Fundamenta Real Estate: Earnings rise, profit falls
Fundamenta Real Estate AG increased its rental income from properties by almost ten percent from CHF 8.47 million to CHF 9.28 million in the first half of 2016. However, a reduced revaluation effect led to a decline in net income of around 19 percent to 5.24 million.
According to Fundamenta Real Estate, the reason for the increase in rental income was the portfolio expansion and a new construction project completed in the previous year. Almost 92 percent of the rental income comes from residential use, with a focus on the mid-range rental segment (under CHF 2,000/month net rent).
The valuation result (before deferred taxes) for the first half of 2016 was CHF 2.47 million, compared to CHF 4.37 million in the same period of the previous year. Primarily due to this reduced revaluation effect, net profit fell by 18.7 percent to CHF 5.24 million (previous year: 6.44 million), Fundamenta reports. The ROE fell accordingly from 6.4 to 4.5 percent.
On the other hand, net operating profit excluding revaluation effect was CHF 3.27 million, up from CHF 2.96 million in the same period of the previous year and corresponding to a cash return on equity (ROE excluding revaluation effect) of 3.5 percent (same period of the previous year: 4%). "Especially considering the development of the market environment", this result is in line with expectations and within the target values, the company informs.
Vacancy rate rises due to repositioning
The vacancy rate in Fundamenta's portfolio rose from 5.7 percent to 7.3 percent in the reporting period. The vacancy rate for existing properties remained essentially stable at two percent, although vacancies rose for individual properties because they are being repositioned. Due to the acquisition of a major new construction project into the existing portfolio, vacancy rates for properties within the initial leasing cycle have meanwhile increased to 3.9 percent (prior-year period: 2.7%), Fundamenta Real Estate said.
The equity base amounted to CHF 191.53 million as of the balance sheet date, corresponding to an equity ratio of 41.5 percent (previous year: 47.3%).
Significant expansion of the portfolio
During the reporting period, Fundamenta Real Estate acquired five existing properties with an investment volume of CHF 41.25 million; these are properties in the city of Bern, in central Switzerland (Netstal), in eastern Switzerland (Arbon) and two properties in the city of Zurich. The ongoing new construction projects in Winterthur and Hinwil will be completed in the coming year. In addition, the planning and realization of a development project in the city of Zurich is underway.
As of the reporting date, the real estate portfolio - taking into account the new construction projects in Winterthur, Hinwil and Zurich - comprised a total of 43 properties with 1,250 residential units and an expected annual net target rental income of around CHF 23.58 million.
After the balance sheet date, Fundamenta acquired another portfolio property in Berikon (Canton Aargau) - a purely residential property with eleven residential units, a net target rental income of CHF 260,000 (p.a.) and an investment volume of 5.85 million (acquisition valuation). This increases the pro forma portfolio to a total investment value of approximately 486 million. (ah)
