Peach Property Group AG, a real estate investor with an investment focus on residential rental properties in Germany, reports a positive development in its operational results for the first half-year of 2022 based on preliminary operating figures, while further improving the Group’s financial structure. The Group confirms the issued guidance for the 2022 financial year (expected net rental income between CHF 113 million and CHF 118 million; expected FFO I between CHF 18 million and CHF 21 million). Peach Property Group will publish its Semi-annual report 2022 on August 30.
Key operating figures significantly improved in the first half-year 2022.
Peach Property Group achieved a new letting record with the conclusion of approximately 1 800 new rental contracts during the first half-year of 2022. Rental successes noticeably influence the vacancy rate, which is expected to reduce by approx. 0.3 percent compared to the end of 2021. This demonstrates the efficiency and scalability of the Group’s digital letting platform, and underpins the portfolio’s rental growth potential.
Simultaneously, the Company further increased rental income. The average rent per square meter from new rental contracts concluded is more than 15 percent above the average rent of approx. EUR 5.7 per square meter as of year-end 2021. Peach Property Group concluded rental adjustments for approx. 5 000 units across 69 cities during the first half-year of 2022. The portfolio average rent continues to be below the average market rent.
Peach Property Group further delivered on its modernization program and reached a new record number of approx. 1 400 units refurbished during the first half-year of 2022. Approximately 15 percent of the refurbished units underwent energy-related renovations such as the modernization of heating systems, or wall insulation solutions. The refurbishments form part of the growth drivers for the second half-year of 2022.
Focus on tenant satisfaction.
Satisfying the needs of our tenants and contributing to their well-being remain the focus of Peach Property Group’s strategy. During the first half-year of 2022, more than 50 000 tenant tickets were successfully processed. The “one-touch” rate in processing tenant tickets remained stable at approx. 90 percent despite an increased ticket volume from a larger portfolio. The average time required by Peach Points to resolve a tenant report significantly reduced from 26.8 hours in 2021 to approx. 20 hours in first half-year of 2022.
Important milestones achieved with Peninsula development project.
In addition to the operational achievements of Peach Property Group’s German portfolio, the Group reached important milestones with its sole remaining development project “Peninsula” in Wädenswil, Switzerland (https://www.peninsula-waedenswil.ch/). After the commencement of deconstruction work in the second quarter of 2022, and notarizations in July 2022, notarized purchase agreements were concluded for 12 of the planned 56 residential units, with a sales volume of over CHF 30 million.
Positive valuation result.
The valuation of Peach Property Group’s portfolio is expected to increase by approximately three percent over the last six months after taking into account the investments made. As a result, the net tangible assets value (NTA) according to EPRA reporting guidelines is expected higher than the CHF 68.56 per share reported as of December 31, 2021. In addition, the loan-to-value ratio (LTV) of 51.9 percent as of December 31, 2021, decreased further toward the medium-term target of 50 percent.
Continuation of active capital management.
Through active capital management, Peach Property Group continuously optimizes its financing costs. Most recently, in line with a partial tender offer the Company repurchased EUR 19 million of a bond maturing in February 2023 for a purchase price of 94 percent, reducing the remaining amount of the maturing bond to approx. EUR 180 million. To this end, the Group utilized a part of a credit facility with a total volume of EUR 100 million concluded in April 2022. An already committed secured financing of approx. EUR 90 million, as well as an additional secured financing still under negotiation will further improve the financial flexibility of the Company, also with respect to the refinancing of the maturing bond. A total of approx. EUR 600 million of the portfolio is unencumbered. Furthermore, Peach Property Group AG is constantly reviewing the further optimization of its financing structure.
Operational successes confirm guidance for current financial year 2022.
Dr. Thomas Wolfensberger, CEO of Peach Property Group AG, commented: “Peach Property Group achieved an outstanding performance in the first six months of the current financial year. The new records for important key operating figures once again underline the efficiency and scalability of our platform. We have never before refurbished and let so many apartments.” Regarding the outlook for the full year, he concluded: “Our rental and refurbishment successes, together with the continued rise in market rents form the basis for a successful second half of the year. With construction costs rising and fewer new apartments completed, the high demand for affordable housing is being met by a reduced supply. I am convinced that this circumstance will have a further and sustained positive effect on the development of the value of our portfolio. Overall, we still feel very comfortable with our guidance for rental income and FFO I for the financial year 2022 and confirm it.”
