Record-breaking profits, FFO and rental income doubled, NTA reaches CHF 68.56 per share in 2021
Ad hoc announcement pursuant Art. 53 LR
* Earnings after tax of CHF 201 million up by around 58 percent year-on-year
* FFO I of CHF 11.1 million and rental income of CHF 108.6 million doubled
* Like-for-like rental income growth of 4.0 percent
* Real estate portfolio grows to more than 27 400 residential units with a market value of CHF 2.7 billion
* EPRA NTA increases to CHF 68.56 per share
* Loan-to-value ratio (LTV) reduced to 51.9 percent
* Forecast 2022: net rental income CHF 113 million to CHF 117 million, FFO I CHF 18 to 21 million
* Sustainability targets defined – commitment towards portfolio climate neutrality by 2050
Peach Property Group AG, a real estate investor with an investment focus on residential rental properties in Germany, continued its successful growth strategy in the 2021 financial year. At CHF 259 million, earnings before taxes reached a new high in the Group’s history and was 69 percent above the previous year’s reported figure. Earnings after tax significantly increased year-on-year by approx. 58 percent, to CHF 201 million. Funds from operations (FFO I) more than doubled year-on-year from CHF 4.6 million, to CHF 11.1 million. Net rental income generated amounted to CHF 108.6 million, almost doubling the previous year’s reported figure. On a like-for-like basis this corresponds to an increase of 4.0 percent. Key drivers were the acquisitions at the end of 2020 and in June 2021, as well as the economies of scale generated as a result. The final results for the 2021 financial year materially correspond to the preliminary figures reported on February 2, 2022.
Accordingly, the Board of Directors of Peach Property Group AG proposes to distribute a dividend of CHF 0.33 per share to shareholders (previous year CHF 0.30). This proposal aligns with the communicated dividend policy of 50 percent of FFO I.
High value of the real estate portfolio
Despite COVID-19-related lockdowns, Peach Property Group further expanded its real estate portfolio in Germany by acquiring around 4 300 new residential units in early summer 2021. With more than 27 400 residential units, and a total market value of CHF 2.7 billion, compared to CHF 2.1 billion in the previous year, a new record has been achieved. The value increase resulted from both acquisitions and revaluations. In line with its strategy, Peach Property Group concentrated its portfolio expansion in regions such as the Ruhr region in North Rhine-Westphalia.
The value of net tangible assets (NTA) according to EPRA reporting guidelines increased by around 20 percent to CHF 68.56 per share compared to CHF 57.29 per share at the end of 2020.
Improved financial profile and significant reduction in loan-to-value ratio (LTV)
In June 2021, Peach Property Group successfully placed a 2.5 percent CHF mandatory convertible bond with an issue amount of CHF 180 million. Following to the further strengthening of the equity base due to the mandatory convertible bond and the annual result, the loan-to-value ratio (LTV) reduced from 57.5 percent in the previous year, to 51.9 percent in 2021. The continuously improving financial profile was also reflected in the improvement of all external ratings by Moody’s Investors Service and Fitch Ratings in 2021. As already announced with the preliminary figures, Peach Property Group will discontinue the use of a third rating agency in the future for efficiency and will focus on two rating agencies only.
Further growth expected in 2022
With its focus on residential real estate in German metropolitan regions and Tier II cities, Peach Property Group expects also in the current financial year a dynamic market environment. In this context, Peach Property Group will continue to pursue a value-creating acquisition strategy which seeks for a clear expectation of return on investment. With an average current rent in place of EUR 5.73 per square meter the portfolio offers a substantial rent-increase potential of 18 percent compared to the market.
Net rental income is expected to reach between CHF 113 million and CHF 117 million in the 2022 financial year (currency-adjusted comparable figure in 2021 CHF 100.4 million). In terms of FFO I, Peach Property Group expects to achieve CHF 18 to 21 million (currency-adjusted comparable figure of CHF 10 million in 2021).
Tenant satisfaction remains the top priority. In the past financial year, the time between notification of a claim and its complete rectification was already reduced from 7 to 5 days.
Meanwhile Peach Property will continue to invest in the expansion of its digital platform and in a motivated team that provides competent support to tenants. To provide this support even better and closer to tenants, three more Peach Points were opened at the beginning of 2022. This brings the total number of tenant shops to 15.
Goal of climate neutrality as part of the further developed sustainability strategy
Peach Property Group’s sustainability strategy was further developed in the current financial year and a decarbonization plan was developed for the first time. As a result, Peach Property Group is committed to achieving climate neutrality of its real estate portfolio by 2050. As an interim step, the aim is to significantly reduce CO2 intensity to below 30 kg CO2 per square meter by 2030. To reduce the environmental footprint, modernization and renovation activities will be intensified, and a corresponding investment program for this purpose was launched. Furthermore, an evaluation by an ESG rating agency will be carried out for the first time in 2022.
Dr. Thomas Wolfensberger, CEO of Peach Property Group AG, said: “For Peach Property Group, the past financial year was characterized by the continuation of our growth strategy. We expanded our portfolio and strengthened the Group’s position on the real estate and capital markets. With now more than 27 400 residential units in our portfolio and a total market value of the portfolio of CHF 2.7 billion, we have achieved a new high. Our actions are consistently geared towards satisfying the needs of our tenants and contributing to their well-being. Our business model has always pointed at meeting our environmental, economic and social responsibilities. We are now additionally committed to achieving climate neutrality of our real estate portfolio by 2050, with an interim target of 2030.”
Wolfensberger continued: “At present, however, our thoughts are primarily with the people in Ukraine affected by the terrible war. We have maintained close contact with officials in over 12 cities since the start of the refugee wave and are now able to provide constantly accommodation for people who have had to flee Ukraine. Our teams in the now 15 regional Peach Points are doing an excellent job. We hope to be able to make at least a small contribution to overcoming this crisis.”
“We achieved a significant improvement in all key financial ratios in financial year 2021, thus closing a record year. The strengthened equity base is also reflected in a significantly lower leverage ratio LTV. Accordingly, we are continuing our sustainable dividend policy and have slightly increased the proposed dividend compared to the previous year as part of our dividend policy. For the current financial year 2022, we expect a continued dynamic positive development as well, which will be reflected in both higher net rental income and higher FFO I. We intend to continue to grow in our core markets in a balanced and sustainable way, whereby our acquisition strategy is linked to a clear expectation of returns. At the same time, we will increase investments in the portfolio and thus the quality of our real estate portfolio. The focus here is on sustainability,” added Thorsten Arsan, CFO of Peach Property Group AG.
The detailed Annual Report 2021 is available on the website at the following link: https://www.peachproperty.com/en/investoren/publications/annual-reports/
An analyst and media conference call will be held today at 10 a.m. in English with CEO Dr. Thomas Wolfensberger and CFO Thorsten Arsan. The webcast can be accessed at the following link: https://onlinexperiences.com/Launch/QReg/ShowUUID=2D2DF880-18CE-4A9C-A611-26EBFF95DD10
Media, investors, and analysts
Dr. Thomas Wolfensberger, Chief Executive Officer, Thorsten Arsan, Chief Financial Officer, and Stefan Feller, Head of Investor Relations
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About Peach Property Group AG
The Peach Property Group is a real estate investor with an investment focus on residential rental properties in Germany. The Group stands for many years of experience, competence and quality. Innovative solutions for state-of-the-art living needs, strong partnerships and a broad value chain round off the profile. The portfolio consists of high-yield portfolio properties, typically in B-cities in the catchment area of conurbations. In addition, the Group develops real estate for its own portfolio or for condominium marketing. In the latter area, the Group concentrates on A locations and properties with attractive architecture and upscale furnishings for an international clientele. Its activities span the entire value chain from evaluating locations through to acquisitions and also active asset management and property sales or lettings.
Peach Property Group AG has its registered office in Zurich and the Group is headquartered in Cologne. Peach Property Group AG is listed on SIX Swiss Exchange (PEAN, ISIN CH0118530366). Its Board of Directors consists of Reto Garzetti (President), Peter Bodmer, Dr. Christian De Prati, Kurt Hardt and Klaus Schmitz.