Quarterly results as per 31 March 2012

Real estate portfolio

At the end of March 2012, the real estate portfolio included 167 office and commercial properties in top locations. In addition, there were seven development sites and three individual construction projects. The carrying value of the total portfolio stood at CHF 5.978 billion (end of 2011: CHF 5.958 billion).

Early 2012, a sub-building lease to construct a health spa on the grounds of the Lido in Locarno, for which there is already a building permit, was purchased. PSP Swiss Property will invest a maximal amount of CHF 26 million in this project. Construction of the building complex, which is already let, will probably last until mid-2013. Furthermore, the property on Seftigenstrasse 259 in Wabern was sold.

The ongoing site developments progressed as planned.

Vacancy rate

At the end of March 2012, the vacancy rate stood at 7.4% (end of 2011: 8.3%). The decrease was mainly due to a partial letting in the new building on Richtistrasse 9 in Wallisellen. 1.5 percentage points of the 7.4% were due to ongoing renovation work on various properties. 0.6 percentage points thereof related to the property on Aarbergstrasse 94 in Biel. 0.5 percentage points came from the property on Laupenstrasse 18/18a in Bern. The properties in Zurich West and Wallisellen (carrying value CHF 0.9 billion) contributed 3.5 percentage points to the overall vacancy rate. The remaining properties with a carrying value of CHF 4.7 billion (i.e. the total investment portfolio excluding the objects under renovation as well as those in Zurich West and Wallisellen) made up only 2.4 percentage points.

Of the lease contracts maturing in 2012 (CHF 36.3 million), 62% had already been renewed respectively extended at the end of March 2012.

Quarterly results Q1 2012

Net income excluding changes in fair value increased from CHF 37.3 million in the previous year’s period to CHF 39.8 million. Corresponding earnings per share amounted to CHF 0.91 (Q1 2011: CHF 0.87). Net income including changes in fair value also amounted to CHF 39.8 million (Q1 2011: CHF 38.4 million). Earnings per share including changes in fair value amounted to CHF 0.91 (Q1 2011: CHF 0.90).

Compared to the previous year’s period, rental income rose by CHF 1.4 million to CHF 68.5 million. At CHF 12.7 million, operating expenses remained stable (Q1 2011: CHF 12.2 million). Due to lower interest-bearing debt and a lower average interest rate, financial expenses fell by CHF 1.6 million to CHF 10.2 million.

At the end of March 2012, net asset value (NAV) per share was CHF 76.26 (end of 2011: CHF 75.28). NAV before deducting deferred taxes amounted to CHF 89.96 (end of 2011: CHF 89.02).

Strong capital structure, decreasing interest expenses

With a loan-to-value of 31.5% (end of 2011: 32.2%), the capital structure remains very solid. At the end of March 2012, unused credit lines amounted to CHF 820 million.

Due to interest rate hedging transactions, PSP Swiss Property will continue to benefit from the historically low interest rate levels in the medium term. The average interest rate amounted to 2.54% in the reporting period (Q1 2011: 2.62%). The average fixed-interest period was 3.5 years at the end of March 2012 (end of 2011: 2.9 years). No bank loans will be due until 2013. On 27 July 2012, a CHF 250 million bond will mature and it will presumably be refinanced by way of existing credit facilities.

At the end of March 2012, the rating agency Fitch confirmed PSP Swiss Property Ltd’s rating with an „A-„ and stable outlook.

 

Subsequent events

A total of 204 927 own shares were sold at an average price of CHF 79.43 each since 1 April 2012. Currently, PSP Swiss Property holds 1 867 029 own shares representing 4.07% of the capital.

Following the resolution of the annual general meeting of 3 April 2012, a dividend payment of CHF 3.00 per share (totalling CHF 131.4 million) was made out of the capital contribution reserves on 12 April 2012.

Outlook 2012

PSP Swiss Property is confident about the medium- and long-term prospects due to its well-established market position, its strong capital base and the high quality of its property portfolio. The Company remains positive for the 2012 earnings development. The forecast communicated at the end of February 2012 is being confirmed: based on the assumption of an unchanged property portfolio, an EBITDA excluding gains/losses on real estate investments in excess of CHF 230 million is expected for the 2012 business year (2011: CHF 232.5 million).

In the current year, the further development of the sites and projects, investments in the portfolio as well as the management of vacancies will be at the top of the agenda. With a view to optimising the portfolio, significant investments are again planned in 2012 in individual properties to enhance their attractiveness.

Concerning the sites and projects, the focus will be on two sites in Zurich, the Hürlimann site (conversion of the “Kesselhaus” as final stage) and the Löwenbräu site, the Gurten site in Wabern near Bern, the new construction “Vorderer Sternen” in Zurich as well as the new project “Lido” in Locarno. The other sites are partly still in the planning phase.

With regard to vacancies in our investment portfolio, a further stabilisation of the vacancy rate is targeted; thereby, a rate of approximately 9% at the end of 2012 is expected (end of March 2012: 7.4%).

 

Key figures

Key financial figures	Unit	2011	Q1 2011	Q1 2012	Δ in %1
Rental income	CHF 1 000	270 675	67 032	68 476	2.2
EPRA like-for-like rental growth	%	2.0	2.2	2.9
Net changes in fair value of real estate investments	CHF 1 000	325 068	0	0
Income from property sales	CHF 1 000	7 504	2 298	226
Income from investments in associated companies	CHF 1 000	68	0	70
Total other income	CHF 1 000	10 268	3 062	3 589
Net income	CHF 1 000	403 994	38 373	39 774	3.7
Net income excl. gains/losses on real estate investments2	CHF 1 000	149 020	37 303	39 846	6.8
EBITDA excl. gains/losses on real estate investments	CHF 1 000	232 532	58 417	59 845	2.4
EBITDA margin	%	81.5	82.9	82.6
Total assets	CHF 1 000	6 050 916	5 625 162	6 063 661	0.2
Shareholders’ equity	CHF 1 000	3 268 894	2 992 376	3 339 967	2.2
Equity ratio	%	54.0	53.2	55.1
Return on equity	%	13.0	5.2	4.8
Interest-bearing debt	CHF 1 000	1 946 894	1 995 659	1 907 341	- 2.0
Interest-bearing debt in % of total assets	%	32.2	35.5	31.5
Portfolio key figures
Number of properties	Number	168	173	167
Carrying value properties	CHF 1 000	5 611 591	5 303 519	5 699 504	1.6
Implied yield, gross3	%	4.9	5.1	4.8
Implied yield, net3	%	4.2	4.4	4.2
Vacancy rate end of period (CHF)3, 4	%	8.3	8.8	7.4
Number of sites and development properties	Number	9	7	10
Carrying value sites and development properties	CHF 1 000	346 879	228 358	278 373	- 19.7
Employees
End of period	Posts	84	83	85
Equal full-time employees	Posts	77	78	78
Per share figures
Earnings per share (EPS)5	CHF	9.40	0.90	0.91	1.6
EPS excl. gains/losses on real estate investments5	CHF	3.47	0.87	0.91	4.7
Distribution per share	CHF	3.006	n.a.	n.a.
Net asset value per share (NAV)7	CHF	75.28	70.03	76.26	1.3
NAV share before deducting deferred taxes7	CHF	89.02	82.10	89.96	1.1
Share price end of period	CHF	78.60	75.65	80.20	2.0

1	Change to Q1 2011 or carrying value as of 31 December 2011 as applicable.
2	“Consolidated 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.
3	For properties.
4	Equals the lost rental income in % of the potential rent, as per reporting date.
5	Based on average number of outstanding shares.
6	For the 2011 business year. Cash payment was made on 12 April 2012.
7	Based on number of outstanding shares.