> Earnings after tax up significantly to CHF 41.9 million, from CHF 11.6 million in the previous year
> Property portfolio grows to around 7,000 units in 2017 after 3,129 units in the previous year; residential rental space increases to almost 445,000 square meters
> Target rental income in the past fiscal year up strongly by 83 percent to CHF 16.3 million due to portfolio expansion and lower vacancies
> NAV at market value after deferred taxes increased by a good 30 percent to CHF 30.38 per share
> Equity ratio at market at 42.8 percent; according to IFRS at 41.6 percent
> Diluted FFO I per share in 2017 totalled CHF 0.74 compared to CHF -5.27 in the previous year
> Outlook for 2018 confirmed: Continued dynamic growth; expansion of portfolio to 9,000 apartments planned over the medium term
Peach Property Group, an investor specialising in German real estate with a focus on residential property has recorded new all-time high figures for both its earnings after taxes as well as its rental income according to final figures for fiscal year 2017. Earnings after taxes almost quadrupled during the past fiscal year to CHF 41.9 million, up from CHF 11.6 in 2016. Pre-tax earnings improved to CHF 51.5 million and thus also significantly exceeded the previous year’s earnings of CHF 17.0 million, as already reported when provisional figures were published. This increase is in particular due to the substantial expansion of the investment portfolio, the tenant centred and value-adding asset management as well as higher rental income and rental success. In addition, one-off factors, in particular currency translation gains in the amount of more than CHF 7 million also had a positive impact on earnings.
During the last year Peach Property Group further drove the expansion of its investment portfolio in line with its strategy. The Group concluded several larger transactions to increase its portfolio of residential properties significantly to around 7,000 units with residential space of almost 445,000 square meters, compared to 3,129 units with 210,000 square meters of residential space in 2016. In total, more than 3,800 residential units were acquired in the fiscal year 2017, of which the ownership of around 2,400 units was transferred in 2017. The portfolio of residential properties increased by 1,114 units alone with the acquisition of a portfolio in Oberhausen und Duisburg. In addition, several properties were acquired in the Bielefeld region, in Bochum, Kaiserslautern as well as in the states of Hesse and Thuringia. Peach Property Group aimed to specifically reinforce its position at locations in which the Group already had existing property clusters.
As a result of the expansion of the investment portfolio as well as the reduction in the vacancy rate rental income in 2017 increased year-on-year by almost 83 percent to CHF 16.3 million. At the same time the market value of the investment properties doubled to CHF 452 million as of 31 December 2017 from CHF 226 at the end of 2016; the market value of the total portfolio increased in 2017 by 58 percent to CHF 520 million compared to the previous year. As a result, investment properties in German B-cities already account for more than 85 percent of the total portfolio.
Vacancies have been further reduced thanks to extensive renovations and optimizations of the portfolio properties. As a result, the vacancy rate had improved significantly from 20.3 percent in the previous year to 16.3 percent at the end of this year’s reporting period- excluding the properties under renovation in Neukirchen-Vluyn and Fassberg, vacancies even dropped to 8.6 percent. The increase in annualised target rental income for all properties is up 109 percent year-on-year to CHF 34 million. On the cost side, Peach Property Group was able to take advantage from its existing operating platform and closed the year with a significantly under-proportional increase in its cost base.
Development properties were reduced further in 2017 in line with the strategy: In the “Wollerau Park” project close to Zurich more than 80 percent of the apartments had already been sold by the end of 2017; further notarizations followed at the beginning of 2018, so that currently around 90 percent of the units have sold. The first hand-overs have been taking place starting February. With regards to the “Peninsula” project in Wädenswil, Peach Property Group is planning to file for the building permission by end of March 2018. The projects in Germany, first and foremost “yoo berlin” and “H36” were completed in 2017. All of the apartments were sold and handed over to their owners with the exception of one apartment in Berlin.
In addition to the strong increase in earnings and rental income Peach Property Group also further optimised its financing structure in 2017. The Group significantly reinforced its equity base thanks to its strong profit growth, the full placement of a convertible hybrid bond in the amount of CHF 59 million and a capital increase. Equity at market value increased by more than CHF 100 million as of 31 December 2017 to CHF 272.2 million, compared to CHF 165.3 million at the end of 2016; according to IFRS the respective figures are CHF 258.5 and 148.9 million respectively. The equity ratio remained practically constant at 42.8 percent (at market) and 41.6 percent respectively (IFRS), irrespective of the strong expansion in the property portfolio and thus also total assets. On a per share basis equity at market increased to CHF 30.38 compared to CHF 23.25 in the previous year.
In parallel with the focus on long-term investment management, as well as the continued attractive interest rate environment, the maturity structure of the financial liabilities was further shifted to the long term. At the end of 2017 almost 80 percent of financial liabilities were non-current, compared to a good 72 percent in the previous year.
Peach Property Group has confirmed the positive outlook for 2018 and is anticipating its dynamic growth to continue in the current fiscal year. Rental income will increase significantly in 2018 as a result of the full-year contribution of the properties acquired in 2017. The share of the development portfolio will continue to decrease in 2018 in line with the Group’s strategy. Most prominently, the development project “Wollerau Park” by Zurich will be completed in 2018 and the units sold will be handed over to its purchasers.
Dr. Thomas Wolfensberger, Peach Property Group’s CEO, commented: “Last year has been the best to date in our Group’s history and we enjoyed dynamic and profitable growth. We more than doubled our portfolio of high-margin residential properties in B-cities and significantly increased our rental income. In addition, we further increased our financial power and flexibility, enabling us to use market opportunities. In view of the business development in 2017 we are very optimistic that we will be able to continue our dynamic growth in 2018. The funds we have available will allow us to increase our residential portfolio from a current total of around 7,000 units to 9,000 units in the mid-term. In addition, we have made major progress in the past year in further expanding our asset management platform and in digitalisation. The resulting process efficiencies will support us in successfully implementing the anticipated growth.”
The 2017 annual report can be downloaded from the Peach Property Group’s Web site using the following link: https://peachproperty.com
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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 and Dr. Christian De Prati.
For more information, see https://peachproperty.com