Peach Property Group AG: Accelerated reduction of debt through CHF 63 million additional equity capital

Zürich (pta006/09.12.2022/07:00 UTC+1)

Ad hoc announcement pursuant to Art. 53 LR

• Mandatory convertible bond with net issue volume of CHF 63 million and issue date of January 2023 approved
• Underwriting of entire issue volume primarily by anchor shareholders confirmed
• Issuance proceeds fully earmarked for repayment of unsecured financial liabilities
• LTV decreases by approx. 2.4% to approx. 49.4% after completion of transaction (pro forma based on H1 2022)
• Net tangible assets (EPRA NTA) amount to CHF 62.50 per share after transaction (pro-forma)
• Stable development of valuations expected at the end of the year compared to the beginning of 2022
• Updated guidance: rental income for fiscal year expected at upper end of guidance; FFO I expected at approx. CHF 16 million due to increased external costs

Peach Property Group AG, a real estate investor with an investment focus on rental apartments in Germany, will issue a mandatory convertible bond with advance subscription exclusion and net issue proceeds of approximately CHF 63 million (nominal volume of CHF 105.7 million) as part of its conditional capital via the 100% group company Peach Property Finance GmbH at the beginning of January 2023. The mandatory convertible bond will be guaranteed by Peach Property Group AG and subscribed primarily by the Company's anchor shareholders.

Overview of the Mandatory Convertible Bond

The conversions under the mandatory convertible bond will be into shares of Peach Property Group AG (SWX: PEAN) at a par value of CHF 30. The bond will strengthen equity immediately after issuance. The issue price of the mandatory convertible bond will be 60% of the nominal value, which arithmetically results in an issue price of the new shares of CH 18. Accordingly, Peach Property Group expects issue proceeds of approximately CHF 63 million. The terms of the mandatory convertible bond provide for an interest coupon of 5 percent p.a. with a three-month maturity. The payment of interests will be made cumulatively at maturity in shares of Peach Property Group AG in a liquidity-neutral manner. In total, Peach Property Group AG will issue approximately 3.6 million new registered shares with a nominal value of CHF 30 each from the conditional capital for redemption/conversion at the end of the term of the mandatory convertible bond in April 2023, which was approved at the company's Annual General Meeting on May 20, 2022. This corresponds to approximately 21% of the current outstanding share capital of the Company. As a result of the issuance of the new shares, the EPRA NTA (Net Tangible Assets) per share will decrease by approximately CHF 7 per share from CHF 69.50 (as of H1 2022) to approximately CHF 62.50 pro forma.

Use of proceeds

Peach Property Group will use the proceeds from the issue in full to repay debt. Following the issuance of the mandatory convertible bond, Peach Property Group's debt ratio (LTV) is expected to decrease by around 2.4 percent to approximately 49.4 percent (pro forma basis 1st half 2022). Together with the proceeds of a secured financing completed in August 2022 and existing liquidity the EUR bond issued in 2019 will be repaid in full. Through these and other measures, Peach Property Group is aligning its financial profile with the changing interest rate environment and believes it is well positioned for the coming years.

Operational update

Demand for rental apartments, particularly in the affordable segment, continues to develop positively against the current difficult economic backdrop. An accelerated increase in market rents can be seen in key Peach locations in particular. Peach Property Group therefore expects rental income at the upper end of the forecast for 2022 (CHF 113-117 million) and a further acceleration of rental income growth in 2023, based on measures already initiated to adjust net rents to market prices.

Due to the significant increase in maintenance, operating and financing costs in the third quarter of 2022, the company expects an operating profitability (FFO I) of around CHF 16 million for the 2022 financial year, which is below the previous forecast of CHF 18-21 million. An efficiency program has therefore been launched to optimize the operating cost blocks, which will lead to annual cost savings in the low single-digit million range.

Valuation update

Based on early indications of the external property appraiser, Peach Property Group expects no devaluation of the Group's real estate portfolio at year-end 2022 compared to the beginning of 2022. The property appraiser is guiding to a valuation decline for H2 2022 in the magnitude of our valuation gains in H1 2022 hence resulting in a neutral valuation outcome for the FY 2022.

Further liquidity measures

Peach Property Group will take further measures to preserve liquidity and, among other things, propose a dividend waiver for the 2022 financial year at the upcoming 2023 Annual General Meeting, undertake operational cost cutting and limit capital expenditures where possible.

Thomas Wolfensberger, CEO of Peach Property Group AG:

"The company is entering a new phase consolidation focusing on unlocking the full earning power of our portfolio as well as reducing costs. Against the changed market environment, the operational performance of the company remains strong. We see declining market vacancy across our locations in Germany and sustainable rental growth. In conjunction with very solid affordability, we feel that our portfolio will continue to deliver rental growth.

Our major shareholders are supporting us with additional equity, which underlines their positive view of Peach Property Group and the potential of our business model. We are using this financial flexibility for an accelerated debt reduction. Our portfolio of around 27 400 portfolio properties is attractively valued with an average price per square meter of under CHF 1 500, even in the current market environment in Germany."

Thorsten Arsan, CFO of Peach Property Group AG, said:

"In terms of capital management, we are now focusing on deleveraging and reducing costs. We have various instruments at our disposal to optimize our financing costs as well as other cost types. We are now using these to counteract the effect of external market factors, such as the accelerated interest rate turnaround."

Contact:

Media, investors, and analysts

Dr. Thomas Wolfensberger, Chief Executive Officer, Thorsten Arsan, Chief Financial Officer, and Stefan Feller, Head of Investor Relations
+41 44 485 50 18 | investors@peachproperty.com

Media Germany

Edelman Smithfield, Ruediger O. Assion
+49 (0) 221 8282 8111 | mobile: +49 (0) 162 4909624 | ruediger.assion@edelmansmithfield.com

About Peach Property Group AG

The Peach Property Group is a real estate investor with an investment focus on residential rental properties in Germany. The Group stands for many years of experience, competence and quality. Innovative solutions for state-of-the-art living needs, strong partnerships and a broad value chain round off the profile. The portfolio consists of high-yield portfolio properties, typically in B-cities in the catchment area of conurbations. In addition, the Group develops real estate for its own portfolio or for condominium marketing. In the latter area, the Group concentrates on A locations and properties with attractive architecture and upscale furnishings for an international clientele. Its activities span the entire value chain from evaluating locations through to acquisitions and also active asset management and property sales or lettings.

Peach Property Group AG has its registered office in Zurich and the Group is headquartered in Cologne. Peach Property Group AG is listed on SIX Swiss Exchange (PEAN, ISIN CH0118530366). Its Board of Directors consists of Reto Garzetti (President), Peter Bodmer, Dr. Christian De Prati, Kurt Hardt and Klaus Schmitz.

More information at https://peachproperty.com/en/

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Emitter:	Peach Property Group AG Neptunstrasse 96 8032 Zürich Switzerland
Contact Person:	Dr. Thomas Wolfensberger and Thorsten Arsan
Phone:	+41 44 485 50 00
E-Mail:	investors@peachproperty.com
Website:	www.peachproperty.com
ISIN(s):	CH0118530366 (Share)
Stock Exchange(s):	SIX Swiss Exchange; Free Market in Berlin, Frankfurt, Stuttgart