PSP : Quarterly results as per 30 September 2019


PSP Swiss Property with very pleasing quarterly results. Improved ebitda and vacancy rate guidance for the business year 2019.

Net income reached CHF 311.5 million, exceeding the previous year’s period by CHF 91.2 million or 41.4% (Q1-Q3 2018: CHF 220.3 million). For the business year 2019, an ebitda excluding gains/losses on real estate investments of CHF 255 million is now expected. As per year-end 2019, a slightly lower vacancy rate of below 4% is now expected.

Real estate portfolio

At the end of September 2019, the carrying value of the total portfolio was CHF 7.849 billion (end of 2018: CHF 7.442 billion). Early in 2019, a number of properties in Bern’s city centre and in Bern-Liebefeld were acquired. As part of the portfolio streamlining process, two properties were sold, one in Zurich-Altstetten and one in Fribourg. In addition, two development projects located at Rue Saint-Martin 7 in Lausanne and at Hardturmstrasse 161/Förrlibuckstrasse 150 in Zurich West were successfully completed; the two properties were reclassified to the investment portfolio.

At the end of September 2019, the vacancy rate stood at 4.0% (end of 2018: 5.0 %). The improvement was the result of several new lettings and the saleof the two properties located in Zurich-Altstetten and Fribourg. One percentage point of all vacancies is due to ongoing renovations. Of the lease contracts maturing in 2019 (CHF 31.0 million), 96% were renewed at the end of September 2019. The wault (weighted average unexpired lease term) of the total portfolio was 4.3 years. The wault of the ten largest tenants contributing around 30% of the rental income was 5.9 years.

Sites and development properties

At the beginning of the year, the last condominium on the Löwenbräu site in Zurich was sold. The project in Uster was disposed in the third Quarter of 2019. As per the end of September 2019, 22% of units of the “Residenza Parco Lago” residential project in Paradiso (completion mid-2020) were sold. A further 7% are reserved.

The new "ATMOS" building in Zurich West is proceeding according to plan. The completion of the office building consisting of 23’700 m2 rental space is scheduled for the beginning of 2021. The letting situation is equally pleasing. Recently, 16% of the space have been let to a renowned Swiss company which will set up its headquarters at this location. Thus, 61% are now pre-let (45% were already let to the running shoe brand On). Further lettings are expected in the near future.

Quarterly results Q1-Q3 2019 (9 months)

Net income excluding gains/losses on real estate investments amounted to CHF 167.4 million (Q1-Q3 2018: CHF 134.8 million). This corresponds to an increase of CHF 32.7 million or 24.2% compared to the previous year’s period. Operationally, higher rental income (+ CHF 8.1 million), lower operating expenses (- CHF 1.1 million) as well as lower financial expenses (- CHF 2.1 million) contributed to the improved overall result. Furthermore, deferred taxes in the amount of CHF 59.0 million were released; CHF 22.1 million thereof had a positive effect on net income excluding gains/losses on real estate investments. The release of deferred taxes was related to the reduction in profit tax rates in various cantons. Earnings per share excluding gains/losses on real estate investments, which is the basis for the dividend distribution, amounted to CHF 3.65 (Q1-Q3 2018: CHF 2.94).

Net income reached CHF 311.5 million (Q1-Q3 2018: CHF 220.3 million). The increase of CHF 91.2 million or 41.4% compared to the previous year’s period resulted mainly from the aforementioned release of deferred taxes and the portfolio appreciation of CHF 124.7 million (Q1-Q3 2018: CHF 107.6 million). In addition, there was a profit of CHF 15.0 million from the sale of two investment properties (Q1-Q3 2018: CHF 2.3 million). Earnings per share amounted to CHF 6.79 (Q1-Q3 2018: CHF 4.80).

At the end of September 2019, net asset value (NAV) per share was CHF 93.80 (end of 2018: CHF 90.63); the dividend payment of CHF 3.50 per share made on 10 April 2019 must be taken into consideration in this regard. NAV before deducting deferred taxes amounted to CHF 111.92 (end of 2018: CHF 109.20).

Strong capital structure

With total equity of CHF 4.302 billion (end of 2018: CHF 4.157 billion) – corresponding to an equity ratio of 54.4% (end of 2018: 54.6%) – the equity base remains strong. Interest-bearing debt amounted to CHF 2.656 billion, corresponding to 33.6% of total assets (end of 2018: CHF 2.511 billion or 33.0%). At the end of September 2019, the passing average cost of debt was 0.75% (end of 2018: 0.87 %). The average fixed-interest period was 4.6 years (end of 2018: 3.0 years). Currently, unused committed credit lines amount to CHF 1.040 billion.

PSP Swiss Property has ratings from two international rating agencies: Senior Unsecured Rating A- (outlook stable) from Fitch and A3 Issuer Rating (outlook stable) from Moody’s.

Subsequent events

As per 1 October 2019, the development project “Rue de Berne” in Geneva was sold for CHF 21.5 million with a gain of CHF 2.8 million.

Market environment and outlook 2019

PSP Swiss Property expects good demand for office space. However, the demand will focus primarily on central and easily accessible locations. The retail space market at good locations is stable.

The focus of PSP Swiss Property remains on the modernisation of selected properties, the further development of sites and projects as well as ongoing letting activities. Acquisitions are considered primarily in the strategic investment areas.

For the business year 2019, an ebitda excluding gains/losses on real estate investments of CHF 255 million is now expected (previous guidance: above CHF 250 million; 2018: CHF 241.7 million). With regard to the vacancies, a slightly lower rate of below 4% is now expected at year-end 2019 (previous guidance: around 4%; end of September 2019: 4.0%).


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