Net income (excluding changes in fair value) amounted to CHF 138.2 million. This 4.6% increase compared to the previous year (Q1–Q3 2016: CHF 132.0 million) resulted mainly through the sale of the residential project “Salmenpark II” in Rheinfelden. At the end of September 2017, NAV per share amounted to CHF 84.47 (end of 2016: CHF 84.30). In this regard, it should be considered that on 11 April 2017, a dividend of CHF 3.35 per share was paid out.
Press release
14 November 2017
Quarterly results as per 30 September 2017
PSP Swiss Property – Pleasing operating earnings. Confirmation of FY 2017 ebitda guidance.
Net income (excluding changes in fair value) amounted to CHF 138.2 million. This 4.6% increase compared to the previous year (Q1–Q3 2016: CHF 132.0 million) resulted mainly through the sale of the residential project “Salmenpark II” in Rheinfelden. At the end of September 2017, NAV per share amounted to CHF 84.47 (end of 2016: CHF 84.30). In this regard, it should be considered that on 11 April 2017, a dividend of CHF 3.35 per share was paid out.
Real estate portfolio
At the end of September 2017, the real estate portfolio included 158 office and commercial properties and twelve sites/projects. The carrying value of the total portfolio stood at CHF 6.954 billion (end of 2016: CHF 6.894 billion).
The development projects progressed as planned. Highlights are the lettings on the new construction “Grosspeter Tower” in Basel (70% let) and on the two renovation projects “Hardturmstrasse / Förrlibuckstrasse” in Zurich West (75% let) and “Rue du Marché” in Geneva (70% let). Construction of the “Orion” project in Zurich West will start in 2018. High-quality, flexibly partitionable office areas and attractive surroundings are planned. The investment total will be approximately CHF 130 million.
Vacancy rate
At the end of September 2017, the vacancy rate stood at 8.3% (end of 2016: 9.3%). 0.6 percentage points of these 8.3% were due to ongoing renovations. Another 1.5 percentage points are related to theproperty located at Av. des Morgines 8/10 in Petit-Lancy.
Quarterly results Q1-Q3 2017
During the reporting period, net income (excluding changes in fair value) reached CHF 138.2 million (Q1–Q3 2016: CHF 132.0 million). The increase compared to the previous year’s period resulted mainly from the higher income from condominium sales; this income increased by CHF 6.8 million to CHF 19.9 million (Q1–Q3 2016: CHF 13.1 million). Thereof, the sale of the residential project “Salmenpark II” in Rheinfelden during Q3 2017 accounted for CHF 17.8 million. Rental income decreased by CHF 3.4 million, in particular because of the lease termination by the single tenant at the property Av. des Morgines 8/10 in Petit-Lancy. Earnings per share (excluding changes in fair value) amounted to CHF 3.01 (Q1–Q3 2016: CHF 2.88).
Operating expenses decreased by CHF 1.3 million to CHF 41.8 million (Q1–Q3 2016: CHF 43.1 million). Financial expenses decreased by CHF 1.3 million to CHF 19.0 million (Q1–Q3 2016: CHF 20.3 million).
Net income (including changes in fair value) was CHF 165.1 million (Q1–Q3 2016: CHF 102.8 million). The increase compared to the previous year’s period was mainly caused by the semi-annual revaluation of the properties, which resulted in an overall appreciation of CHF 17.7 million (Q1–Q3 2016: depreciation of CHF 38.4 million), as well as by higher income from condominium/project sales. Furthermore, tax expenses decreased by CHF 2.1 million to CHF 20.6 million (Q1–Q3 2016: CHF 22.7 million). In this regard, it should be considered that the new lower corporate tax rate in the Canton of Vaud was applied in Q3 2017. This resulted in a positive effect (release of deferred taxes) in the amount of CHF 17.0 million. Thereof, CHF 12.9 million are related to revaluations of the property portfolio and do not impact the net result excluding changes in fair value. Earnings per share (including changes in fair value) amounted to CHF 3.60 (Q1–Q3 2016: CHF 2.24).
Strong capital structure
With total equity of CHF 3.893 billion (end of 2016: CHF 3.867 billion) – corresponding to an equity ratio of 53.4% (end of 2016: 54.9%) – the capital base remains strong.
Interest-bearing debt amounted to CHF 2.511 billion, corresponding to 34.5% of total assets (end of 2016: CHF 2.248 billion respectively 31.9%). In order to lengthen the interest fixing period, a bond and the private placement were increased by overall CHF 225 million during the reporting period. In this context, fixed-term deposits were increased by CHF 175 million to CHF 275 million. Excluding these CHF 275 million, interest-bearing debt amounts to CHF 2.236 billion, corresponding to 31.9% of total assets.
At the end of September 2017, the passing average interest rate was 0.99% (end of 2016: 1.28%). The average fixed-interest period was 3.8 years (end of 2016: 4.3 years). No major committed bank loans will be due until 2019. Currently, unused committed credit lines amount to CHF 740 million.
PSP Swiss Property has ratings from two international rating agencies: Senior Unsecured Rating A- (outlook stable) from Fitch and A3 Issuer Rating (outlook stable) from Moody’s.
Market environment and outlook 2017
PSP Swiss Property expects the office and retail property market to remain challenging. One positive aspect is the fact that the office market seems to be stabilising, especially in good locations. Due to the improved economic growth forecasts for 2017 and 2018, the demand for office space might pick up.
The acquisition market for prime objects is expected to remain highly competitive. This is due to the continuing low interest rates and the resulting investment plight of institutional investors.
The focus of PSP Swiss Property remains on the renovation and modernisation of selected properties, the further development of our sites and projects as well as the letting activities.
For FY 2017, ebitda (excluding changes in fair value) of above CHF 240 million, as published mid-year, is confirmed (2016: CHF 241.6 million).
With regard to the vacancies at year-end 2017, a lower rate of below 8.5% is now expected (previously: 8.5%; end of September 2017: 8.3%).
Key figures
Key financial figures | Unit | 2016 | Q1-3 2016 | Q1-3 2017 | +/-1 |
Rental income | CHF 1 000 | 276 316 | 207 711 | 204 272 | -1.7% |
EPRA like-for-like change | % | -1.6 | -1.4 | -1.32 | |
Net changes fair value real estate investments | CHF 1 000 | -50 208 | -38 407 | 17 739 | |
Income property sales (condominiums) | CHF 1 000 | 14 224 | 13 108 | 19 896 | |
Income property sales (investment properties) | CHF 1 000 | 1 354 | 1 075 | 308 | |
Total other income | CHF 1 000 | 6 291 | 5 374 | 4 341 | |
Net income | CHF 1 000 | 134 867 | 102 772 | 165 138 | 60.7% |
Net income excl. gains/losses on real estate investments3 | CHF 1 000 | 172 548 | 132 032 | 138 152 | 4.6% |
Ebitda excl. gains/losses on real estate investments | CHF 1 000 | 241 572 | 184 618 | 187 405 | 1.5% |
Ebitda margin | % | 81.3 | 81.5 | 82.0 | |
Total assets | CHF 1 000 | 7 041 368 | 6 943 844 | 7 285 981 | 3.5% |
Shareholders’ equity | CHF 1 000 | 3 866 754 | 3 825 298 | 3 892 691 | 0.7% |
Equity ratio | % | 54.9 | 55.1 | 53.4 | |
Return on equity | % | 3.5 | 3.6 | 5.7 | |
Interest-bearing debt | CHF 1 000 | 2 248 436 | 2 178 438 | 2 510 896 | 11.7% |
Interest-bearing debt in % of total assets | % | 31.9 | 31.4 | 34.54 | |
Portfolio key figures | |||||
Number of investment properties | Number | 161 | 161 | 158 | |
Carrying value investment properties | CHF 1 000 | 6 297 968 | 6 249 941 | 6 315 126 | 0.3% |
Implied yield, gross | % | 4.3 | 4.3 | 4.2 | |
Implied yield, net | % | 3.6 | 3.7 | 3.6 | |
Vacancy rate end of period (CHF) | % | 9.3 | 9.4 | 8.3 | |
Number of sites/development properties | Number | 10 | 10 | 12 | |
Carrying value sites/development properties | CHF 1 000 | 595 885 | 633 704 | 639 088 | 7.3% |
Employees | |||||
End of period/Equal FTE | People | 90/84 | 90/82 | 86/81 | |
Per share figures | |||||
Earnings per share (EPS)5 | CHF | 2.94 | 2.24 | 3.60 | 60.7% |
EPS excl. gains/losses on real estate investments5 | CHF | 3.76 | 2.88 | 3.01 | 4.6% |
Distribution per share | CHF | 3.356 | n.a. | n.a. | |
Net asset value per share (NAV)7 | CHF | 84.30 | 83.40 | 84.87 | 0.7% |
NAV per share before deferred taxes7 | CHF | 100.95 | 99.97 | 101.59 | 0.6% |
Share price end of period | CHF | 88.00 | 92.50 | 89.20 | 1.4% |
1 | Change to Q1-3 2016 or carrying value as of 31 December 2016 as applicable. |
2 | +0.6%, excl. property Av. des Morgines 8/10 in Petit-Lancy. |
3 | “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 sales of investment properties 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 | LTV, excluding CHF 275 million of fixed-term deposits (made in relation to private placement and bond issue) would amount to 31.9%. |
5 | Based on average number of outstanding shares. |
6 | For the business year 2016. Cash payment was made on 11 April 2017. |
7 | Based on number of outstanding shares. |