BFW Liegenschaften makes progress with sales

BFW Liegenschaften sold one property each in Burgdorf and Weinfelden in the first half of the year, followed by two more in August at a total price of CHF 24 million. The remaining ten transactions are expected to be completed in the next six months, the real estate company said.

BFW Liegenschaften intends to use the proceeds from the sales to invest in existing properties and development projects. The company says that it is currently planning a site development in Steckborn with around 20 apartments, a conversion and new construction project in Rorschach with four buildings and a total of 86 apartments as well as a small commercial component, and a project in Zurich for the extension and further development of an existing residential and commercial property.

Due to the planned sales, some adjustments to the investment regulations will come into force in November. Among other things, the minimum number of properties in the portfolio will be reduced from 30 to 20.

Sales influence half-year result

According to BFW Liegenschaften, the result for the first half of 2019 is strongly influenced by the portfolio sales, a lower gain from revaluation and a substantial value adjustment on the derivative interest rate hedging instruments compared to the same period of the previous year.

The value of the property portfolio as of June 30, 2019, was 406.6 million, down from 414.4 million as of December 31, 2018. BFW Liegenschaften cites the sale of the two investment properties (11.4 million) as the reason for the decrease. This is offset by positive valuation effects (2.1 million) and investments in investment and development properties (1.5 million).

The target rental income of the investment properties - viewed on an annualized basis - amounts to just over 20 million. The rental income share from residential use was just over 78% in the first half of 2019 (H1 2018: 77%).

Net rental income decreased by approximately 7% year-on-year to 9.3 million mainly due to sales. The net return on investment properties generated in the first half of 2019 was 3.5% (Dec. 31, 2018: 3.7%). The vacancy rate of investment properties increased from 8.6% at the end of 2018 to 10.3% now.

Operating earnings before interest and taxes (EBIT) fell significantly year-on-year from 15.8 million to 9.1 million. The reason for the decline was the lower rental income base due to the sales and the different profit contributions from the sale of properties and from the revaluations, the company said.

Profit including revaluation gains was 2.9 million in the first half of 2019, significantly below the prior-year figure of 13.4 million. Profit excluding revaluation gains amounted to 1.4 million, compared with 7.5 million in the previous year.

BFW Liegenschaften's fixed assets included 24 investment properties worth 318.3 million and one development project worth 1.4 million. (ah)