Peach Property adds further 1,000 units to residential portfolio

Swiss listed residential developer and investor Peach Property has bought a portfolio of 1,066 apartments, nine commercial units and 771 parking spaces in Heidenheim, in the Baden-Württemberg region of Germany. The company did not divulge either the seller or the purchase price.

The deal, which lifts the group's residential portfolio by 15% to around 8,000 units, encompasses 73,700 sqm of space with an average occupancy of 95%.

The Zurich-based group said that it plans to retain the majority of the apartments while only a minority will be privatised. Most of the properties were built between 1905 and 2006, and include a number of former Gagfah properties in the Zanger Berg district of Heidenheim. The assets are expected to generate rents of €5.5m a year.

Thomas Wolfensberger, Peach Property Group’s CEO, commented: 'Peach Property has established a strong presence in the south of Germany thanks to this acquisition. We are convinced of Heidenheim in Baden-Württemberg with its strong economy and are very pleased to be represented here with a rental cluster which has a critical size from the very outset. This will allow for a focused asset management with local resources to leverage the existing potential.' The company had earlier given a medium-term goal of acquiring 9,000 apartment units, so this deal will have brought them a lot closer to their target, itself expected to be reached this year.

The company's focus is on high-yielding existing properties, preferably in so-called B-cities close to larger conurbations. It also invests in and develops high-end residential properties of architectural merit for well-heeled international investors. In addition to its HQ in Zurich, the company has a German headquarters in Cologne.

Just this week Peach Property announced the issue of a CHF 50 million subordinated hybrid warrant bond, with the possibility of boosting the volume to CHF 100 million. The funds will be used "for expanding the portfolio in Germany, and the redemption of other liabilities", said the company.

The bond has an unlimited term, with any termination by Peach possible only in June 2023 at the earliest. The interest coupon is 1.75% until June 2023, and after that the prevailing capital market interest rate plus 9.25% per annum. Each bond at a nominal value of CHF 1,000 entitles the bond holder to 4 warrants to buy Peach Property shares, where each warrant entitles the holder to one share at an exercise price of CHF 25.00 between June 2018 and June 2021.