PSP SWISS PROPERTY AG Press release
7 May 2019
Quarterly results as per 31 March 2019
PSP Swiss Property with very pleasing quarterly results and successful letting activities. Improved vacancy rate expected at the end of the year.
With CHF 50.5 million, net income (excluding gains/losses on real estate investments) exceeds the previous year's result of CHF 43.2 million by 16.9%. Supported by good demand for office space and thanks to the ongoing portfolio optimisation, the vacancy was reduced to 4.4% at the end of March 2019 (end of 2018: 5.0%).
Real estate portfolio
At the end of March 2019, the carrying value of the total portfolio was CHF 7.682 billion (end of 2018: CHF 7.442 billion). Early 2019, a number of properties in Bern's city centre and in Bern-Liebefeld were acquired. In addition, as part of the portfolio streamlining process, the property located at Bernerstrasse Süd 167/169 in Zurich-Altstetten and the property located at Route des Arsenaux 41 in Fribourg were sold. Finally, the last condominium on the Löwenbräu site in Zurich was also sold at the beginning of 2019.
At the end of March 2019, the vacancy rate stood at 4.4% (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. 1.1 percentage points of all vacancies are due to ongoing renovations. Of the lease contracts maturing in 2019 (CHF 31.0 million), 79% were renewed at the end of March 2019. The WAULT (weighted average unexpired lease term) of the total portfolio was 4.5 years. The WAULT of the ten largest tenants representing around 30% of the rental income was 6.5 years.
Quarterly results Q1 2019
Net income (excluding gains/losses on real estate investments) amounted to CHF 50.5 million (Q1 2018: CHF 43.2 million). The increase of CHF 7.3 million or 16.9% compared to the previous year's period resulted mainly from higher rental income (+ CHF 3.3 million) and an increase in profit from condominium sales (+ CHF 1.0 million). Lower financial expenses (- CHF 0.9 million) and a (relatively) lower tax burden also contributed to the improved overall result. The Canton of Basel-Stadt reduced the total profit tax rate from 22.2% to 13.0% as of 1 January 2019. This resulted in the release of deferred taxes in the amount of CHF 5.0 million, CHF 1.6 million thereof had a positive effect on net income (excluding gains/losses on real estate investments). Earnings per share (excluding gains/losses on real estate investments), which is the basis for the dividend distribution, amounted to CHF 1.10 (Q1 2018: CHF 0.94).
Operating expenses remained virtually unchanged at CHF 13.9 million (Q1 2018: CHF 13.8 million). Financial expenses declined by CHF 0.9 million to CHF 5.0 million (Q1 2018: CHF 5.9 million).
Net income (including gains/losses on real estate investments) reached CHF 79.7 million (Q1 2018: CHF 40.3 million). The increase of CHF 39.5 million compared to the previous year's period resulted mainly from the portfolio appreciation of CHF 19.7 million (Q1 2018: depreciation of CHF 3.9 million). CHF 7.5 million thereof relate to the first-time valuation of the properties acquired in Bern and CHF 12.3 million to the development project "Rue du Marché" in Geneva (due to the letting of the retail area). Moreover, a profit of CHF 15.0 million resulted from the sale of two investment properties (Q1 2018: no sales). On the other hand, tax expenses increased by CHF 3.6 million to CHF 13.9 million (Q1 2018: CHF 10.3 million). Earnings per share (including gains/losses on real estate investments) amounted to CHF 1.74 (Q1 2018: CHF 0.88).
At the end of March 2019, net asset value (NAV) per share was CHF 92.36 (end of 2018: CHF 90.63). NAV before deducting deferred taxes amounted to CHF 111.00 (end of 2018: CHF 109.20).
Strong capital structure
With total equity of CHF 4.236 billion (end of 2018: CHF 4.157 billion) - corresponding to an equity ratio of 53.9% (end of 2018: 54.6%) - the equity base remains strong. Interest-bearing debt amounted to CHF 2.678 billion, corresponding to 34.1% of total assets (end of 2018: CHF 2.511 billion respectively 33.0%). Excluding financial debt invested as fixed-term deposit totalling CHF 125 million, the debt ratio was 33.0%. At the end of March 2019, the passing average cost of debt was 0.79% (end of 2018: 0.87 %). The average fixed-interest period was 3.1 years (end of 2018: 3.0 years). Currently, unused committed credit lines amount to CHF 750 million.
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
The ordinary Annual General Meeting on 4 April 2019 approved all proposals of the Board of Directors. Among other resolutions, the payment of an ordinary dividend of CHF 3.50 per share for the 2018 business year was approved (previous year: CHF 3.40 per share). The payment totalling CHF 160.5 million was made on 10 April 2019. Luciano Gabriel was re-elected as Chairman of the Board of Directors (one-year term of office). All remaining six current members of the Board of Directors were also re-elected (one-year terms of office). Ernst & Young AG, Zurich, was re-elected as Statutory Auditors for the 2019 business year. Proxy Voting Services GmbH, Zurich, was re-elected as independent shareholder representative (one-year term of office). The Compensation Committee and the Audit Committee consist of Peter Forstmoser (Chairman), Adrian Dudle, Nathan Hetz and Josef Stadler. The Nomination Committee consists of Josef Stadler (Chairman), Corinne Denzler and Adrian Dudle.
On 18 April 2019, the existing bond maturing in 2027 was increased by a nominal amount of CHF 80 million to CHF 180 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 is likely to remain tense, especially in peripheral regions.
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 and must be justified by potential added value in the long-term.
For the business year 2019, an ebitda (excluding gains/losses on real estate investments) of CHF 250 million is still expected (2018: CHF 241.7 million). With regard to the vacancies, a rate of 4.5% is now expected at year-end 2019 (previous guidance: below 5.0%; end of 2018: 5.0%).
Key figures
Key financial figures | Unit | 2018 | Q1 2018 | Q1 2019 | +/-1 |
Rental income | CHF 1 000 | 279 373 | 69 123 | 72 440 | 4.8% |
EPRA like-for-like change | % | 0.9 | 0.3 | 1.9 | |
Net changes fair value real estate investments | CHF 1 000 | 166 692 | - 3 873 | 19 735 | |
Income property sales (condominiums) | CHF 1 000 | 10 484 | 1 481 | 2 458 | |
Income property sales (investment properties) | CHF 1 000 | 2 472 | 0 | 14 961 | |
Total other income | CHF 1 000 | 8 172 | 3 583 | 2 989 | |
Net income | CHF 1 000 | 308 152 | 40 257 | 79 747 | 98.1% |
Net income excl. real estate gains2 | CHF 1 000 | 176 250 | 43 204 | 50 519 | 16.9% |
Ebitda excl. real estate gains | CHF 1 000 | 241 743 | 60 600 | 65 358 | 7.9% |
Ebitda margin | % | 80.8 | 81.7 | 82.8 | |
Total assets | CHF 1 000 | 7 619 283 | 7 859 291 | 3.2% | |
Shareholders' equity | CHF 1 000 | 4 156 908 | 4 236 213 | 1.9% | |
Equity ratio | % | 54.6 | 53.9 | ||
Return on equity | % | 7.6 | 7.6 | ||
Interest-bearing debt | CHF 1 000 | 2 511 212 | 2 678 036 | 6.6% | |
Interest-bearing debt in % of total assets | % | 33.0 | 34.13 | ||
Portfolio key figures | |||||
Number of investment properties | Number | 163 | 163 | ||
Carrying value investment properties | CHF 1 000 | 6 778 932 | 6 875 305 | 1.4% | |
Implied yield, gross | % | 4.1 | 4.1 | 4.1 | |
Implied yield, net | % | 3.5 | 3.5 | 3.5 | |
Vacancy rate end of period (CHF) | % | 5.0 | 4.4 | ||
Number of sites/development properties | Number | 11 | 13 | ||
Carrying value sites/development properties | CHF 1 000 | 663 174 | 806 693 | 21.6% | |
Headcount | |||||
Employees/FTE | People | 91/86 | 91/86 | ||
Per share figures | |||||
Earnings per share (EPS)4 | CHF | 6.72 | 0.88 | 1.74 | 98.1% |
EPS excl. real estate gains4 | CHF | 3.84 | 0.94 | 1.10 | 16.9% |
Distribution per share | CHF | 3.505 | n.a. | n.a. | |
Net asset value per share (NAV)6 | CHF | 90.63 | 92.36 | 1.9% | |
NAV per share before deferred taxes6 | CHF | 109.20 | 111.00 | 1.6% | |
Share price end of period | CHF | 96.85 | 108.20 | 11.7% |
1 | Change to Q1 2018 or carrying value as of 31 December 2018 as applicable. |
2 | "Net income excluding gains/losses on real estate investments" corresponds to the net income excluding net changes in fair value of the real estate investments, net income on sales of investment properties and all of the related taxes. Income from the sale of properties which were developed by the Company itself is, however, included in the "net income excluding gains/losses on real estate investments". |
3 | Excluding debt capital invested as fixed-term deposit totalling CHF 125 million: 33.0%. |
4 | Based on average number of outstanding shares. |
5 | For the business year 2018. Payment was made on 10 April 2019. |
6 | Based on number of outstanding shares. |
Further information
Giacomo Balzarini, CEO · Phone +41 (0)44 625 59 59 · Mobile +41 (0)79 207 32 40
Vasco Cecchini, CCO · Phone +41 (0)44 625 57 23 · Mobile +41 (0)79 650 84 32
Report and presentation are available on www.psp.info
www.psp.info/reports
www.psp.info/presentations
Today, 10:30am (CET): conference call (Q&A only)
Switzerland / Europe · +41 (0)58 310 50 00
UK · +44 (0)207 107 0613
USA · +1 (1)631 570 56 13
Agenda
Publication H1 2019 · 15 August 2019
Publication Q1-Q3 2019 · 12 November 2019
Publication FY 2019 · 25 February 2020
Annual General Meeting 2020 · 2 April 2020
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