Peach Property Group AG

DGAP-Adhoc: Peach Property Group AG with significant profit growth in the first half-year 2014

Peach Property Group AG   / Key word(s): Half Year Results

21.08.2014 07:03

Release of an ad hoc announcement pursuant to Art. 53 KR
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Press Release

Peach Property Group AG with significant profit growth in the first
half-year 2014

  - Net profit for the period of CHF 4.4 million 17 percent over last
    year's half-year result

  - Earnings before taxes rise 12 percent to CHF 5.9 million

  - Operating income up 57 percent to CHF 42.6 million

  - Considerable value increases and higher rental income from investment
    properties; progress on all development projects

  - Major projects in Berlin and Hamburg mostly completed

Zurich, 21 August 2014 - Peach Property Group, a leading property investor
and developer of high-end residential and commercial real estate, continued
its positive business performance in the first half of 2014 and reported a
sharp jump in profits. Net profit for the period was up around 17 percent
on the previous year to CHF 4.4 million. Earnings before taxes grew 12
percent to CHF 5.9 million.

This growth in profits was achieved despite the ongoing effects of the
insolvency of the general contractors involved in the large-scale projects
in Berlin and Hamburg, which put downward pressure on the results in the
first half-year 2014. As a result, net impairment losses totalled some CHF
5.6 million in the reporting period. Along with the CHF 13.9 million
incurred in the 2013 financial year, additional costs thus amounted to CHF
19.5 million.

In the first six months of 2014, operating income rose by 57 percent
year-on-year to CHF 42.6 million. This was primarily due to operational
progress achieved with the investment properties, and the resulting value
appreciation and increased rental income. The total increase in value of
the investment properties was CHF 17.3 million. Rental income was increased
by 54 percent to CHF 3.8 million by expanding the portfolio of investment
properties, lowering vacancy rates and raising rents.

In the reporting period, Peach Property Group further pursued the
implementation of its strategy to strengthen its investment property
portfolio and to increase recurring income. In the case of the "Gretag
Wohnen" property in Regensdorf near Zurich, Switzerland, and the "Dortmund
RS 173" property in Germany, key planning milestones were reached,
resulting in considerable appreciation in value. The design plan for the
use of undeveloped land at the Gretag site was completed in draft form and
submitted to the municipality and canton. Based on acceptance of the
outline building application, detailed planning continued on the property
located at Rheinische Strasse 173 in Dortmund. The application for a
building permit is expected to be submitted in the third quarter of 2014.
At the same time, discussions are already underway with potential general
contractors.

Also notable is the progress of the three major projects in Berlin and
Hamburg - "Am Zirkus", "yoo berlin" and "Harvestehuder Weg 36" - which have
mostly been completed. At the "Am Zirkus" property, the interior work in
the commercial units was finished, and anchor tenant Roland Berger Strategy
Consultants moved into the space in mid-June 2014. The hotel operated by
the Fattal Group under the name "Leonardo Berlin Mitte" opened on 14 August
2014. In addition, the city of Berlin approved the construction work on the
"yoo berlin" property in July 2014; in the meantime, first condominiums
have been handed over to buyers. The first buyers in Hamburg also have
already started taking ownership of their apartments.

As expected, the sales volume in the first half of 2014 at CHF 23 million
dropped below the prior-year figure of CHF 42 million. This was primarily
due to the already high rate of sales achieved by the major projects. Of
this amount, CHF 3 million from the sale of the last two apartments of the
"Schooren des Alpes" project was reflected in earnings in the period under
review, while the rest is attributable to the second half of 2014 and the
2015 financial year. These sales mark the end of the "Schooren des Alpes"
project.

The growth in profits in the reporting period was also mirrored in changes
in equity according to IFRS, which increased by 4 percent from CHF 95.8
million at the end of December 2013 to CHF 99.9 million at the end of June
2014. Equity at market values improved by 1 percent to CHF 127.1 million.
However, due to the nearly completed projects in Berlin and Hamburg, total
assets increased again, causing the equity ratio according to IFRS to drop
from 18.8 percent to 17.5 percent and at market values to decline from 23.4
percent to 21.2 percent. This is however a temporary effect: With the
transfer of ownership of apartments in the large-scale projects in the
second half of 2014, total assets will decrease sharply and the equity
ratio will rise accordingly.

Based on the strong results achieved in the first half-year of 2014, Peach
Property Group is optimistic about 2014 as a whole. The Group anticipates
significant payback from its major projects in Berlin and Hamburg. Over the
course of the year, the focus will be on expanding the portfolio of
investment properties and reducing liabilities. The Group also investigates
opportunities for development projects. In July 2014 Peach Property Group
was chosen as buyer of a hotel in southern Germany near Salzburg and plans
to convert this property into an apartment building. The purchase price was
slightly below CHF 1 Mio.

Thomas Wolfensberger, CEO of Peach Property Group AG, states: "In the first
six months of 2014, we made excellent progress despite additional
impairment losses resulting from general contractor insolvencies. The major
projects in Berlin and Hamburg are close to being finished. We also hit key
milestones when Roland Berger Strategy Consultants moved into their space,
the "Leonardo Berlin Mitte" hotel opened, and the first apartments were
handed over to their owners. At the same time, we achieved operational
progress on our investment property portfolio. This is reflected in a
substantial increase in the value of the portfolio and the further increase
in rental income. With the flow back of funds from our projects in Berlin
and Hamburg we will reduce liabilities and further invest in our investment
portfolio."

The 2014 Half-yearly Report (German only) is available on the company's
website by clicking the following link:
http://www.peachproperty.com/HJB2014

Contacts:

Media, investors and analysts
Dr. Thomas Wolfensberger, Chief Executive Officer and Dr. Marcel Kucher,
Chief Financial Officer
+41 44 485 50 00 | investors@peachproperty.com


Media Germany
edicto GmbH, Axel Mühlhaus, Peggy Kropmanns
+49 (0) 69 90 55 05 52 | amuehlhaus@edicto.de

About Peach Property Group AG

Peach Property Group AG is a property investor and developer focused on
investments in Switzerland and Germany. The portfolio includes an
increasing number of investment properties that are designed to generate
sustained income as well as attractive residential development properties.
The Group's activities cover the entire value chain, from site evaluation
to project planning, implementation and marketing. In the investment
segment, the Group is focused on properties with a potential for achieving
attractive yields based on active asset management - typically secondary
locations in the catchment area of urban agglomerations. In the development
segment, the Group concentrates on exceptional locations and properties
with high-end specifications and amenities that meet the requirements of a
demanding clientele.

Peach Property Group AG is headquartered in Zurich and has its German Group
headquarters in Cologne. Peach Property Group AG is listed on the SIX Swiss
Exchange (PEAN, ISIN CH0118530366).

For more information, see www.peachproperty.com



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Document title: Press release


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Language:               English
Company:                Peach Property Group AG
                        Seestrasse 346
                        8038 Zürich
                        Switzerland
Phone:                  +41 44 485 50 00
Fax:                    +41 44 485 50 11
E-mail:              investors@peachproperty.com
Internet:            www.peachproperty.com
ISIN:                   CH0118530366
Valor:                  A1C8PJ
Listed:                 Freiverkehr in Berlin, Stuttgart; Frankfurt in Open
                        Market ; SIX

End of Announcement                             EQS Group News-Service

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