Novavest increases profit in the first half-year
Novavest Real Estate reported a 17% year-over-year increase in Ebit and a 26% increase in profit, including revaluation gains, for the first half of 2020.
According to a statement from Novavest Real Estate AG, operating earnings before interest and taxes (EBIT) climbed from CHF 9.6 million in the first half of 2019 to now 11.2 million. Profit including revaluation gains increased from 6.5 to 8.2 million in the same period. Profit excluding revaluation gains was 5.0 million (previous year: 4.4 million).
The real estate portfolio has a value of 630.0 million as of June 30, 2020. It consists of 44 investment properties with a balance sheet value of 540.5 million and four projects (6 properties) with a value of 89.5 million. The portfolio has mainly due to acquisitions increased in value by 14%.
"relatively minor" impact of lockdown
As Novavest continues, the impact of the lockdown on the rental income of the real estate portfolio in the first half of 2020 was "relatively minor overall". The company had sought early discussions with various smaller commercial tenants who were particularly affected and had agreed on individual solutions such as temporary rent reductions or deferrals. In total, rent reductions of CHF 46,000 had been granted in the first half of 2020. For the year as a whole, Novavest does not expect any significant rent losses.
Annualized target rental income from investment properties (excluding projects) amounted to 25.0 million as of June 30 (previous year: 22.7 million). The proportion of rental income from residential use increased slightly from 59% to 61%.
Net rental income increases by 10%
Net rental income increased by 10% from 10.6 to 11.6 million in the first half of the year. The main reasons for the increase were the property in Olten, which was fully acquired as of September 26, 2019, and a reduction in the vacancy rate from 7.3% in the first half of 2019 to now 4.6% (excluding projects). The net yield on investment properties was 3.7% in the reporting period (PY: 4.1%).
The impact of the Covid-19 pandemic on the economy is still very unclear from today's perspective, as the crisis is far from over, Novavest writes in the release. However, with residential occupancy accounting for just over 60% of rental income, the company has a relatively robust business model. The high creditworthiness of the most important commercial tenants, including SBB, BMW Switzerland, the St. Gallen Cantonal Hospital and Lidl Switzerland, also contributes to the stability of the portfolio.
The company intends to press ahead with its conversion and development projects in Zurich (by 2021), St. Gallen (by 2023), Olten (2020) and Lucerne (2020). The projects are expected to have a positive effect on the residential occupancy rate in the portfolio, combined with significant potential for value appreciation. In order to finance further growth, a capital increase is being examined in the second half of the year. (ah)
