Intershop increases property income and net profit
In an environment dominated by economic uncertainty, the Intershop Group presented another successful result for the first half-year 2016:
- Net profit of CHF 31.4 million or CHF 15.72 per share is 7.7% higher than the result for the same period last year.
- With one per cent higher property income Intershop generated a gross return of 6.5% and a net return of 5.7% on its yield portfolio.
- The return on equity came to 11.5%.
- Shareholders' equity as of 30/06/2016 came to CHF 556 million or CHF 278 per share, which represents an equity ratio of 41.7%.
- As expected, the vacancy rate for its investment properties went up to 11.6%.
The result for the reporting period was significantly affected by the reversal of tax obligations and the sale of the investment in Corestate Capital Holding S.A. Property income performed well, although the rental market for commercial space remains challenging, especially for office space in the Zurich area, and vacancy rates have gone up.
On the reporting date the portfolio comprised 59 properties, including development and promotional properties. Rental income in the reporting period was derived from the following types of use: 48% office and education, 32% trade and logistics, 7% retail and food and 13% residential and parking.
The market value of the properties at the close of the reporting period was CHF 1,254 million, up marginally by CHF 0.4 million (0.03%) after deducting investments made.
Property income went up by 0.9% to CHF 42 million during the reporting period, while the overall portfolio remained constant.
Property expenses went down to CHF 4.4 million due to lower spending on maintenance and repairs.
The net return on the investment portfolio remained stable at 5.7%, as in the same period last year, despite a higher vacancy rate.
Short-term investments generated substantial financial income of CHF 1.9 million, particular from the loan to the Corestate Group.
Financial expenses increased to CHF 9.6 million. Whereas the repayment of a CHF 70 million mortgage loan reduced interest expense by CHF 0.4 million, miscellaneous financial expenses came to CHF 2.1 million.
Intershop again refrained from making acquisitions in the first half of 2016. The focus remained on the development of its own portfolio and on letting. The apartment buildings in Kilchberg were completed on schedule. All the apartments have been let. Work continued on the promotional project «eden7» in Zurich, so that demolition work and the sale of 17 freehold apartments and three commercial units was able to begin after the reporting date. Project work to prepare the planning application began for the site «Albanteich-Promenade» in Basel. Concerning the «AuPark» project, talks are being held with the relevant authorities about alterations to the zoning and development plans and at the same time with the canton of Zurich about the future location of the «Zimmerberg» secondary school.
The sale of the last apartment, approved at a later date, crowned the successful completion of the «Résidence Bel Orne» project in Lausanne. No other sales transactions were completed. A sales contract to take effect in the second half-year was notarised for the commonhold section of the property in Widnau, which is mainly used as a hotel. Intershop also granted a purchase option for the «Zuchwiler Hof» in Zuchwil, which can be exercised at the end of August 2016.
The sale of the investment in Corestate Capital Holding S.A. resulted in a substantial pre-tax profit of CHF 7.6 million. Following this divestment and the preceding repayment of the loan made to the Corestate Group, Intershop no longer has any investments abroad.
Intershop continues to expect market conditions to be challenging, since there is no sign that the economic environment will improve in the short term. Letting commercial space will stay demanding in the medium term. Financing costs should fall, by contrast, unless the Swiss National Bank reduces interest rates any further. Intershop projects a vacancy rate in the region of 12% at year-end.
To the extent that the sales transactions mentioned above are completed, a lower single-figure million earnings contribution is expected. In this case it will only be possible to offset some of the lost rental income.
Altogether, Intershop expects a positive operating result for the year, which should make it possible to maintain the previous dividend policy.
Intershop is a real estate company listed on the SIX Swiss Exchange and active in Switzerland, which primarily invests in commercial properties. As of 30/06/2016 its portfolio comprised 59 properties with a lettable area of 584,000 m2 and a market value of some 1.3 billion Swiss francs. Intershop invests mainly in the Zurich area, around Lac Leman and along the main traffic arteries. Its portfolio combines high yields with security, thanks to diversification by geography and type of use, with considerable potential for value appreciation in the properties with development potential.
|01/03/2017||Publication of annual report 2016 with conference for media and financial analysts|
|30/03/2017||Ordinary Annual General Meeting 2017|
|30/08/2017||Publication of half-year report 2017 with online presentation for media and financial analysts|