Half-year results as per 30 June 2014

Real estate portfolio

At the end of June 2014, the real estate portfolio included 160 office and commercial properties. In addition, there were five development sites and five individual construction projects. The carrying value of the total portfolio was CHF 6.452 billion (end of 2013: CHF 6.466 billion). End of April 2014, the investment property on Albulastrasse 57 in Zurich was sold. During the reporting period, no investment properties were acquired.

The revaluation of the properties for the first six months of 2014 resulted in an appreciation of CHF 9.8 million. Thereby, various value drivers had a compensating effect: slightly higher market rents in top locations and a decline in the average weighted discount rate by 4 basis points had a positive effect. At the balance-sheet date, the portfolio’s weighted average nominal discount rate was 4.87% (end of 2013: 4.91%). Longer expected downtime periods between leases, adjustment of market rents in peripheral locations and higher renovation costs at a number of properties had a negative effect.

The apartment complex on the Gurten site in Wabern near Bern was completed in the second quarter of 2014. At the end of June 2014, all 99 apartments and both studios were sold. Until the end of 2014, the former brewing house and further commercial areas on the site will be renovated. The conversion of the two industrial buildings of the erstwhile bottling plant are currently in the evaluation phase. Work on the “Salmenpark” in Rheinfelden, the currently largest development project with an investment total of CHF 170 million (stage 1), proceeds according to plan. Construction began at the end of August 2013; completion is planned for 2016. 45% of the commercial units have already been pre-let and marketing for the remaining 3 600 m² or so of sales areas, for approximately 4 500 m² of office space and for 36 rental apartments began at the end of March 2014. At the end of June 2014, 34 of the 113 freehold apartments had been sold. New constructions and conversions on the other sites progressed as planned.

Vacancy rate

At the end of June 2014, the vacancy rate stood at 9.3% (end of 2013: 8.0%). 1.4 percentage points of the 9.3% were due to ongoing renovation work on various properties. The properties in Zurich West and Wallisellen with a carrying value of CHF 0.8 billion contributed 3.7 percentage points to the overall vacancy rate. The remaining properties with a carrying value of CHF 5.1 billion (i.e. the total investment portfolio excluding the objects under renovation as well as those in Zurich West and Wallisellen) made up 4.2 percentage points.

Of the lease contracts maturing in 2014 (CHF 42.1 million), 52% were renewed respectively extended at the end of June 2014.

Half-year results H1 2014

Net income excluding changes in fair value increased to CHF 87.4 million (H1 2013: CHF 85.2 million). Corresponding earnings per share amounted to CHF 1.91 (H1 2013: CHF 1.86). For PSP Swiss Property, net income excluding changes in fair value is the basis for the distribution to shareholders.

Net income including changes in fair value amounted to CHF 95.9 million (H1 2013: CHF 158.7 million). The decline is mainly due to the lower appreciation of the properties compared to the year-earlier period. Earnings per share including changes in fair value amounted to CHF 2.09 (H1 2013: CHF 3.46).

With CHF 138.4 million, rental income virtually remained at the level of the previous year’s period (CHF 138.1 million). Income from the sale of freehold apartments amounted to CHF 4.9 million (H1 2013: CHF 1.2 million). In the reporting period, 94 freehold apartments (of overall 99 units) and both studios on the Gurten site in Wabern near Bern as well as two freehold apartments on the Löwenbräu site in Zurich were transferred to their buyers. The sale of one investment property resulted in a profit of CHF 2.0 million (H1 2013: no sales). Total other income was CHF 3.5 million (H1 2013: CHF 4.5 million).

Operating expenses decreased by CHF 0.7 million to CHF 25.5 million (H1 2013: CHF 26.2 million). With CHF 15.9 million, financial expenses hardly changed (H1 2013: CHF 15.8 million).

At the end of June 2014, net asset value (NAV) per share was CHF 82.11 (end of 2013: CHF 83.70). NAV before deducting deferred taxes amounted to CHF 97.76 (end of 2013: CHF 99.25). It should be noted that a cash payment of CHF 3.25 per share was made at the beginning of April 2014.

Strong capital structure

With a loan-to-value of 28.8% (end of 2013: 28.1%), the capital structure remains very solid. Currently, unused committed credit lines amount to CHF 650 million.

Thanks to interest rate hedging transactions, PSP Swiss Property will continue to benefit from the low interest rate levels in the medium term. At the end of June 2014, the passing average interest rate was 1.76% (end of 2013: 1.85%). The average fixed-interest period was 3.7 years (end of 2013: 3.4 years). No major committed bank loans will mature until 2018.

In March 2014, the rating agency Fitch confirmed PSP Swiss Property Ltd’s rating with an “A-” and stable outlook.

Outlook 2014

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. In any case, 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 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 expects an Ebitda excluding changes in fair value of approximately CHF 235 million for 2014, which is above the previous forecast of CHF 230 million (2013: CHF 242.5 million). The decrease compared to last year is mostly due to a decline in rental income and lower income from the sale of condominiums.

With regard to vacancies, a rate of approximately 11% is still expected at year-end 2014 (end of June 2014: 9.3%). The increase results mainly from two larger vacancies, which will arise during the fourth quarter of 2014 at one property in Zurich (Central Business District) and one property in Zurich West.

Key figures

Key financial figures	Unit	2013	H1 2013	H1 2014	Δ in %1
Rental income	CHF 1 000	279 143	138 077	138 402	0.2
EPRA like-for-like rental change	%	1.7	-0.2	0.4
Net changes in fair value of real estate investments	CHF 1 000	128 144	95 735	9 872
Income from property sales	CHF 1 000	13 048	1 202	6 919
Total other income	CHF 1 000	6 088	4 487	3 480
Net income	CHF 1 000	270 993	158 731	95 877	-39.6
Net income excl. gains/losses on real estate investments2	CHF 1 000	173 643	85 210	87 433	2.6
Ebitda excl. gains/losses on real estate investments	CHF 1 000	242 480	117 890	122 050	3.5
Ebitda margin	%	81.3	82.0	83.0
Total assets	CHF 1 000	6 541 812	6 504 249	6 518 630	-0.4
Shareholders’ equity	CHF 1 000	3 839 230	3 728 541	3 766 070	-1.9
Equity ratio	%	58.7	57.3	57.8
Return on equity	%	7.2	8.6	5.0
Interest-bearing debt	CHF 1 000	1 838 784	1 948 383	1 878 391	2.2
Interest-bearing debt in % of total assets	%	28.1	30.0	28.8
Portfolio key figures
Number of properties	Number	161	165	160
Carrying value properties	CHF 1 000	6 033 930	6 181 268	6 054 849	0.3
Implied yield, gross	%	4.6	4.6	4.5
Implied yield, net	%	3.9	3.9	3.9
Vacancy rate end of period (CHF)	%	8.0	9.1	9.3
Number of sites and development properties	Number	10	9	10
Carrying value sites and development properties	CHF 1 000	431 647	247 034	397 315	-8.0
Employees
End of period	Posts	86	87	89
Equal full-time employees	Posts	79	80	82
Per share figures
Earnings per share (EPS)3	CHF	5.91	3.46	2.09	-39.6
EPS excl. gains/losses on real estate investments3	CHF	3.79	1.86	1.91	2.6
Distribution per share	CHF	3.254	n.a.	n.a.
Net asset value per share (NAV)5	CHF	83.70	81.29	82.11	-1.9
NAV share before deducting deferred taxes5	CHF	99.25	96.52	97.76	-1.5
Share price end of period	CHF	75.50	81.80	83.50	10.6

1	Change to H1 2013 or carrying value as of 31 December 2013 as applicable.
2	“Net income excluding gains/losses on real estate investments” corresponds to the consolidated 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	Based on average number of outstanding shares.
4	For the 2013 business year. Cash payment was made on 10 April 2014.
5	Based on number of outstanding shares.

Further information

Giacomo Balzarini, CFO	Vasco Cecchini, CCO
Tel. +41 (0)44 625 59 59	Tel. +41 (0)44 625 57 23
Mobile +41 (0)79 562 20 72	Mobile +41 (0)79 650 83 42

H1 2014 report and presentation

Both documents are available as PDF on www.psp.info.

http://www.psp.info/reports

http://www.psp.info/presentations

Agenda

Publication Q3 2014 Publication FY 2014	14 November 2014 27 February 2015
Annual General Meeting 2015	1 April 2015
Publication Q1 2015	12 May 2015

PSP Swiss Property – leading Swiss real estate company

PSP Swiss Property owns office and commercial properties valued at around CHF 6.5 billion in prime locations in Switzerland’s main economic areas; its market capitalisation amounts to CHF 3.8 billion. The 89 employees are based in Geneva, Olten, Zug and Zurich.

Since March 2000, PSP Swiss Property is listed on the SIX Swiss Exchange (symbol: PSPN, security number: 1829415, ISIN CH0018294154).

None of the information in this press release constitutes an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. None of the securities of the Company referred to in this press release have been or will be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), or under the applicable securities laws of any state or other jurisdiction of the United States.