- Market value of portfolio increased to CHF 292.4 million
- Consolidated income of CHF 19.7 million lower than previous year since, as planned, no major projects were concluded
- Annual profit of CHF –11.1 million or CHF –2.31 per share in line with expectations
- Significant expansion of investment property portfolio to CHF 58 million at present; increase in rental income to currently CHF 4.6 million p.a. to stabilise earnings
- Solid progress made in construction and sale of development projects
- Integration and automation of business processes to enhance efficiency
- Dividend of CHF 0.30 per share proposed; yield-based dividend policy continued
Zurich, 2 April 2012 – Peach Property Group AG, a leading developer of high-value residential property in German-speaking Europe, reports consolidated operating income of CHF 19.7 million for the financial year 2011, against CHF 84.4 million in the previous year. The reason for the decrease is that, as planned on the timeline, no major real estate projects were completed in the year under review. Accordingly, income from property development of CHF 12.1 million was lower than in the previous year. Furthermore, in 2010, substantial other operating income was accrued from the re-evaluation of acquisitions as well as from the sale of shares in Beach House AG. Other operating income amounts to CHF 3.6 million in 2011. Income from re-evaluation of investment property of CHF 3.3 million is attributable to the acquisition of an investment property portfolio in Munster (Germany) in December 2011. In the year under review, Peach Property Group generated income from the lease of investment properties in the amount of CHF 0.7 million.
The lower operating income leads to an operating loss (EBIT) of CHF 12.0 million for the financial year 2011. At the net result level, Peach Property Group reports a loss of CHF 11.1 million for the financial year 2011. This corresponds to a result of CHF -2.31 per share.
Continuation of dividend policy
The Board of Directors proposes to the annual general meeting of Peach Property Group AG that a dividend of CHF 0.30 per share be distributed for the financial year 2011. This represents a dividend yield of 2.7 percent as at the year-end and is in line with Peach Property Group’s dividend policy, which aims to pay shareholders a regular dividend that is above long-term money market rates. The dividend will be distributed in the form of a tax-privileged capital repayment.
Portfolio value close to the 300 million mark
Based on the valuation by the independent real estate valuer Wüest & Partner, the market value of the total real estate portfolio held by Peach Property Group as at 31 December 2011 amounts to CHF 292.4 million, CHF 270.8 million, or 93 percent, of which is attributable to development properties (including joint ventures) and CHF 21.6 million, or 7 percent, to investment properties.
According to this independent market valuation of the portfolio, the net asset value (NAV) of Peach Property Group AG at year-end 2011 amounts to CHF 130.0 million. In line with IFRS guidelines, which require an assessment of development properties at their acquisition or production costs, the NAV amounts to CHF 95.2 million. The difference compared to the previous year’s NAV figures is attributable to the loss reported for the financial year 2011, including additional costs incurred on the “yoo berlin”/Am Zirkus 1 project, and the dividend distribution. These negative effects on NAV could not be offset by the increase in value of the portfolio.
Solid equity base
On the basis of acquisition or production costs, the development properties of Peach Property Group as at 31 December 2011 are accounted for at CHF 153.4 million. The year-on-year increase in value is due to the construction work carried out on existing projects, factoring out the Living 106 project in Berlin, which was derecognised after ownership of the last apartments had been transferred to their buyers. The acquisition of the portfolio in Munster (Germany) increases the value of investment properties to CHF 21.6 million. Peach Property Group’s equity amounted to CHF 95.2 million at year-end. This corresponds to a solid equity ratio of 42 percent; on the basis of the NAV market value, the equity ratio amounts to 48 percent.
Development projects progressing according to plan
Peach Property Group pressed on according to plan with all projects under construction in the financial year 2011. Milestones include:
- completion of the Living 106 project in Berlin;
- start of structural engineering work on “yoo berlin”/Am Zirkus 1;
- topping-out ceremony for the first construction stage of Harvestehuder Weg 36 in Hamburg (Alsterkamp 43);
- off-plan sales reached for the start of the second construction phase at Harvestehuder Weg 36;
- topping-out ceremony for the Schooren des Alpes project in Kappl (near Ischgl).
Significant progress was also achieved in projects in the development phase, including the exclusive cooperation agreement signed with renowned landscape architect Enzo Enea to design the entire park and garden area for the Peninsula site in Wädenswil. The rear noise barrier was installed, marking the first phase of the construction process.
Appeals by the Heritage Society against individual projects on the Peninsula site were assessed by the Construction Appeal Tribunal (Baurekursgericht) of Canton Zurich in March 2012. Approval for Peach Property Group’s plans to divert the Reidbach watercourse and to remove former lodging houses from the inventory has been upheld. This brings the Group a major step closer to realising its Mews & Gardens project. The Group is being required to incorporate two further existing buildings into its Aquatica project, which reduces the entire construction volume. Peach Property Group is nevertheless confident of being able to ensure the profitability of the Aquatica project, but reserves the right to file an appeal with the Administrative Tribunal (Verwaltungsgericht) as court of the next higher instance.
Investment portfolio expanded in line with strategy
In addition to the existing Bakery commercial property in Wädenswil, Peach Property Group in 2011 has acquired an investment property portfolio in Munster (Germany) within the catchment area of the major cities of Hamburg and Hanover. At the end of January 2012, Peach Property Group acquired another high-yield portfolio of apartments and commercial units in Erkrath-Hochdahl near Düsseldorf.
As at the end of January 2012, Peach Property Group therefore has an overall investment property portfolio (market value: CHF 58 million) which comprises 519 apartments and commercial space of almost 15 000 m2 and generates annual rental income of approximately CHF 4.6 million. The Group has thus implemented important steps towards stabilising income while adhering to strategy.
Integration and automation of business processes
Peach Property Group focussed on the integration and automation of business processes in the financial year 2011. IT systems for customer relationship management and construction cost management were introduced at all locations. The aim is to replicate the processes along the property development value added chain in a cross-disciplinary information system. On the basis of such an integrated platform Peach Property Group can execute its projects more efficiently and transparently.
Positive assessment of financial year 2011
CEO Thomas Wolfensberger is positive on the financial year 2011: “Peach Property Group’s financial result for 2011 is in line with expectations. It is important that the company has made good operational progress at all levels: We have reached the specified milestones for all projects under construction and pressed on with projects in the development stage. We have implemented the announced build-up of an investment property portfolio. And not least, we have enhanced the efficiency of our processes. We have thereby set the course for the profitable development of Peach Property Group going forward.”
Outlook for 2012
Peach Property Group expects real estate markets in German-speaking Europe to also perform well in the current year. With its projects for the most discerning of client segments Peach Property Group is well positioned in the market. The popular initiative limiting the construction of second homes that was passed by the Swiss electorate in March does not impose any constraints on Peach Property Group’s business model.
Peach Property Group is again targeting various milestones at project level in 2012: Under the twin project “yoo berlin”/Am Zirkus 1 construction work is progressing on the ten-storey freestanding building. In Hamburg, title to the apartments in the first construction stage is to be transferred to the owners from spring 2012 on. Structural engineering work for the second phase is scheduled to commence in April. The twelve luxury holiday apartments in the Schooren des Alpes property will be ready in time for the next winter season. The foundation stone for the Beach House project is to be laid in April 2012. In parallel with the realisation of development projects, Peach Property Group will also examine the acquisition of high-yield investment property portfolios in 2012.
Key figures Peach Property Group AG (consolidated)
Peach Property Group AG is hosting a media conference on the 2011 annual results today at 9.00 a.m. in the Convention Point of SIX Swiss Exchange, Selnaustr. 30, Zurich.
The 2011 annual report is available on the company’s website at: http://investoren.peachproperty.com/peachestates/downloads/Annual_report2011.pdf
Investors and analysts:
Dr. Thomas Wolfensberger, Chief Executive Officer
Bruno Birrer, Chief Operating Officer
+41 44 485 50 00
Siro Barino, Barino Consulting
+41 79 335 24 24
About Peach Property Group
Peach Property Group AG is a leading developer in the field of top-quality residential property in the German-speaking region of Europe. Its activities cover the entire prime property development value chain, from site evaluation to project planning, implementation and marketing. Properties developed by Peach Property Group AG are located on exceptional sites in or near city centres and holiday resorts. Premier amenities meet the requirements of a demanding clientele. The company’s integrated corporate strategy includes not only the development of high-quality residential properties, but also the management of investment properties for the purpose of generating consistent annual revenues.
Peach Property Group AG is headquartered in Zurich and also has a branch office in Cologne. Peach Property Group AG is listed on SIX Swiss Exchange (PEAN, ISIN CH0118530366).
Visit www.peachproperty.com for more information.