Warteck Invest: Portfolio value further increased

In the first half of 2017, EBIT excluding the revaluation effect rose by 13.9 percent year on year to CHF 11.7 million. Net profit (also excluding revaluation effect) even increased by 27.1 percent to 6.4 million. Taking into account the revaluations of the properties, however, the consolidated result at Warteck Invest amounted to 6.6 million (-5.6 % compared with the previous year). At 678.2 million, the new market value of the real estate portfolio is now 1.6 percent above the value at the end of 2016 and 11.5 percent higher than in the first half of the previous year.

Yields down slightly

According to the company, the new construction projects for two residential buildings in Wil (SG) and Erlinsbach (SO), which were started in 2016, are progressing according to plan. In the reporting period, work also began on the comprehensive renovation of the residential complex in Rudolfstetten (AG). The company was able to further expand its real estate portfolio through investments in construction projects and the existing portfolio, as well as through a smaller bolt-on acquisition in Weinfelden (TG).

The gross return on investment properties (target rental income in relation to market value) amounted to 5.0 (previous year: 5.1) percent in the first half of the year. The net return (gross return less vacancies, bad debt losses, operating costs and maintenance) decreased year-on-year to 4.2 (4.3) percent. Performance (net return plus revaluation result) was 4.3 (4.5) percent.

During the reporting period, demand for indirect real estate investments continued, writes Warteck Invest. The share price rose by almost seven percent since the beginning of the year to CHF 1,954 on the reporting date. With the distribution from the reserves from capital contributions of CHF 68 per registered share, this resulted in a positive total return of 10.7 percent for the first half of 2017.

Challenge of record low reference interest rate

Target rental income rose by 10.3 percent to 16.2 (14.7) million in the period under review. According to the company, this significant increase is attributable to acquisitions and the completion of two projects in the second half of the previous year. Although vacancy rates were slightly higher than in the same period of the previous year (3.5 %) at a rate of 3.8 percent, they were reduced again compared with 2016 as a whole (4.2 %). As a result, actual rental income was 9.9 percent up on the prior-year level (14.2 million) at 15.6 million.

One challenge in the residential sector is the development of the reference interest rate, writes Warteck Invest. The historic low in the interest rate is creating "corresponding pressure on residential rents". Despite the challenges on the market, however, the company aims to further increase rental income as early as the second half of 2017 thanks to the recent acquisitions, according to the half-year report.