaction and the reduction of vacancies are equally important. We are proud of our achievements and are continuing to work on it. Enhancing our presence with local tenants via our Peach Points has paid off, and so has expanding digital communication with the tenants and thus offering an innovative service”.
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Dr. Thomas Wolfensberger, Chief Executive Officer and 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, Dr. Christian De Prati and Kurt Hardt.
For more information, see http://peachproperty.com