Real estate portfolio
At the end of September 2010, the real estate portfolio included 178 office and commercial properties in prime locations as well as 7 attractive development sites with a total carrying value of CHF 5.369 billion (end of 2009: CHF 5.216 billion). During the reporting period, a property in Zurich was bought for CHF 45.1 million and five small assets from the investment portfolio were sold for a total consideration of CHF 15.0 million, resp. 21.4% above the last valuation.
Work on the development sites progressed as planned. The following developments are worth mentioning: i) Gurten site, Wabern near Bern: the building application for this project (conversion of existing properties and construction of new buildings) was submitted at the end of February 2010. Construction is scheduled to begin in mid-2011; this means that the project should be completed by the end of 2013. ii) Löwenbräu site, Zurich: The whole project will be realised stepwise by 2013. The first expansions and conversions are likely to be completed in 2011. The sale of the freehold apartments began in the second quarter of 2010 and is very promising. After the balance sheet date, a part of the site (art galleries and museums) was sold to the funding body of "Löwenbräu-Kunst AG", of which the City of Zurich holds a stake. The transfer of ownership will occur after completion of the construction, presumably in spring 2012.
Vacancy rate
At the end of September 2010, the vacancy rate stood at 9.0% (end of 2009: 7.5%). As expected and already communicated, the increase since the end of 2009 is due to the completion of the two new buildings in Wallisellen.
Of the 9.0%, 1.2 percentage points were due to ongoing renovation work on various properties. The properties in Zurich West and Wallisellen (carrying value CHF 0.8 billion) contributed 5.5 percentage points to the overall vacancy rate. The contribution by the core investment portfolio with a carrying value of CHF 4.3 billion (i.e. the investment properties excluding the objects under renovation as well as those in Zurich West and Wallisellen) is just 2.3 percentage points.
Quarterly results January to September 2010
Net income excluding changes in fair value increased by CHF 3.7 million to CHF 108.4 million. Corresponding earnings per share amounted to CHF 2.56 or 2.0% more than in the previous year's period (CHF 2.51).
The improved results compared to the previous year's period was mainly driven by the following factors: income from discontinued operations, lower operating expenses thanks to strict cost management as well as lower interest expenses.
Solid capital structure, low interest expenses
With a loan-to-value of 37.2% (end of 2009: 37.2%), the capital structure remains very solid. During the reporting period, interest rate hedging transactions were concluded, which will allow PSP Swiss Property to continue benefiting from the historically low interest rate levels in the medium term. No bank loans will be due until 2013; bonds totalling CHF 290 million will mature in 2012. PSP Swiss Property has unused credit lines of CHF 600 million. This substantial amount allows the Company to continue to flexibly manage its capital and is an excellent basis for acquisitions.
In the reporting period, the average interest rate was 2.58% (previous year's period: 2.52% resp. 2.54% for the whole 2009 business year). At the end of September 2010, the average fixed-interest period was 3.3 years (end of 2009: 3.0 years).
Outlook 2010
Due to the better than expected business development, the EBITDA forecast for the entire 2010 business year has been uplifted to "above CHF 215 million".
The vacancy rate forecast for the year-end has also been improved, and is expected to be below 9%.
