Ad hoc announcement according to article 53 KR
Peach Property Group AG: Profitability significantly increased in the first half-year 2022
Zurich (pta011/30.08.2022/07:00 UTC+2)
Ad hoc announcement pursuant to Art. 53 LR
- Operating profitability (FFO I) increased by 93 percent to CHF 9.0 million
- Net rental income for first half-year amounted to CHF 59.2 million, up 18% year-on-year, driven by like-for-like rental growth of 3.4% and portfolio acquisitions
- Operating income at CHF 104.3 million
- Half-year profit after taxes CHF 47.0 million
- EPRA NTA increased to CHF 69.50 per share / Market value of real estate portfolio at CHF 2.72 billion
- Leverage ratio (LTV) reduced to 51.7 percent
- Reduction of interest cost on debt to 2.5 percent
- Repayment of bonds maturing in February 2023 covered
- Full-year guidance confirmed
Zurich, August 30, 2022 - Peach Property Group AG, a real estate investor with an investment focus on residential rental properties in Germany, successfully increased its profitability during the first half-year of 2022. Funds from operations (FFO I) increased to CHF 9.0 million for the first half-year of 2022, compared to CHF 4.7 million in the previous period. The year-on-year increase of 93 percent is almost double and reflects the Company's significantly increased profitability from operations.
Operating income for the first half-year of 2022 was CHF 104.3 million compared to CHF 87.9 million (excluding the initial valuation gain of CHF 63.8 million from the acquisition in June 2021, as no acquisitions were completed in the reporting period) in the previous period. Profit after tax for the first half-year of 2022 amounted to CHF 47.0 million.
Operational progress with increased new letting and higher rental income
Peach Property Group achieved a new letting record with the conclusion of approx. 1 800 new residential rental contracts during the first half-year of 2022. Letting successes positively influenced the vacancy rate, which reduced from 8.0 percent as of December 31, 2021, to 7.6 percent as of June 30, 2022. The average rent per square meter from new rental contracts concluded is more than 15 percent higher than the average rent as of year-end 2021. Furthermore, rental charge adjustments were concluded for approx. 5 000 units during the reporting period. Although like-for-like rental income increased by 3.4 percent in the reporting period, the full effect of rental charge adjustments will only be realized during the second half-year of 2022. On the back of these operational actions and the impact from the acquisition at the end of the previous period, rental income increased by approx. 18 percent, from CHF 50.2 million in the previous period, to CHF 59.3 million in the reporting period.
Operational progress continued through various refinancing measures, the reduction in the vacancy rate, and receivables management.
The entire real estate portfolio market value (including development projects and right-of-use assets) was CHF 2.72 billion as of June 30, 2022. The EPRA net tangible assets value (NTA) increased to CHF 69.50 per share from CHF 68.56 per share at year end-2021 despite a further weakening of the Euro against the Swiss franc. The increase is attributable to valuation gains in the existing portfolio of approx. 3 percent as well as operational progress made.
Improved financing structure and reduced leverage ratio (LTV)
The loan-to-value-ratio (LTV) decreased further from 51.9 percent, as of December 31, 2021, to 51.7 percent, as of June 30, 2022. The interest coverage ratio increased from 1.38 in the previous period to 1.53 in the reporting period.
Through buyback offers in the reporting period and at the beginning of July, early settlements were made for approx. EUR 70 million of the bond maturing in February 2023, with an original volume of EUR 250 million. Unsecured promissory notes of EUR 55 million, as well as a revolving credit facility of EUR 100 million were successfully concluded. Recently an agreement was signed to lock in further secured financing of approx. EUR 100 million. The proceeds from the new financing will be utilized to repay the outstanding balance of EUR 180 million of the bond maturing in February 2023. Further financing measurements are currently being assessed. As a result of the financing measures in the reporting period, the average interest costs were further reduced from 2.7 percent in the previous period, to 2.5 percent in the reporting period – this despite higher market interest rates.
Guidance for 2022 confirmed: First half-year lays the foundation for a successful full financial year
With the successful first half-year, Peach Property Group laid the foundation for a strong second half-year. Net rental income for the current financial year is expected to be between CHF 113 million and CHF 118 million. FFO I is forecasted to be between CHF 18 million to CHF 21 million. Based on the results for the first half-year, this guidance can be confirmed. The interest coverage ratio will also continue to improve, as the favorable new financing agreements concluded in the first months of the year, will have contributed for the full second half of the year. The guidance is further supported by the continued strong demand for affordable housing in German cities. To date, Peach Property Group has hedged risks such as rising energy prices via medium-term supply contracts. The Company will counter new regulations effective from October 1, 2022, with an increase in ancillary cost prepayment charges and keep the impact on the cost structure neutral.
On an annualized basis, Peach Property Group plans investments of approx. CHF 50-60 million, e.g. energy-related renovations among others.
Dr. Thomas Wolfensberger, CEO of Peach Property Group AG, said: "The development in the first half of the year testifies to our solid and sustainable business model. We were able to improve many important key figures in the operational area. We achieved all-time highs with new letting. We continued to modernize our real estate portfolio. Energy-efficient refurbishments not only reduce the burden on the environment, but also help our tenants in view of current developments on the energy markets. We also made steady progress in tenant communications and were able to further reduce our response times to tenant concerns. Despite an increase in like-for-like rental income, our focus remains on providing affordable housing. Our average existing rents remain well below average market rents. Due to the significant increases in construction and energy costs, we expect fewer new construction projects to be realized, which will have a positive impact on demand in the existing market. In this respect, we believe that our real estate portfolio in metropolitan regions of Germany continue to position us favorably for the future."
Wolfensberger continued: "Particularly, the crisis triggered by Russia's war of aggression has once again highlighted the responsibility we bear for society as a residential real estate company. We consider it as self-evident to support people in need and offer them a safe home. The expenditure on energy costs in the coming heating period will also have a massive impact on social life. This will place a very heavy burden on many private households. We will stand by our tenants in these challenging times, for example through a personal meeting in the Peach Points."
Thorsten Arsan, CFO of Peach Property Group AG, added: "As planned, we achieved a significant improvement in our profitability in the first half-year of 2022. We were able to almost double FFO I after successfully integrating and completing acquisitions. Our active capital management in connection with refinancing measures, the further reduction of vacancies and improvements in receivables management have also paid off. Through repurchase offers, we repaid part of a bond maturing in February 2023 to our creditors ahead of schedule. In addition, we were able to conclude unsecured promissory notes and a revolving credit facility in the reporting period. Combined with the recently signed new secured financing of approx. EUR 100 million, the repayment of the remaining outstanding bond maturing in February 2023 is covered. As a result of the improved financing structure and financing measures, LTV and average interest costs have decreased. Further financing is being assessed and secured financing was recently concluded. We thus feel well prepared for the second half of 2022 and have confirmed our guidance."
The detailed 2022 semi-annual report is available on the website at the following link: https://www.peachproperty.com/en/news-en/interim-reports/
Today at 11 a.m. (CET), an analyst and media conference call in English will take place with CEO Dr. Thomas Wolfensberger and CFO Thorsten Arsan. The webcast can be accessed at the following link: https://onlinexperiences.com/Launch/QReg/ShowUUID=31B9DB88-430A-4BD0-8754-B0AC075AA0CB
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.
More information at https://www.peachproperty.com/en/
Peach Property Group AG
|Dr. Thomas Wolfensberger and Thorsten Arsan
|+41 44 485 50 00
|SIX Swiss Exchange; Free Market in Berlin, Frankfurt, Stuttgart