Peach Property strengthens equity
The residential real estate company is issuing a mandatory convertible bond of CHF 63 million to reduce its debt. A dividend waiver for the 2022 financial year is also planned.
Residential real estate investor Peach Property is issuing a mandatory convertible bond with a net issue volume of CHF 63 million. According to the company, the underwriting of the entire issue volume has been confirmed predominantly by anchor shareholders. Peach intends to use the proceeds from the issue to repay unsecured financial debt. The group's leverage ratio (LTV) will decrease by 2.4% to 49.4% (pro-forma basis 1st half 2022), it added.
Major shareholder Ares Management does not have to make a public takeover offer for Peach as a result of the convertible bond, the company further announced. The Takeover Board had approved a corresponding request from Ares Management. Ares Management had reported a 36.77% stake in Peach Property at the end of 2022, up from 26% previously.
Cost increases depress FFO I
In December 2022, Peach had to partially revise its forecasts for the 2022 financial year downwards: It expects operating profitability (FFO I) of CHF 16 million - below its previous forecast of CHF 18-21 million. This is due to maintenance, operating and financing costs, which rose sharply in the third quarter. Meanwhile, rental income is expected to be at the upper end of the forecast of CHF 113-117 million for 2022, Peach said. Further, devaluations are hitting the company, which holds residential properties in Germany: For the second half of 2022, the appraisers would assume a decline in valuation in the order of magnitude of the revaluations made in the first half of the year, Peach informs. This should lead to a neutral valuation result for the entire financial year.
Additional measures will be taken to strengthen liquidity, such as requesting a dividend waiver for fiscal 2022, implementing operational cost reductions and limiting capital expenditures, the company added. (ah)
