The revaluation effects of -3.4 million francs influence the revaluation profit included; this amounts to 0.3 million francs against 2.4 million for the same period of the previous year.
- Expansion of the real estate portfolio by 13% to CHF 258.3 million thanks to the completion of new construction projects and acquisitions
- Theoretical rental income from investment properties increases by 17% to 13.0 million francs per year as of June 30, 2023
- Result from rental activities up to CHF 5.0 million; plus 7% compared to the same period of the previous year
- Profit excluding revaluations up sharply to 3.1 million francs (+35%)
SenioResidenz AG (BX Swiss AG: SENIO) continued to develop its real estate portfolio and successfully pursued its long-term growth strategy in the first half of 2023. Operationally, the future revenue base was further strengthened with the completion, respectively the acquisition of the new construction projects “Croix Blanche” in Aigle/VD and “DOMUM Saline II” in poor Zurzach/AG, as well as the acquisition of a building in Salmsach/TG. In addition, the new construction project in Oberdiessbach/BE with 24 barrier-free and age-friendly housing units was completed after the balance sheet date and was ready for occupancy on August 1, 2023. Thanks to the expansion of the portfolio and the completion of the new construction projects, the company expects a significant contribution to rental income in the second half of 2023.
Real estate portfolio of 258.3 million francs as of June 30, 2023
The total value of the real estate portfolio is increased by 13% to 258.3 million francs as of 30 June 2023 (31.12.2022: 228.4 million). The increase in value is mainly due to the acquisitions of the buildings in Salmsach and poor Zurzach (+22.1 million francs), as well as to the investments in the new construction projects in Aigle and Oberdiessbach (+11, 2 million francs). The theoretical rental income from investment properties is increased, on an annualized basis, by 17% to 13.0 million francs (31.12.2022: 11.1 million).
Details of the results for the first half of 2023
Rental income increased by 7% to CHF 5.7 million during the first half of 2023 (H1 2022: CHF 5.3 million). As of June 30, 2023, the portfolio vacancy rate was 2.9%. The gross return achieved during the first half of 2023 was 5.3%, the net return 4.7% (on an annual basis).
Direct charges related to let investment properties amounted to CHF 0.7 million (H1 2022: CHF 0.6 million). Income from rental activities was up 7% to CHF 5.0 million (H1 2022: CHF 4.7 million). The total of the expense items “advisory costs” and “administrative costs” amounted to CHF 1.2 million (H1 2022: CHF 1.5 million). This decrease is mainly due to lower legal fees related to the ongoing bankruptcy proceedings of the Paracelsus Hospital.
The valuation of the real estate portfolio by the independent real estate expert Wüest Partner AG showed a revaluation result of CHF -3.4 million (H1 2022: CHF 0.1 million). The revaluation effect is explained on the one hand by an increase in the discount rates for existing investment properties due to the higher interest rate environment and, on the other hand, by the needs of specific and long-term investment in buildings in Leukerbad and Richterswil.
Due to the revaluation loss, the operating result before interest and taxes (EBIT) fell to CHF 0.9 million in the first half of 2023 (H1 2022: CHF 3.3 million). Profit including revaluations was CHF 0.3 million (H1 2022: CHF 2.4 million). Profit excluding revaluations increased by 35% to CHF 3.1 million (H1 2022: CHF 2.3 million).
With an equity ratio of 47.8% and a pledge of buildings by third parties of 49.0% as of 30 June 2023, SenioResidenz AG still benefits from solid financing (31.12.2022: equity of 55.3%; pledge of buildings by thirds of 42.1%). The average interest rate in the first half of 2023 amounted to 1.6% (31.12.2022: 0.7%). The duration of the financial debts as of June 30, 2023 was 2.6 years (31.12.2022: 3.7 years).
At the balance sheet date, shareholders’ equity amounted to CHF 124.8 million (31.12.2022: CHF 129.3 million). This variation is explained by the contribution to the profit of the first half of 2023 of CHF 0.3 million as well as by the repayment of the nominal value of CHF 1.90 per registered share for a total amount of CHF 4.9 million, which were paid in June 2023. The net asset value (NAV) as of June 30, 2023 was CHF 48.82 (31.12.2022: CHF 50.60).
Extended rental contract with Canton of Zurich
It is also very pleasing to note that the rental contract with the canton of Zurich for the temporary use of two buildings at Bergstrasse 16 and Bodenstrasse 10 in Richterswil/ZH has been extended until the end of 2024, which has made it possible to increase planning certainty both for the canton of Zurich and for SenioResidenz as the owner.
SenioResidenz signed the “Principles for Responsible Investment” (UNPRI) in the spring of 2023 and thus undertakes to comply with the principles of responsible investment and to take ESG themes into account in its investment policy and practice. The integration of sustainability across the entire value chain is an ongoing process, the progress of which will be described in detail in the 2023 management report.
The first half of 2023 was marked by gradual increases in the key interest rates of the Swiss National Bank (SNB). Economists from the SNB and SECO (State Secretariat for Economic Affairs) expect below-average economic growth for the whole of 2023, with GDP growth in the region of around 1 %1. When it last raised its key interest rate on June 22, 2023, the SNB further announced that “it cannot be ruled out that further rate increases are necessary to ensure price stability in the medium term”. The SNB currently expects an inflation rate of 2.2% for the whole of 2023, which is still slightly higher than the price stability objective of less than 2% on annual average that it is aiming for.
The market for real estate transactions in Switzerland is difficult due to the high level of interest rates. From the perspective of SenioResidenz AG, nonetheless, the pressure on transaction prices remains limited, in particular due to sustained population growth and relatively weak construction activity.
In view of the increasing life expectancy of the Swiss population and their demands on the housing offer for the elderly, the board of directors and management of SenioResidenz AG are convinced that the demand and need for future-oriented, needs-based housing offers and affordable housing for seniors will continue to grow. With its specific focus on the sector of residences for the elderly, new forms of housing for the elderly and care establishments, the “pure player” investment strategy therefore remains unchanged.
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