Novavest: EBIT and profit increase
Novavest Real Estate AG generated EBIT of CHF 8.9 million and net income of CHF 5.8 million in the 2016 financial year. These are 31 and 26 percent respectively more than in the previous year
The real estate portfolio of Novavest Real Estate AG was significantly expanded in the reporting year through acquisitions of three residential properties, three residential/commercial properties, and one conversion project (commercial property into residential property). As of December 31, 2016, it had a total value of CHF 315.7 million (previous year: 207.7 million).
On an annualized basis, the target rental income from investment properties increased by 40 percent year-on-year to 15.1 million (previous year: 10.7 million). At the same time, the targeted percentage of rental income from residential use of 50 percent was also achieved with the portfolio expansion.
Net rental income amounted to 10.6 million in the 2016 reporting year (previous year: 8 million). The 33 percent year-on-year growth was due in particular to the expansion of the property portfolio, with four of the seven newly acquired properties purchased in the second half of the year and thus contributing to rental income for only a few months, Novavest wrote in a statement.
The net return on investment properties generated in 2016 was 3.5 percent, down from four percent in 2015, while the gross return was 5.1 percent (previous year: 5.3%).
Vacancy rate increases - mainly due to acquisitions
The vacancy rate of the portfolio rose from 6.5 to 10.3 percent. This was mainly due to the acquisition of newly built properties that were still being let for the first time. Including the Badenerstrasse 696 conversion project in Zurich, the vacancy rate was 13.2 percent (previous year: 8.8%). Novavest aims to significantly reduce the vacancy rate again in the 2017 reporting year with various initial and re-letting campaigns, the company said.
As part of the acquisition of the entire portfolio of Pretium AG in 2014, Novavest Real Estate AG also took over two residential development projects in Fruthwilen (TG) in addition to investment properties. These construction projects were recognized as promotion properties as of mid-year 2016 with the intention to sell both projects in the near future. In the second half of 2016, both projects could be sold, however, this resulted in a slight loss on sale of promotion properties in the amount of 0.6 million.
EBIT and profit in the plus
The market valuation of the real estate portfolio by Wüest Partner resulted in income from revaluation of 3.7 million (previous year: 2.8 million). This was mainly due to the appreciation of the property at Badenerstrasse 696 in Zurich as a result of the advanced conversion work (conversion of commercial space into residential space) and to higher valuations of various other investment properties, according to Novavest.
Earnings before interest and taxes (EBIT) amounted to 8.9 million. This represents a year-on-year increase of 31 percent (previous year: 6.8 million). Profit including revaluation gains increased by 26 percent to 5.8 million (previous year: 4.6 million). Profit excluding revaluation gains was 3.1 million, compared with 2.6 million in the previous year.
Fixed assets amounting to 328.2 million (as of December 31, 2016) consisted mainly of investment properties (298.4 million), the conversion project in Zurich (17.3 million), and advance payments for property purchases or projects (10.1 million).
Equity amounted to 135.2 million, corresponding to an equity ratio of 38.8 percent. Net asset value per share increased by 0.77 to 37.08 in the 2016 reporting year.
Further conversion project in planning
In the 2017 financial year, Novavest will complete the existing construction project at Badenerstrasse 696 in Zurich (final conversion stage) and will start re-letting from September 2017.
The planning work for the conversion project at Badenerstrasse 701 in Zurich (conversion of commercial property into residential property) has been initiated. The Company expects the entire planning and building permit phase to extend throughout 2017 and into the first quarter of 2018. The construction phase is then planned for 2018/2019. Re-letting is planned from 2019.
On April 1, 2017, the transfer of ownership of the residential project "Belano" for senior citizens in Berikon (AG) will take place. Here, 35 age-appropriate and obstacle-free rental apartments will be realized. Currently, 28 of 35 apartments are already rented.
