Real estate portfolio
At the end of September 2011, the real estate portfolio included 168 office and commercial properties in top locations. In addition, there were six attractive development sites and two single projects. The carrying value of the total portfolio stood at CHF 5.714 billion (end of 2010: CHF 5.518 billion). During the reporting period, no acquisitions were made; six properties were sold for CHF 55.4 million, 18.0% above the last valuation.
Work on the development sites progressed as planned. Particularly worth mentioning are the construction start on the Gurten site in Wabern near Bern and the submission of the renewed building application for the "Paradiso" site in Lugano. Gurten site: of the 101 units, 40 have already been reserved. Construction of the new „Vorderer Sternen" on Theaterstrasse 22 at the Bellevue in Zurich began in July 2011. The new building offering a restaurant and office space will be built by spring 2013. The investment sum amounts to approximately CHF 12 million. Furthermore, the conversion of the "Kesselhaus" on the Hürlimann site in Zurich started recently; the investment sum for this office building with approximately 700 m2 floor space amounts to approximately CHF 5 million.
Vacancy rate
At the end of September 2011, the vacancy rate stood at 8.6% (end of 2010: 8.5%). Of the 8.6%, 1.7 percentage points were due to ongoing renovation work on various properties, whereof 0.5 percentage points are already pre-let. The properties in Zurich West and Wallisellen (carrying value of CHF 0.8 billion) contributed 4.4 percentage points to the overall vacancy rate. The largest part of the portfolio with a carrying value of CHF 4.5 billion (i.e. the total portfolio excluding the objects under renovation and those in Zurich West and Wallisellen) made up 2.5 percentage points only.
Of the lease contracts maturing in 2011 (CHF 39.0 million), 96% had already been renewed respectively extended on average at slightly higher rents at the end of September 2011.
Quarterly results January to September 2011
Compared to the previous year's period, net income excluding changes in fair value increased from CHF 108.4 million to CHF 113.1 million. Earnings per share amounted to CHF 2.64 (previous year's period: CHF 2.56).
Rental income went up by CHF 7.2 million to CHF 203.9 million. This rise resulted from: i) rental income generated by the property on Seestrasse 353 in Zurich acquired in April 2010, ii) rental income generated by the thermal bath on the Hürlimann site in Zurich completed in December 2010 and iii) additional rental income as a result of successful new leases as well as extraordinary income in the second quarter of 2011.
With CHF 39.7 million, operating expenses increased slightly (previous year's period: CHF 38.3 million). Financial expenses decreased slightly to CHF 34.7 million (previous year's period: CHF 34.9 million).
At the end of September 2011, net asset value (NAV) per share was CHF 71.33 (end of 2010: CHF 68.87). NAV per share before deferred taxes amounted to CHF 84.11 (end of 2010: CHF 80.86).
Solid capital structure, low interest expenses
With a loan-to-value of 34.6% (end of 2010: 35.7%), the capital structure remains very solid. The amount of unused credit lines is CHF 720 million. No committed bank loans will mature until 2013; a CHF 250 million bond and a CHF 40 million private placement will mature in 2012.
During the reporting period, the average interest rate was 2.56% (previous year's period: 2.58%) and the average interest rate at the end of September 2011 2.8 years (end of 2010: 3.2 years).
Own shares
During the reporting period, a total of 558 020 own shares were sold at an average price of CHF 80.38 per share. Furthermore, a total of 110 000 own shares were sold at an average price of CHF 82.60 each since 1 October 2011. At present, PSP Swiss Property holds 5.39% of the issued shares.
Outlook 2011
PSP Swiss Property remains confident for the 2011 earnings development and confirms the improved forecast made mid-year. Based on the assumption of an unchanged property portfolio, for 2011 an EBITDA (excluding gains/losses on real estate investments) of CHF 225 million is expected (2010: CHF 223.3 million).
As communicated previously, the portfolio vacancy rate at the end of 2011 is expected to be below 9%.
With regard to the sites, the focus will be on two sites in Zurich, the Hürlimann site (hotel completion as well as conversion of the "Kesselhaus" as final stages) and the Löwenbräu site, as well as the Gurten site in Wabern near Bern, where construction started recently. The other sites are projects still in the planning phase.
