During the reporting period January to June 2013, operating net income excluding changes in fair value remained with CHF 85.2 million at essentially the same level as in the previous year’s period. At the end of June 2013, NAV per share amounted to CHF 81.29, 1.0% higher than at year-end 2012 (CHF 80.48). NAV per share before deducting deferred tax liabilities grew by 1.6% to CHF 96.52 (end of 2012: CHF 95.00).
Press Release
for immediate publication
16 August 2013
Half-year results as per 30 June 2013
PSP Swiss Property – Solid half-year operating results. FY13 forecast confirmed.
During the reporting period January to June 2013, operating net income excluding changes in fair value remained with CHF 85.2 million at essentially the same level as in the previous year’s period. At the end of June 2013, NAV per share amounted to CHF 81.29, 1.0% higher than at year-end 2012 (CHF 80.48). NAV per share before deducting deferred tax liabilities grew by 1.6% to CHF 96.52 (end of 2012: CHF 95.00).
Real estate portfolio
At the end of June 2013, the real estate portfolio included 165 office and commercial properties in prime locations. In addition, there were five development sites and four individual construction projects. The carrying value of the total portfolio was CHF 6.428 billion (end of 2012: CHF 6.283 billion). During the reporting period, no investment properties were acquired nor sold. Already during the first quarter of 2013, the following new constructions in Zurich were successfully completed and transferred to the investment property portfolio: i) Brandschenkestrasse 152b (“Kesselhaus”), ii) Limmatstrasse 250-254/264/266 („Löwenbräu Red“) and iii) Theaterstrasse 22 („Vorderer Sternen“). The other ongoing site developments progressed as planned.
At the beginning of May 2013, the decision was made to invest approximately CHF 30 million in the construction of a health spa on the grounds of the “Genève Plage” in Geneva/Cologny, Port Noir. Construction of the building complex, which is already let to an expert operating company, will take until 2015. This project follows the successfully completed spas in Zurich (Thermalbad & Spa Zürich, Hürlimann site) and Locarno (Termali Salini & Spa, Lido Locarno). Furthermore, demolition of the property at Löwenstrasse 16 in Zurich and construction of a new building began in June 2013. The investment sum for this new building with mixed use (office and retail spaces) will be around CHF 7 million. Construction is likely to take until the end of 2014. The new developments and conversions on the other sites progressed as planned.
Vacancy rate
At the end of June 2013, the vacancy rate stood at 9.1% (end of 2012: 8.0%). 1.9 percentage points of the 9.1% were due to ongoing renovation work on various properties. Thereof 1.2 percentage points related to the properties at Bahnhofplatz/Bahnhofquai in Zurich. 0.4 percentage points concerned the renovation of the property at Bahnhofplatz 2 (formerly Aarbergstrasse 94) in Biel. The properties in Zurich West and Wallisellen (carrying value CHF 0.9 billion) contributed 3.4 percentage points to the overall vacancy rate. The remaining properties with a carrying value of CHF 5.0 billion (i.e. the total investment portfolio excluding the objects under renovation as well as those in Zurich West and Wallisellen) made up 3.8 percentage points. Of the lease contracts maturing in 2013 (CHF 42.0 million), 70% had already been renewed respectively extended at the end of June 2013.
Half-year results 2013
As in the previous year’s period income from sold properties (inventories) was significantly higher, due to the sale of a part of the Löwenbräu site called „White“, net income excluding changes in fair value decreased slightly from CHF 86.0 million (previous year’s period) to CHF 85.2 million (H1 2013). Most of the other income and expense components, in particular financial expenses, progressed positively compared to the previous year’s period. Corresponding earnings per share (excluding net changes in fair value) amounted to CHF 1.86 (previous year’s period: CHF 1.94). The slight decrease reflected also the dilution effect of the sale of own shares in 2012 . For PSP Swiss Property, net income excluding net changes in fair value is the basis for the distribution to shareholders.
Net income including net changes in fair value amounted to CHF 158.7 million (previous year’s period: CHF 178.9 million). The decline resulted mainly from the lower appreciation of the properties (H1 2013: CHF 95.7 million) compared to H1 2012 (CHF 119.3 million). Of the CHF 95.7 million appreciation, CHF 43.1 million came from the initial application of the new IFRS 13 standard (Fair Value Measurement using the new concept of “Highest and Best Use”). Earnings per share including net changes in fair value amounted to CHF 3.46 (previous year’s period: CHF 4.04).
Rental income increased to CHF 138.1 million (previous year’s period: CHF 137.0 million). With CHF 26.2 million, operating expenses remained virtually unchanged from the previous year’s period. Financial expenses decreased by CHF 4.3 million respectively 21.5% to CHF 15.8 million due to the benign interest rate environment and the favourable effect of the newly entered interest rate swaps.
At the end of June 2013, net asset value (NAV) per share was CHF 81.29 (end of 2012: CHF 80.48). NAV before deducting deferred taxes amounted to CHF 96.52 (end of 2012: CHF 95.00). It should also be mentioned that a dividend payment of CHF 3.20 per share was made mid-April 2013.
Strong capital structure, low interest expenses
With a loan-to-value of 30.0% (end of 2012: 28.4%), the capital structure remains very solid. Currently, unused committed credit lines amount to CHF 410 million.
Thanks to interest rate hedging transactions, PSP Swiss Property will continue to benefit from the historically low interest rate levels in the medium term. At the end of June 2013, the passing average interest rate amounted to 1.85% (end of 2012: 2.20%) and the average fixed-interest period was 3.3 years (end of 2012: 3.7 years). No major committed bank loans will mature until 2018.
In March 2013, the rating agency Fitch confirmed PSP Swiss Property Ltd’s rating with an “A-” and stable outlook.
Subsequent events
There were no subsequent events.
Outlook 2013
Despite all the economic imponderabilities, PSP Swiss Property remains confident about the future: the Company is well established in the Swiss real estate market with a strong capital base and a high-quality property portfolio.
The Company sticks to its long-term, value-oriented and judicious acquisition strategy and to its conservative financing policy.
Focus will be kept on renovation and modernisation of selected properties as well as on the development of the sites and projects.
Based on the assumption of an unchanged property portfolio, PSP Swiss Property still expects an EBITDA excluding changes in fair value of approximately CHF 240 million for 2013 (2012: CHF 238.3 million). With regard to vacancies, a rate of approximately 10% at year-end 2013 is expected (end of June 2013: 9.1%).
Key figures
Key financial figures | Unit | 20121 | H1 20121 | H1 2013 | Δ in %2 |
Rental income | CHF 1 000 | 272 849 | 136 964 | 138 077 | 0.8 |
EPRA like-for-like rental change | % | 1.5 | 2.1 | - 0.2 | |
Net changes in fair value of real estate investments | CHF 1 000 | 266 851 | 119 309 | 95 735 | |
Income from property sales | CHF 1 000 | 12 924 | 11 689 | 1 202 | |
Total other income | CHF 1 000 | 8 351 | 4 651 | 4 487 | |
Net income | CHF 1 000 | 368 385 | 178 903 | 158 731 | - 11.3 |
Net income excl. gains/losses on real estate investments3 | CHF 1 000 | 161 367 | 86 011 | 85 210 | - 0.9 |
EBITDA excl. gains/losses on real estate investments | CHF 1 000 | 238 308 | 127 940 | 117 890 | - 7.9 |
EBITDA margin | % | 81.0 | 83.4 | 82.0 | |
Total assets | CHF 1 000 | 6 356 255 | 6 176 365 | 6 504 249 | 2.3 |
Shareholders’ equity | CHF 1 000 | 3 691 551 | 3 467 128 | 3 728 541 | 1.0 |
Equity ratio | % | 58.1 | 56.1 | 57.3 | |
Return on equity | % | 10.6 | 10.6 | 8.6 | |
Interest-bearing debt | CHF 1 000 | 1 808 286 | 1 897 792 | 1 948 383 | 7.7 |
Interest-bearing debt in % of total assets | % | 28.4 | 30.7 | 30.0 | |
Portfolio key figures | |||||
Number of properties | Number | 163 | 167 | 165 | |
Carrying value properties | CHF 1 000 | 5 968 097 | 5 824 151 | 6 181 268 | 3.6 |
Implied yield, gross | % | 4.7 | 4.8 | 4.6 | |
Implied yield, net | % | 3.9 | 4.1 | 3.9 | |
Vacancy rate end of period (CHF) | % | 8.0 | 8.5 | 9.1 | |
Number of sites and development properties | Number | 9 | 10 | 9 | |
Carrying value sites and development properties | CHF 1 000 | 314 430 | 259 610 | 247 034 | - 21.4 |
Employees | |||||
End of period | Posts | 84 | 85 | 87 | |
Equal full-time employees | Posts | 78 | 78 | 80 | |
Per share figures | |||||
Earnings per share (EPS)4 | CHF | 8.21 | 4.04 | 3.46 | - 14.4 |
EPS excl. gains/losses on real estate investments4 | CHF | 3.60 | 1.94 | 1.86 | - 4.5 |
Distribution per share | CHF | 3.205 | n.a. | n.a. | |
Net asset value per share (NAV)6 | CHF | 80.48 | 76.24 | 81.29 | 1.0 |
NAV share before deducting deferred taxes6 | CHF | 95.00 | 90.00 | 96.52 | 1.6 |
Share price end of period | CHF | 86.55 | 83.65 | 81.80 | - 5.5 |
1 | Adjusted, due to initial application of IAS 19 (revised). |
2 | Change to H1 2012 or carrying value as of 31 December 2012 as applicable. |
3 | “Annual net income excluding gains/losses on real estate investments” corresponds to the consolidated annual net income excluding net changes in fair values of the real estate investments, realised income on investment property sales 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. |
4 | Based on average number of outstanding shares. |
5 | For the 2012 business year. Cash payment was made on 16 April 2013. |
6 | Based on number of outstanding shares. |