Peach Property Group AG: Financial year 2022 with highest operating result in Group’s history

Peach Property Group AG, a real estate investor with an investment focus on residential rental properties in Germany, completed the 2022 financial year with the highest operating result in the Group’s history to date. Funds from operations (FFO I) reached EUR 19.2 million and were up by approximately 90 percent year-on-year. The operational profitability was achieved through the full integration of the 4 300 residential units acquired in June 2021, a further increase in occupancy whereby the vacancy rate reduced from 8 percent to 6.9 percent, a moderate rent adjustment, and a reduction in management costs through efficiency measures. The net rental income increased by 16 percent to EUR 116.5 million (+5.1 percent on a like-for-like basis), ending at the upper end of the guidance. The average rent per square meter of the properties is, at approximately EUR 6, still 18 percent below the average market rent, which underlines the further potential of the Group’s portfolio.

In the current market environment, property valuations and financing costs are decisive success factors in the real estate business. Peach Property Group’s existing portfolio of approximately 27 550 residential units was valued by an external property appraiser at approximately EUR 2.60 billion at the 2022 financial year-end. The valuation included a slight devaluation of EUR 12 million, which was offset by investments in modernization measures and a smaller acquisition. Thus, the valuation of Peach Property Group’s real estate portfolio remains virtually unchanged compared to the previous year (2021: EUR 2.54 billion).

The average book value of a square meter of residential space from the Group’s portfolio is EUR 1 450, and is at a very attractive level in a sector comparison. The net tangible asset value (NTA) according to EPRA is EUR 64.88 per share (2021: EUR 66.40 per share). Taking into account the issuance of approximately 3.8 million new shares on April 12, 2023 in connection with the mandatory convertible bond announced in December 2022, the EPRA NTA will be approximately EUR 55, on a pro forma basis. Peach Property Group AG (PEAN; ISIN CH0118530366) shares are thus currently trading at approximately 70 percent below the pro forma EPRA NTA per share.

In line with its active capital management, Peach Property Group kept its debt financing costs stable compared with the previous year, with an average interest rate of approximately 2.7 percent at year-end. In order to further strengthen the balance sheet, a short-termed mandatory convertible bond was issued in January 2023 (complete conversion on April 12, 2023). It was primarily subscribed to by the Company’s anchor shareholders. The proceeds of approximately EUR 68 million were used in full to repay debt. This reduced the loan-to-value ratio (LTV) per January 2023 from 54.7 percent to 52 percent. The average maturity of all financing of Peach Property Group remains unchanged at 3.7 years. This action by Peach Property Group AG’s management followed in response to the abrupt turnaround in central banks’ monetary policy, and the massive increase of interest rates.

The Group’s result before taxes was negatively affected by non-cash foreign exchange losses. The Company’s equity is denominated in Swiss francs. Capital raised in Swiss francs and subsequently utilized to finance Euro denominated operations may result in non-cash foreign exchange movements from intra-group financing. This resulted in accounting losses of approximately EUR 30 million due to the further weakening of the Euro against the Swiss franc. The non-cash foreign exchange loss impact combined with valuation gains on investment properties not materializing, resulted in a reduction in the result after taxes to EUR -15 million (2021: EUR 186.1 million). The EBIT of Peach Property Group in 2022 amounts to EUR 43.7 million (2021: EUR 315 million).