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    SPSN   CH0008038389

SWISS PRIME SITE AG

(SPSN)
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Swiss Prime Site: successful business year despite pandemic

02/25/2021 | 01:04am EDT

EQS Group-Ad-hoc: Swiss Prime Site AG / Key word(s): Annual Results
Swiss Prime Site: successful business year despite pandemic

25-Feb-2021 / 07:00 CET/CEST
Release of an ad hoc announcement pursuant to Art. 53 KR
The issuer is solely responsible for the content of this announcement.


PRESS RELEASE

Olten, 25 February 2021

  • Strengthening the equity ratio to 47.8% and reduction of the LTV to 41.9%
  • High revaluation gains of CHF 203.4 million
  • Decrease of vacancy rate from 5.4% in H1 2020 to 5.1% 
  • Confirmation of medium-term targets and attractive dividend yield of 3.9%

The pandemic had a major social and economic impact in 2020, one that was felt by both the Swiss real estate sector and the Swiss Prime Site Group. However, despite the challenging situation, the Company still managed to meet many of its targeted goals and achieve good results in the end. In 2020, Swiss Prime Site generated an operating income of CHF 792.9 million [CHF 1 258.8 million]. The deviation is mainly attributable to the sale of the group company Tertianum on 28 February 2020. The operating result (EBIT) was CHF 762.3 million [CHF 628.3 million]. The strong increase is due to the profit from the sale of Tertianum, which amounted to CHF 204.2 million. EBIT for the core Real Estate business amounted to CHF 555.0 million [CHF 572.9 million]. This included revaluation gains of CHF 203.4 million in the property portfolio at a fair value of CHF 12.3 billion [CHF 11.8 billion]. The Services segment generated EBIT of CHF 207.3 million [CHF 55.5 million]. This increase is explained by the previously mentioned sale of Tertianum. The result at profit level was CHF 610.4 million [CHF 608.5 million]. In contrast to the previous year, this value only includes a marginal positive tax effect of CHF 7.1 million [CHF 172.5 million] from the reversal of deferred tax liabilities arising from cantonal reductions in tax rates. Excluding revaluations and all deferred taxes, profit rose to CHF 476.6 million [CHF 315.7 million]. In all, Swiss Prime Site boosted its equity ratio to 47.8% [44.4%] and reduced leverage, thereby significantly strengthening the balance sheet.

Operating income
Swiss Prime Site generated operating income of CHF 792.9 million [CHF 1 258.8 million] in 2020. The difference in comparison to the previous year is mostly attributable to the sale and deconsolidation of the group company Tertianum on 28 February 2020.

In a challenging market environment, the Real Estate segment generated rental income of CHF 431.0 million (-1.4%). On a like-for-like basis, there was a fall of 3.7%. This takes into account a CHF 12.7 million reduction in income caused by the effects of the coronavirus pandemic. Around CHF 4 million of this figure was due to lower than planned turnover-linked and parking rents, and around CHF 9 million was attributable to the rent waivers granted. Operating income came in at CHF 482.9 million [CHF 519.5 million]. Despite the difficult market conditions, it was possible to bring vacancies in the portfolio back down to 5.1% [4.7%] after they had risen to 5.4% in the first half of 2020. The property portfolio grew by CHF 557.2 million (+4.7%) to CHF 12.3 billion. This increase was due to revaluation gains and the completion of the Company's own project developments. At 3.2% [3.5%], the net yield on the real estate portfolio is at an attractive level in the market for prime properties.

The Services segment generated operating income of CHF 378.2 million [CHF 828.4 million]. In comparison to the previous year, this only includes two months of results for Tertianum, which largely explains the difference. Capital increases enabled Swiss Prime Site Solutions to generate new funds totalling CHF 160 million for its client Swiss Prime Investment Foundation and thereby finance some attractive transactions. Income from asset management amounted to CHF 13.1 million [CHF 13.5 million]. Wincasa generated income from real estate services amounting to CHF 146.2 million [CHF 148.1 million]. With the digital rental agreement, the transformation of the group company's business model began to bear fruit. Jelmoli was heavily affected by the government-imposed lockdown in March, April and May. It was also hit hard by the partial restriction of Sunday shopping in the fourth quarter, which is traditionally the busiest period of the year for retailers. Income from retail was CHF 110.6 million, down by a considerable 13.4% on the previous year.

Operating result (EBIT)
In 2020, Swiss Prime Site increased its operating result (EBIT) by a considerable margin of 21.3% to CHF 762.3 million [CHF 628.3 million]. Income from the sale of Tertianum contributed substantially to this rise.

The core Real Estate business generated EBIT of CHF 555.0 million [CHF 572.9 million]. The 3.1% difference to the previous year was attributable to the impact of the coronavirus crisis. On the one hand, rental income dropped by some CHF 13 million as a result of the pandemic. On the other hand, the costs involved in handling tenant enquiries increased. The operating result includes net revaluation gains of CHF 203.4 million [CHF 204.4 million]. The major part of these gains, CHF 164.5 million, relates to existing properties. Projects under construction made up the remaining CHF 38.9 million. The average real discount rate as at 31 December 2020 was 2.91%, 15 basis points lower than at the end of 2019. Excluding revaluations, the Real Estate segment generated EBIT of CHF 351.6 million [CHF 368.4 million]. The pro rata pre-tax profits from sold development projects (Espace Tourbillon and Weltpost Park) and the sale of existing property in Berne and Zurich during the year contributed a total of CHF 36.1 million [CHF 37.6 million] to the result.

The Services segment generated EBIT of CHF 207.3 million [CHF 55.5 million]. The significant increase is attributable to the profit of CHF 204.2 million from the sale of Tertianum. At CHF 375.0 million [CHF 771.9 million], the operating expenses of the Service segment for 2020 were down significantly, due to lower personnel costs following the sale of Tertianum.

Profit
Swiss Prime Site generated a profit of CHF 610.4 million [CHF 608.5 million] in 2020. In contrast to the previous year, this value only includes a marginal positive tax effect of CHF 7.1 million [CHF 172.5 million] from the reversal of deferred tax liabilities arising from cantonal reductions in tax rates. Excluding revaluations and all deferred taxes, profits rose significantly to CHF 476.6 million [CHF 315.7 million]. This figure takes into account the profit of CHF 204.2 million resulting from the sale of Tertianum. Financial expenses were reduced to CHF 60.5 million [CHF 70.7 million] through the new and sustainable refinancing. EPS (earnings per share) was CHF 8.04 [CHF 8.00]. Excluding revaluations and all deferred taxes, EPS was CHF 6.27 [CHF 4.14].

Balance sheet
In the fourth quarter of 2020, Swiss Prime Site successfully issued a green bond with a value of CHF 300 million, a term of nine years and a coupon of 0.65%. Due to attractive refinancing, the weighted average residual term to maturity of interest-bearing financial liabilities increased significantly to 4.8 years [4.2 years] and the interest rate on financial liabilites fell to 1.1% [1.2%]. In comparison to the somewhat lower net yield of 3.2% [3.5%] on the property portfolio, this implies a very attractive interest rate spread of 2.1% [2.3%]. The sale of Tertianum led to a cash inflow of CHF 600.4 million and a total profit of CHF 508.7 million. Of this figure, CHF 304.5 million was a return of goodwill recorded directly in the equity and CHF 204.2 million was recorded as profit of the sale in EBIT. In addition, conversions of convertible bonds resulted in a marginal increase in shares issued to 75 970 364 [2019: 75 946 349] and thus a slight rise in equity by CHF 2.4 million. These effects led to a clear increase in the equity ratio to 47.8% [44.4%] and a reduction in the loan-to-value ratio of the property portfolio to 41.9% [45.7%]. NAV after deferred taxes rose significantly to CHF 80.11 per share (+11.5%). This takes into account the dividend payout of CHF 3.80 per share in April 2020. Swiss Prime Site generated a return on equity of 10.6% [11.5%]. Due to the profit of sale, this was significantly higher than the company's long-term target of 6 - 8%.

Outlook
For the 2021 financial year and beyond, the management of Swiss Prime Site expects market opportunities for office floor space to remain sound. This assessment for Switzerland is based on the shortest commuter times in Europe, an occupancy rate for office floor space that was adapted to new working models even before the pandemic and the need for more distancing and common areas. The situation for retail remains challenging. Here, Swiss Prime Site expects continued positive demand for bricks-and-mortar retail in good locations. The retail space portfolio is primarily situated in premium locations. If the general situation for tourism returns to normal in the medium term, there will be good opportunities once again for hotels and events. In view of the development projects that were completed in 2020 and are largely fully let, Swiss Prime Site expects rental income to rise in 2021, subject to unforeseeable upheaval linked to the coronavirus pandemic. The portfolio vacancy rate will be reduced to below 5%. On a medium-term horizon, Swiss Prime Site is standing by the targets communicated in October 2020.

Sustainability and CO2 reduction pathway
Swiss Prime Site's property portfolio contains high-quality property and locations. The portfolio as a whole also has a good sustainability balance sheet. To optimise this further, targeted measures are being taken and investments made as part of Swiss Prime Site's CO2 reduction pathway. The aim is to continuously improve resource consumption and achieve climate neutrality in the property portfolio by 2040.

Change in the Group Executive Board of Swiss Prime Site
Markus Meier, CFO Swiss Prime Site, has decided to leave the company for personal reasons and after many years of commitment. The Board of Directors and the Group Executive Board thank him for his great contribution to the company's success and wish him all the best for the future. The Swiss Prime Site Board of Directors has appointed Dr. Marcel Kucher (Swiss, 1971) as his successor. Marcel Kucher completed his studies in economics at University of Zurich in 2000 with his dissertation. He then began his professional career at McKinsey & Company (Zurich). He is currently CFO of the listed Peach Property Group. Dr. Barbara Frei-Spreiter, Chairwoman of the Nomination and Compensation Committee of Swiss Prime Site's Board of Directors comments: «We are pleased to have recruited Marcel Kucher, a proven financial expert with in-depth real estate knowledge, for Swiss Prime Site. With his broad wealth of experience in the areas of capital markets and digitalisation, he will ideally complement and further strengthen our Group's management team.» Marcel Kucher will take up his new position on 1 July 2021.

Annual General Meeting 2021
The Board of Directors proposes to the shareholders at the Annual General Meeting on 23 March 2021 a distribution of CHF 3.35 per share (ex-date: 25 March 2021, payment date: 29 March 2021). Half of the distribution will be made from the reserves from capital contributions (without withholding tax deduction) and half as an ordinary dividend (with 35% withholding tax deduction). Furthermore, the Board of Directors proposes Ms. Barbara A. Knoflach for election to the Board of Directors at the Annual General Meeting. The current members of the Board of Directors, with the exception of Mr. Rudolf Huber, are standing for re-election.

If you have any questions, please contact:
 
Investor Relations, Markus Waeber
Tel. +41 58 317 17 64, markus.waeber@sps.swiss
 
Media Relations, Mladen Tomic
Tel. +41 58 317 17 42, mladen.tomic@sps.swiss
 

Web links:
Online Annual report | Press release | Presentation | Webcast | Invitation to the AGM

SELECTED KEY FIGURES

     

 

 in

31.12.2019

31.12.2020

 

 

 

 

Group key figures

 

 

 

Investment properties at fair value

CHF m

11 765.4

12 322.6

 

 

 

 

Rental income from properties

CHF m

 486.9

 424.7

Income from real estate developments

CHF m

 79.8

 50.1

Income from real estate services

CHF m

 117.5

 115.2

Vacancy rate

%

 4.7

 5.1

Net property yield

%

 3.5

 3.2

Weighted average interest rate on financial liabilities

%

 1.2

 1.1

Total operating income

CHF m

1 258.8

 792.9

 

 

 

 

Revaluation of investment properties, net

CHF m

 203.4

 203.4

Result from investment property sales, net

CHF m

 20.8

 22.2

Result from sale of participations, net

CHF m

-

 204.2

 

 

 

 

Operating result before depreciation and amortisation (EBITDA)

CHF m

 653.4

 779.9

Operating result (EBIT)

CHF m

 628.3

 762.3

Profit

CHF m

 608.5

 610.4

 

 

 

 

Key figures: Real Estate segment

 

 

 

Rental income from properties

CHF m

 437.3

 431.0

Income from real estate developments

CHF m

 79.8

 50.1

Total operating income

CHF m

 519.5

 482.9

Operating result (EBIT)

CHF m

 572.9

 555.0

 

 

 

 

Key figures: Services segment

 

 

 

Rental income from properties

CHF m

 106.0

 28.6

Income from real estate services

CHF m

 148.1

 146.2

Income from retail

CHF m

 127.8

 110.6

Income from assisted living

CHF m

 423.9

 72.4

Income from asset management

CHF m

 13.5

 13.1

Total operating income

CHF m

 828.4

 378.2

Operating result (EBIT)

CHF m

 55.5

 207.3

 

 

 

 

Group key financial figures

 

 

 

Shareholders' equity

CHF m

5 459.2

6 085.6

Equity ratio

%

44.4

47.8

Loan-to-value ratio of property portfolio (LTV)

%

45.7

41.9

Return on equity (ROE)

%

11.5

10.6

Return on invested capital (ROIC)

%

5.6

5.4

 

 

 

 

Earnings per share (EPS)

CHF

 8.00

8.04

NAV before deferred taxes per share1

CHF

 86.34

95.41

NAV after deferred taxes per share1

CHF

 71.87

80.11

 

 

 

 

Group key figures excluding revaluations and all deferred taxes

 

 

 

Operating result (EBIT)

CHF m

 424.9

 558.9

Profit

CHF m

 315.7

 476.6

Earnings per share (EPS)

CHF

 4.14

6.27

Return on equity (ROE)

%

 6.3

 8.5

       

1 Services segment (real estate-related business fields) included at book values only

 



End of ad hoc announcement
Language: English
Company: Swiss Prime Site AG
Frohburgstrasse 1
4601 Olten
Switzerland
Phone: +41 (0)58 317 17 64
E-mail: markus.waeber@sps.swiss
Internet: www.sps.swiss
ISIN: CH0008038389
Listed: SIX Swiss Exchange
EQS News ID: 1170967

 
End of Announcement EQS Group News Service

1170967  25-Feb-2021 CET/CEST

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