Peach Property Group AG: Audited figures for 2023 confirm best operating results in Group's history

[ Report ]

Zürich (pta008/21.03.2024/07:00) - Ad hoc announcement pursuant to Art. to 53 LR

* Audited figures confirm: Financial year 2023 shows best operating result ever
* FFO I increased to EUR 22.8 million
* Adjusted EBITDA margin increased to 54.7 percent
* Loan-to-Value (LTV) pro forma at 56.8 percent
* ESG risk rating from Sustainalytics improved
* Guidance 2024: Net rental income EUR 124-126 million, FFO I EUR 17-19 million

Peach Property Group AG ("Peach Property Group"), a real estate investor focused on residential real estate in Germany, has published its annual report with audited results for the financial year 2023. According to the report, the Group generated funds from operations (FFO I) of EUR 22.8 million in the 2023 financial year (previous year 2022: EUR 19.2 million). This figure is at the upper end of the communicated guidance of EUR 21 to 23 million for the full year 2023 and is the best operating result since the Group's incorporation. Peach Property Group's full-year 2023 rental income increased to EUR 120.9 million (previous year: EUR 116.5 million). On a like-for-like basis, target rents increased by 3.7 percent. At around EUR 6.20, the average rent per square meter for the properties is around 18 percent below the average market rent, which underlines the further upside potential of the Group's portfolio.

The adjusted EBITDA margin increased from 50.9 percent in the previous year to 54.7 percent, meaning that the margin increases of around 56 percent envisaged for 2025 has already been partially realized.

Market environment impacts portfolio value

At the end of 2023, the overall market value of the Group's investment property portfolio was EUR 2.4 billion, a decrease of 7.5 percent compared to the previous year. The overall portfolio loan-to-value (LTV) ratio thus rose to approx. 57.5 percent from 54.7 percent in 2022, following non-cash impairment charges of approx. 8 percent. The capital increase within the capital band approved in March 2024, with the creation of 1'930'000 new shares in April 2024, reduced the LTV ratio to 56.8 percent on a pro forma basis.

The negative valuation charge of EUR -209.4 million also had a significant impact on the result before taxes ending at EUR -229.6 million.

Rising interest rates, high inflation directly impacting construction materials prices, and a pronounced shortage of skilled workers created numerous challenges in the sector and also impacted Peach Property Group. To conserve liquidity, the Group postponed major refurbishment measures at certain residential properties which led to an increase in the vacancy rate from 6.9 percent at the end of the previous year to 7.4 percent at the end of 2023. In the current 2024 financial year, vacancy rates are expected to decrease as a result of targeted investments in the portfolio and efficiency improvements in the refurbishment and re-letting processes. In addition, rent levels in large parts of the portfolio are expected to gradually rise to prevailing average market rents.

Convertible bond secures stable financing

The placement of a convertible bond in May 2023 with a coupon of three percent per annum and a volume of CHF 50 million was a major success for the Group's financing. With the issue of this three-year convertible bond and the conclusion of further mortgage-backed financing, the Peach Property Group will have no major refinancing obligations until 2025 and will be able to continue its consolidation process and focus on measures aimed at continuously improving the Group's performance.

New CEO as of April 15

Gerald Klinck will become the new CEO of Peach Property Group as of April 15, 2024. Gerald Klinck has more than 25 years of professional experience in the real estate industry and has served as a member of the Executive Board of Deutsche Wohnen Group, member of the Executive Board of Vonovia, CFO and Co-CEO of TLG Immobilien, and CEO and CFO of Cureus GmbH. At Peach Group, in addition to his role as CEO he will also take over the role of CFO.

In addition to Gerald Klinck, Marcus Schmitt (COO) and Dr Andreas Steinbauer (Head of Letting & Sales) will be members of the Executive Board.

Further implementation of ESG measures and improvement of ESG risk rating

Despite the challenging environment, the Peach Property Group continued to invest in ESG improvements. The focus was on cost-effective measures with significant energy saving potential. This included the installation of smart metering systems – more than 50 percent of the Group's properties have now been equipped with smart meters. These measures were also recognized by Morningstar Sustainalytics, an independent ESG and corporate governance rating company. Sustainalytics rated Peach Property Group as low risk against ESG benchmarks, improving the rating from 11.5 to 10.3 in 2023. This rating places the Peach Property Group in the top 9 percent of more than 1'000 real estate companies rated by Sustainalytics. The Group received an A rating in the MSCI ESG Rating.

Peach Property Group expects challenging environment in 2024

Peach Property Group expects the market environment to remain challenging in 2024. However, given the recent easing of inflation and the pick-up in residential transactions, the Group expects macroeconomic conditions to normalize later in the year. At the same time, ongoing high demand for affordable housing – partly due to low new construction activity – and positive early economic indicators should have a stabilizing effect on the business. Some industry experts believe that residential property values may have bottomed out.

Peach Property Group also expects rental income to increase to an estimated EUR 124 to 126 million in 2024. FFO I is forecasted to decrease to a range of EUR 17 to 19 million, mainly due to higher interest rates and inflationary cost increases. Both forecasts assume that no parts of the portfolio will be sold and that there will be no special effects from early refinancing.

Klaus Schmitz, Executive Chairman of the Board of Directors of Peach Property Group, commented: "The results speak for themselves: we have made significant progress in our consolidation in 2023. The best operating result in the Group's history is also a testament to the excellent work of the entire Peach team. I am also optimistic about 2024: the affordable housing segment remains attractive; demand is immense and growing. The Peach Property Group will capitalize on this potential under its new CEO."

Contacts:

Media, investors and analysts

Thorsten Arsan, Chief Financial Officer
Vanessa da Cruz, Head of Investors Relations & ESG
+41 44 485 50 31 | investors@peachproperty.com

Media Germany

Feldhoff & Cie
Anke Sostmann, Executive Director
+49 159 04028505 | as@feldhoff-cie.de

About Peach Property Group AG

Peach Property Group is a real estate investor with an investment focus on residential real estate in Germany. The Group stands for many years of experience, competence, and quality. Innovative solutions that cater to tenants' needs, strong partnerships, and a broad value chain round off the profile while digitalization and sustainability underpin the operational activities. The portfolio consists of high-yielding properties, typically in German Tier II cities in the commuter belt of metropolitan areas. The activities, therefore, span the entire value chain, from location evaluation and acquisition to active asset management and the letting or sale of properties.

In addition, Peach Property Group develops selected properties in Switzerland to be sold as condominiums, of which the "Peninsula Wädenswil" development project is the last such development project.

Peach Property Group AG has its registered office in Zurich and operational headquarters in Cologne. Peach Property Group AG is listed on SIX Swiss Exchange (PEAN, ISIN CH0118530366). Its Board of Directors consists of Klaus Schmitz (Executive Chairman), Dr. Christian De Prati and Peter Bodmer.

More information at https://peachproperty.com

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