Real estate portfolio
At the end of September 2012, the real estate portfolio included 164 office and commercial properties in prime locations. In addition, there were seven development sites and three individual construction projects. The carrying value of the total portfolio stood at CHF 6.101 billion (end of 2011: CHF 5.958 billion).
Early 2012, PSP Swiss Property decided to invest approximately CHF 26 million in a health spa on the grounds of the Lido in Locarno. Construction of the building complex, which is already let to an expert operating company, will presumably last until mid-2013. Furthermore, four properties were sold in the reporting period for a total of CHF 14.4 million.
The ongoing site developments progressed as planned.
Vacancy rate
At the end of September 2012, the vacancy rate stood at 9.2% (end of 2011: 8.3%). 2.0 percentage points of the 9.2% were due to ongoing renovation work on various properties: 0.6 percentage points related to the property on Route des Acacias 50/52 in Carouge. 0.5 percentage points came from the property on Laupenstrasse 18/18a in Bern. 0.4 percentage points were due to the renovation of the property on Aarbergstrasse 94 in Biel. The properties in Zurich West and Wallisellen (carrying value CHF 0.9 billion) contributed 3.9 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 3.3 percentage points.
Of the lease contracts maturing in 2012 (CHF 36.3 million), 84% had already been renewed respectively extended at the end of September 2012.
Interim results Q1 to Q3 2012
Net income excluding changes in fair value increased from CHF 113.1 million to CHF 122.5 million compared to the previous year’s period. This increase was mainly due to the sale of the arts space on the Löwenbräu site in Zurich and lower financial expenses. Corresponding earnings per share amounted to CHF 2.75 (previous year’s period: CHF 2.64). For PSP Swiss Property, net income excluding changes in fair value is the basis for the distributions to shareholders. Net income including changes in fair value amounted to CHF 215.5 million (previous year’s period: CHF 234.3 million). The decrease resulted from a lower appreciation of the properties at mid-year 2012 compared to H1 2011. Earnings per share including changes in fair value amounted to CHF 4.83 (previous year’s period: CHF 5.46).
Rental income remained stable at CHF 204.3 million (previous year’s period: CHF 203.9 million). Overall operating expenses increased slightly by CHF 1.5 million to CHF 41.2 million. Due to lower interest-bearing debt and a lower average interest rate, financial expenses declined by CHF 5.8 million to CHF 28.9 million compared to the previous year’s period.
At the end of September 2012, net asset value (NAV) per share was CHF 77.22 (end of 2011: CHF 75.28). NAV before deducting deferred taxes amounted to CHF 90.99 (end of 2011: CHF 89.02). It should also be mentioned that a dividend payment of CHF 3.00 per share was made mid of April 2012.
Strong capital structure, decreasing interest expenses
With a loan-to-value of 29.6% (end of 2011: 32.2%), the capital structure remains very solid. At the end of September 2012, unused credit lines (all committed) amounted to CHF 430 million, i.e. after bond repayments totalling CHF 290 million during the reporting period; currently, the unused credit lines amount to CHF 510 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. At the end of September 2012, the passing average interest rate amounted to 2.16% (end of 2011: 2.49%) and the average fixed-interest period was 3.8 years (end of 2011: 2.9 years). No bank loans will mature until 2015.
At the end of March 2012, the rating agency Fitch confirmed PSP Swiss Property Ltd’s rating with an “A-” and stable outlook.
Outlook 2012
PSP Swiss Property is confident about the prospects due to its well-established market position, its strong capital base and the high quality of its property portfolio.
The economic environment will be kept observed – in Switzerland, in Europe and globally. Even if Switzerland has been able to avoid the bigger problems of many Eurozone countries so far, the turbulences on the financial markets, the issues related to the international sovereign debt problems and the strong franc might adversely affect the country’s economy in the mid to long term. Therefore, PSP Swiss Property will stick to its long-term value enhancing acquisition strategy and conservative financing policy.
Based on the assumption of an unchanged property portfolio, the 2012 EBITDA forecast (excluding gains/losses on real estate investments) of “approximately CHF 235 million” is being confirmed (2011: CHF 232.5 million). A lower vacancy rate than originally expected of “less than 8.5%” is foreseen for the end of the year (previously: “approximately 9%”).
Concerning the sites and projects, the focus will be on two sites in Zurich, the Hürlimann site (conversion of the “Kesselhaus” to be completed by year-end 2012) 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.
Key figures
Key financial figures | Unit | 2011 | Q1-3 2011 | Q1-3 2012 | Δ in %1 |
Rental income | CHF 1 000 | 270 675 | 203 865 | 204 337 | 0.2 |
EPRA like-for-like rental growth | % | 2.0 | 2.4 | 1.8 | |
Net changes in fair value of real estate investments | CHF 1 000 | 325 068 | 152 816 | 119 309 | |
Income from property sales | CHF 1 000 | 7 504 | 8 143 | 12 105 | |
Total other income | CHF 1 000 | 10 337 | 7 842 | 6 265 | |
Net income | CHF 1 000 | 403 994 | 234 268 | 215 446 | - 8.0 |
Net income excl. gains/losses on real estate investments2 | CHF 1 000 | 149 020 | 113 127 | 122 517 | 8.3 |
EBITDA excl. gains/losses on real estate investments | CHF 1 000 | 232 532 | 176 892 | 182 016 | 2.9 |
EBITDA margin | % | 81.5 | 81.9 | 81.7 | |
Total assets | CHF 1 000 | 6 050 916 | 5 803 060 | 6 181 066 | 2.2 |
Shareholders’ equity | CHF 1 000 | 3 268 894 | 3 087 741 | 3 537 842 | 8.2 |
Equity ratio | % | 54.0 | 53.2 | 57.2 | |
Return on equity | % | 13.0 | 10.4 | 8.4 | |
Interest-bearing debt | CHF 1 000 | 1 946 894 | 2 006 482 | 1 828 039 | - 6.1 |
Interest-bearing debt in % of total assets | % | 32.2 | 34.6 | 29.6 | |
Portfolio key figures | | | | | |
Number of properties | Number | 168 | 168 | 164 | |
Carrying value properties | CHF 1 000 | 5 611 591 | 5 427 584 | 5 827 889 | 3.9 |
Implied yield, gross3 | % | 4.9 | 5.0 | 4.7 | |
Implied yield, net3 | % | 4.2 | 4.3 | 4.0 | |
Vacancy rate end of period (CHF)3, 4 | % | 8.3 | 8.6 | 9.2 | |
Number of sites and development properties | Number | 9 | 8 | 10 | |
Carrying value sites and development properties | CHF 1 000 | 346 879 | 286 221 | 273 287 | - 21.2 |
Employees | | | | | |
End of period | Posts | 84 | 83 | 85 | |
Equal full-time employees | Posts | 77 | 77 | 79 | |
Per share figures | | | | | |
Earnings per share (EPS)5 | CHF | 9.40 | 5.46 | 4.83 | - 11.7 |
EPS excl. gains/losses on real estate investments5 | CHF | 3.47 | 2.64 | 2.75 | 4.0 |
Distribution per share | CHF | 3.006 | n.a. | n.a. | |
Net asset value per share (NAV)7 | CHF | 75.28 | 71.33 | 77.22 | 2.6 |
NAV share before deducting deferred taxes7 | CHF | 89.02 | 84.11 | 90.99 | 2.2 |
Share price end of period | CHF | 78.60 | 81.70 | 85.45 | 8.7 |
1 | Change to Q1-3 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. |