Real estate portfolio
At the end of March 2016, the real estate portfolio included 164 office and commercial properties as well as five development sites and three individual projects. The carrying value of the total portfolio stood at CHF 6.759 billion (end of 2015: CHF 6.724 billion). In the reporting period, no investment properties were purchased nor sold.
The completion and delivery of the residential units at the “Salmenpark” in Rheinfelden proceeds as planned. During the reporting period, 38 of the 113 freehold apartments were transferred to the buyers. The Salmen Center (retail spaces as well as a nursing and care home) was completed and reclassified as an investment property at the end of March 2016. The first stage of construction with an investment total of approximately CHF 180 million will take until the end of 2016 to complete. The building application for stage two with an investment total of approximately CHF 70 million was submitted at the end of 2015. This project includes residential use only with 100 units and an underground garage.
In April 2016, the construction approval for the “Paradiso” site in Lugano was obtained. The plan is to realise, on the site near the lake, a project with freehold apartments (11 200 m2) as well as offices (1 400 m2) and retail areas (750 m2). The planned investment total will amount to approximately CHF 65 million. The intention is to sell all units after their completion.
The new constructions and conversions on the other sites progressed as planned.
Vacancy rate
At the end of March 2016, the vacancy rate stood at 8.7% (end of 2015: 8.5%). 0.6 percentage points of these 8.7% were due to ongoing renovation work on various properties. The properties in Zurich West and Wallisellen (carrying value CHF 0.7 billion) contributed 2.8 percentage points to the overall vacancy rate. The remaining properties with a carrying value of CHF 5.6 billion (i.e. the total investment portfolio excluding the objects under renovation as well as those in Zurich West and Wallisellen) made up 5.3 percentage points.
Quarterly results Q1 2016
During the reporting period, net income (excluding changes in fair value) reached CHF 46.9 million (Q1 2015: CHF 38.2 million). The main reasons for this increase were higher rental income, which was up by CHF 1.2 million, as well as income of CHF 8.7 million from the sale of 38 freehold apartments at the “Salmenpark” project in Rheinfelden (Q1 2015: no income from apartment sales). Corresponding earnings per share (excluding changes in fair value) amounted to CHF 1.02 (Q1 2015: CHF 0.83). For PSP Swiss Property, net incomeexcluding changes in fair value is the basis for the distribution to shareholders.
During the reporting period, there were no revaluations and no sales of investment properties. As a result, net income (including changes in fair value) was also CHF 46.9 million (Q1 2015: CHF 38.2 million). Earnings per share (including changes in fair value) amounted to CHF 1.02 (Q1 2015: CHF 0.83).
Strong capital structure
With total equity of CHF 3.912 billion (end of 2015: CHF 3.870 billion) – corresponding to an equity ratio of 57.3% (end of 2015: 57.0%) – PSP Swiss Property had a strong capital base at the end of March 2016. Interest-bearing debt amounted to CHF 1.944 billion, corresponding to 28.5% of total assets (end of 2015: CHF 1.969 billion respectively 29.0%).
In mid-March 2016, PSP Swiss Property was able to settle the last open case relating to the negative CHF Libor with the remaining counterparty. Consequently, there are no more pending cases relating to the negative CHF Libor.
At the end of March 2016, the passing average interest rate was 1.53% (end of 2015: 1.53%). The average fixed-interest period was 4.5 years (end of 2015: 3.4 years).
No major committed bank loans will be due until 2019. Currently, PSP Swiss Property has unused committed credit lines totalling CHF 650 million.
In March 2016, the rating agency Fitch confirmed PSP Swiss Property Ltd’s rating with an “A-” and stable outlook.
Subsequent events
Based on a resolution of the annual General Meeting on 31 March 2016, a cash payment of CHF 3.30 per outstanding share (thereof CHF 1.80 from the capital contribution reserves and CHF 1.50 as ordinary dividend; totalling CHF 151.4 million) was made on 6 April 2016.
For the refinancing of financial liabilities, a 0.375% bond with a duration from 2016 to 2026 and a volume of CHF 100 million was issued on 29 April 2016.
Market environment
The investment demand, mainly from Swiss institutional investors, for high-class commercial properties in sought-after locations remains high.
In certain geographical areas, there is a structural oversupply of office space. Crowding out intensifies further, particularly for badly located properties with poor transportation links as well as objects with limited utilisation options. On the other hand, demand for centrally located buildings with good access to public transport as well as modern buildings with flexible office space is satisfactory. Overall, the absorption of the oversupply of office space (especially in peripheral areas of Zurich and Geneva) will take time.
In the retail sector, stores are increasingly rivalled by shopping trips abroad and the expanding online trade. Well frequented and prestigious locations are more resistant; although the market environment remains challenging, even in prime locations.
Outlook 2016
Due to the continuing low interest rates, demand for well-located commercial properties remains strong and the acquisition market highly competitive. When evaluating possible acquisition targets, we continue to pursue our conservative acquisition strategy focusing on prime properties in top locations with prospects of long-term capital appreciation.
Focus will be kept on the letting activities, the renovation and modernisation of selected properties as well as the further development of our sites and projects.
For 2016, an ebitda (excluding changes in fair value) of approximately CHF 240 million is expected (2015: CHF 232.7 million). With regard to vacancies, a rate of around 11% at the end of 2016 is expected, mainly because of expiries towards year-end (end of March 2016: 8.7%).
Key figures
Key financial figures | Unit | 2015 | Q1 2015 | Q1 2016 | Δ in %1 |
Rental income | CHF 1 000 | 275 063 | 68 175 | 69 402 | 1.8 |
EPRA like-for-like change | % | 0.2 | - 0.2 | 1.1 | |
Net changes in fair value of real estate investments | CHF 1 000 | 33 791 | 0 | 0 | |
Income from property sales (freehold apartments) | CHF 1 000 | 3 259 | 0 | 8 653 | |
Income from property sales (portfolio) | CHF 1 000 | 1 374 | 0 | 0 | |
Total other income | CHF 1 000 | 4 588 | 663 | 569 | |
Net income | CHF 1 000 | 187 726 | 38 165 | 46 900 | 22.9 |
Net income excl. gains/losses on real estate investments2 | CHF 1 000 | 161 287 | 38 165 | 46 900 | 22.9 |
Ebitda excl. gains/losses on real estate investments | CHF 1 000 | 232 690 | 55 808 | 64 996 | 16.5 |
Ebitda margin | % | 82.0 | 81.1 | 82.7 | |
Total assets | CHF 1 000 | 6 791 923 | 6 707 341 | 6 829 287 | 0.6 |
Shareholders’ equity | CHF 1 000 | 3 870 473 | 3 858 708 | 3 912 345 | 1.1 |
Equity ratio | % | 57.0 | 57.5 | 57.3 | |
Return on equity | % | 4.9 | 4.0 | 4.8 | |
Interest-bearing debt | CHF 1 000 | 1 969 035 | 1 918 594 | 1 944 140 | - 1.3 |
Interest-bearing debt in % of total assets | % | 29.0 | 28.6 | 28.5 | |
Portfolio key figures | | | | | |
Number of properties | Number | 163 | 161 | 164 | |
Carrying value properties | CHF 1 000 | 6 223 006 | 6 092 720 | 6 334 365 | 1.8 |
Implied yield, gross | % | 4.4 | 4.5 | 4.3 | |
Implied yield, net | % | 3.7 | 3.9 | 3.8 | |
Vacancy rate end of period (CHF) | % | 8.5 | 9.7 | 8.7 | |
Number of sites and development properties | Number | 8 | 10 | 8 | |
Carrying value sites and development properties | CHF 1 000 | 501 371 | 543 359 | 424 432 | - 15.3 |
Employees | | | | | |
End of period | Posts | 87 | 86 | 88 | |
Equal full-time employees | Posts | 81 | 81 | 82 | |
Per share figures | | | | | |
Earnings per share (EPS)3 | CHF | 4.09 | 0.83 | 1.02 | 22.9 |
EPS excl. gains/losses on real estate investments3 | CHF | 3.52 | 0.83 | 1.02 | 22.9 |
Distribution per share | CHF | 3.304 | n.a. | n.a. | |
Net asset value per share (NAV)5 | CHF | 84.38 | 84.13 | 85.30 | 1.1 |
NAV per share before deducting of deferred taxes5 | CHF | 100.83 | 100.01 | 101.82 | 1.0 |
Share price end of period | CHF | 88.00 | 91.65 | 92.50 | 5.1 |
1 | Change to Q1 2015 or carrying value as of 31 December 2015 as applicable. |
2 | “Net income excluding gains/losses on real estate investments” corresponds to the consolidated net income excluding net changes in fair value 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 | Based on average number of outstanding shares. |
4 | For the business year 2015: the distribution comprises a payment out of the capital contribution reserves (CHF 1.80) and a dividend paid from retained earnings (CHF 1.50). Cash payment was made on 6 April 2016. |
5 | Based on number of outstanding shares. |