Peach Property continues refocus with German portfolio buy

Swiss-listed Peach Property Group made a further move to boost its German residential holdings by buying a residential portfolio in Kaiserslautern, in the south-west of the country in Rhineland Palatinate.

The company is buying 901 apartments, 10 commercial units and 589 parking spaces with lettable space totaling 63,400 sqm from a large German property company. The deal increases Peach Property's residential portfolio by 40% to 3,150 units.

Previously a developer of top-end luxury property, the Zurich-based Peach Property has shifted its focus to the mainstream residential sector. According to CEO Dr. Thomas Wolfensberger, "These properties in Kaiserslautern, most of which were built in the 1970s and 1980s are in good technical condition with high letting levels and represent an attractive addition to our portfolio. This acquisition enables us to increase our annual target rental income by more than 37% to over CHF 16 million. Approximately 85% of our rental income now comes from residential property."

The new portfolio has an annual target rent of around CHF 4.4 million (€4.1 million) and generates an actual annual net rent of around CHF 4.1 million (€3.8 million). The acquisition will raise the company's annual target rent by more than a third to a new high of more than CHF 16.2 million. The new portfolio is spread across a total of 12 sites in Kaiserslautern and is in good structural condition. The overall vacancy rate is less than 5%. Peach Property runs its German business from its office in Cologne.

For the first half of 2016, the company posted pretax earnings of CHF 7.7m, up 65% on last year's figure. After-tax profit rose by 6% to CHF 3.6m, largely due to the sale of sites in Regensdorf near Zurich and a retail property in Erkrath, near Düsseldorf, which enabled the company to buy more residential properties and to repay a €50m bond on the Frankfurt Stock Exchange. The company's property valuations were CHF 160m at end-June, while the IFRS equity ratio jumped to 45% from 31% after repaying the bond.