Senior residence with significant profit increase
Senioresidenz AG increased operating income before interest and taxes by 138% in the first half of 2020, while profit including revaluation gains increased by 95%.
Despite the Covid 19 pandemic, Senioresidenz reported very good revenue growth in the first half of 2020. Compared to the same period last year, rental income and profitability increased significantly. In terms of operating earnings before interest and taxes (Ebit), the company posted a 138% increase in profit to 3.0 million (PY: 1.3 million). Profit including revaluation gain increased by 95% from 1.1 to 2.1 million. Profit excluding revaluation gains was 2.1 million, compared with 0.9 million in the prior-year period. The valuation of the real estate portfolio resulted in a slightly negative revaluation result of -0.1 million (PY: +0.2 million).
As of June 30, Senioresidenz held properties valued at 165 million, up about 100 million from 64.1 million twelve months earlier (June 30, 2019). During the same period, the portfolio's target rental income increased from 3.5 to 8.6 million on an annualized basis.
Net rental income in the first half of 2020 increased from 1.8 to 4.3 million. The reason for the increase of 142% was the acquisitions of the properties in Martigny and Richterswil in the second half of 2019 and a portfolio of six retirement and care centers in Berg, Egnach, Kradolf, Kirchlindach, Reute and Wald with transfer of ownership in January 2020, Senioresidenz says. The gross return achieved in the first half of 2020 was 5.2%, while the net return was 5.1% (annualized).
It is true that the Corona pandemic presented operators of retirement and nursing homes, rehabilitation clinics and hospital managements with immense challenges, for example because visiting bans were in place and there were further restrictions and security concepts. Nevertheless, rental income has not been affected, Senioresidenz says. All of the properties held in the portfolio are fully leased and without loss of rent, it said.
However, in the first half of 2020, acquisition activity for new properties was severely restricted by the strict regulations in homes and hospitals. Since the end of June 2020, the situation has eased somewhat and negotiation talks for some acquisition properties have resumed. Senioresidenz is confident that some ongoing contract negotiations can be concluded in the second half of the year. (ah)
