Quarterly report Q1 Q3. Short report

Transcription

1 2017 Quarterly report Q1 Q3 Short report

2 2 PSP Swiss Property Short report Q1 Q Key figures Key financial figures Unit 2016 Q Q Q1 Q Q1 Q / 1 Rental income CHF % EPRA like-for-like change % Net changes in fair value of real estate investments CHF Income from property sales (freehold apartments) CHF Income from property sales (investment properties) CHF Total other income CHF Net income CHF % Net income excluding gains/losses on real estate investments 3 CHF % Ebitda excluding gains/losses on real estate investments CHF % Ebitda margin % Total assets CHF % Shareholdersʼ equity CHF % Equity ratio % Return on equity % Interest-bearing debt CHF % Interest-bearing debt in % of total assets % Portfolio key figures Number of properties Number Carrying value properties CHF % Implied yield, gross 5 % Implied yield, net 5 % Vacancy rate (CHF) 5, 6 % Number of sites and development properties Number Carrying value sites and development properties CHF % Employees End of period People Full-time equivalents FTE Per share figures Earnings per share (EPS) 7 CHF % EPS excluding gains/losses on real estate investments 7 CHF % Distribution per share CHF n.a. n.a. n.a. n.a. Net asset value per share (NAV) 9 CHF % NAV per share before deduction of deferred taxes 9 CHF % Share price end of period CHF % 1 Change to previous year s period 1 January to 30 September 2016 or carrying value as of 31 December 2016 as applicable. 2 Excl. property at Av. des Morgines 8/10 in Petit-Lancy: %. 3 See definition Net income excluding gains/losses on real estate investments on page 6, footnote 1. 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 For investment properties. 6 Equals the lost rental income in % of the potential rent, as per reporting date. 7 Based on average number of outstanding shares. 8 For the 2016 business year. Cash payment was made on 11 April Based on number of outstanding shares.

3 PSP Swiss Property Short report Q1 Q Portfolio value in CHF billion Shareholders equity in CHF billion Vacancy rate end of period in % Return on equity in % Ebitda 81.3 % % % Q Net income components 82.0 % 81.8 % % Q % % % 8.3% % % 10.0 % 8.0 % Shareholders equity 9.3 % Real estate portfolio Ebitda margin in % Q Q Ebitda excl. gains/losses on real estate investments in CHF million Q Q Net income excl. gains/losses on real estate investments in CHF million Contribution gains/losses on real estate investments in CHF million 3

4 4 PSP Swiss Property Short report Q1 Q Q1 Q report In good locations, the office market seems to be stabilising. In the wake of an economic upswing, demand might pick up. Market environment Competition on the letting market for commercial space remains strong; thereby, location and quality of the properties are crucial for success. One positive aspect is the fact that the office market seems to be stabilising, at least in good locations, especially in Zurich s city centre. In Zurich West, we observe lively interest in modern office space. If the promising economic outlook for 2018 is correct, the demand for office space might accelerate even more. Interest rates still hardly moved from their historically low levels in Q and fixed income investments remain unattractive. Consequently, institutional investors continue to look for qualitative real estate investments providing a positive, stable yield. Demand for the purchase of prime commercial properties is unlikely to decline in the foreseeable future. Letting market Office In Switzerland as a whole, there is still a lot of vacant office space. However, at least in our main market, Zurich, the pace of new constructions is decreasing slightly, except in Zurich North. Here, building activity continues and vacancies keep growing, while rents are declining moderately. Especially in peripheral regions, the reduction of vacancies is likely to take years. The situation is markedly better in economic centres. Central office locations in Zurich have been doing particularly well recently. The situation is stable in Basel. However, supply of office space will expand in the coming years due to a number of new construction projects. The demand for office space is relatively brisk, especially from the life-sciences, insurance and IT sectors. The most difficult market is Geneva. Here, demand remains stagnant. In addition, supply will expand due to new construction projects, especially in outlying districts. Furthermore, Geneva is still behind Zurich with regard to the consolidation of the financial sector. Consequently, the trend for rents in Geneva remains negative. Overall, we do not expect office rents to rise quickly. On the other hand, the signs of a pickup in demand in central locations are encouraging. It remains to be seen, however, whether this will lead to a sustainable market recovery. Retail The situation on the market for retail space remains tense and demand is subdued. Shopping tourism and online shopping keep pressure on rents. Central locations ( high street retail ) are more resilient. Most of our retail properties are located in this more stable market segment. Portfolio At the end of September 2017, our real estate portfolio included 158 office and commercial properties. In addition, we had twelve sites respectively projects. The carrying value of the total portfolio was CHF 7.0 billion.

5 PSP Swiss Property Short report Q1 Q Investment properties On 3 April 2017, we sold the property located at Eisenbahnstrasse 95 in Gwatt (Thun) for CHF 7.0 million. We did not purchase any investment properties in the reporting period. Along with regular smaller renovations we do in our investment portfolio, several of our buildings are going through an extensive modernisation process. We are currently focusing on Zurich s city centre, several properties in Zurich West as well as one property each in Geneva and Lausanne. In 2017 and 2018, we invest around CHF 100 million for renovations and conversions in our investment properties. Vacancy 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. Of the lease contracts maturing in 2017 (CHF 31.4 million), 90 % were renewed respectively extended at the end of September As at year-end 2017, we expect a vacancy rate of below 8.5 %. Sites and development properties The ongoing work at several projects proceeded as planned during the reporting period. The most important developments in short: The new construction Grosspeter Tower in Basel will be completed by the end of The current letting rate of 70 % is encouraging. The Ibis Style Business Hotel on the lower floors has been in operation since spring Furthermore, 10 of the 22 floors (all office space) have already been let. The Grosspeter Tower has an imposing exterior and meets the most stringent criteria with regard to sustainability and technology. A fully integrated photovoltaic installation will generate enough power to cover the basic electricity needs of the building. For that reason, the Grosspeter Tower recently received the Swiss Solar Award At the Rue du Marché project in Geneva, the comprehensive renovation will cost around CHF 30 million and last until With the international hotel group citizenm, we have a prominent anchor tenant. citizenm will open a 144-room boutique hotel following the renovation. The remaining space, which is partly let, will be dedicated to retail. Construction of the Residenza Parco Lago in Paradiso (Lugano) with m 2 floor space (predominantly condominiums) started in March The investment total will amount to approximately CHF 80 million. Once completed, we will sell all units towards the end of The project Bahnhofquai/Bahnhofplatz in Zurich (total renovation, particularly infrastructure and technical installations) consists of several properties and will be carried out in three stages: Renovation work for stage 1 (Bahnhofplatz 1, Bahnhofquai 9/11/15) will cost approximately CHF 51 million. Work began in June 2017 and is likely to take around two years. Most of the space will be dedicated to offices and retail use. CBRE has been appointed as letting agent. For stage 2 (Waisenhausstrasse 2/4, Bahnhofquai 7) our chosen project was approved by the City Historical Building Committee in May The project includes a restaurant, like before the renovation. For the remaining space, both office and hotel options are being assessed. From todayʼs perspective, capital expenditure will amount to approximately CHF 33 million. We plan to submit the building permission request in spring 2018.

6 6 PSP Swiss Property Short report Q1 Q Stage 3 (Bahnhofplatz 2) is under review. Our cost estimate for this renovation is approximately CHF 12 million. There are still ongoing lease agreements. The Hardturmstrasse / Förrlibuckstrasse project (investment total approximately CHF 60 million) in Zurich West is also on track. This property will undergo a comprehensive renovation and will be upgraded to modern standards in terms of technical installations by the end of The building will allow flexible and individual office layouts. 60 % of the space is already let. Space demand is originated among others from telecommunications, medtech, IT and energy firms. In 2018, we will start the Orion project in Zurich West (a replacement building for two properties). High-quality, flexibly partitionable office areas are planned. The investment total will be approximately CHF 130 million. The Salmenpark II residential project in Rheinfelden was sold for CHF 27.6 million on 18 August For further information on the current projects see pages 50 to 51. Consolidated quarterly results (January to September 2017) During the reporting period, we achieved a net income (excluding gains/losses on real estate investments) 1 of CHF million (Q1 Q3 2016: CHF million). The increase resulted mainly from the higher income from condominium sales compared to the previous year s period; 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 Q 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 located at Av. des Morgines 8/10 in Petit-Lancy. Earnings per share (excluding gains/losses on real estate investments) amounted to CHF 3.01 (Q1 Q3 2016: CHF 2.88); this EPS forms the basis for the distribution to shareholders. 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 gains/losses on real estate investments) was CHF million (Q1 Q3 2016: CHF 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 Q 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 gains/losses on real estate investments. Earnings per share (including gains/losses on real estate investments) amounted to CHF 3.60 (Q1 Q3 2016: CHF 2.24). At the end of September 2017, net asset value (NAV) per share was CHF (end of 2016: CHF 84.30); in this regard, the dividend payment made on 11 April 2017 of CHF 3.35 per share must be taken into account. NAV before deducting deferred taxes amounted to CHF (end of 2016: CHF ). 1 Net income excluding gains/losses on real estate investments corresponds to the consolidated annual 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.

7 PSP Swiss Property Short report Q1 Q Capital management With total equity of CHF billion (end of 2016: CHF billion) corresponding to an equity ratio of 53.4 % (end of 2016: 54.9 %) the capital base remained strong at the end of September Interest-bearing debt amounted to CHF billion, corresponding to 34.5 % of total assets (end of 2016: CHF 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 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 At the end of September 2017, we had unused committed credit lines of CHF 730 million. PSP Swiss Property has ratings from two international rating agencies: a Senior Unsecured Rating A- (outlook stable) from Fitch and an A3 Issuer Rating (outlook stable) from Moody s. Subsequent events Outlook The outlook for Switzerland s economy as a whole is positive. Nevertheless, the property market will remain a challenge, especially in peripheral regions. In this competitive market, location and quality of the properties are key factors for rental success. Landlords that offer state-ofthe-art new buildings or comprehensively renovated and upgraded properties in good locations have a competitive advantage. This holds true for both office buildings and the retail sector. Our focus remains on the renovation and modernisation of selected properties, the further development of our sites and projects as well as the letting activities. Due to the continuing low interest rates and the resulting investment plight of institutional investors, competition on the acquisition market for top properties will remain fierce. For the 2017 business year, we expect an ebitda (excluding gains/losses on real estate investments) of more than CHF 240 million (2016: CHF million). With regard to the vacancies at year-end 2017, we now expect a lower rate of below 8.5 % (previous forecast: 8.5 %; end of September 2017: 8.3 %). The Executive Board, November 2017 There were no material subsequent events.

8 8 PSP Swiss Property Short Short report report Q1 Q3 Q1 Q Portfolio summary Q C A D E 2 B 6 5 Areas 4 Sites 8 Projects Project pipeline 1 Basel, project Grosspeter Tower CHF 120 million 2 Lausanne, project Rue Saint-Martin CHF 13 million 3 Zurich, project Hardturmstrasse / Förrlibuckstrasse 4 Zurich, project Bahnhofquai/-platz CHF 60 million CHF 51 million (stage 1) CHF 45 million (stages 2 & 3) 5 Paradiso, Residenza Parco Lago CHF 80 million 6 Geneva, project Rue du Marché CHF 30 million 7 Zurich, project Orion CHF 130 million

9 PSP Swiss PSP Swiss Property Property Short Short report Q1 Q Portfolio value by area 9% Sites and development properties 6% Other locations 5% Lausanne 4% Bern 8% Basel 58% Zurich 11% Geneva Portfolio key figures A Zurich area B Geneva area Portfolio value CHF 4.0 billion Portfolio value CHF 0.7 billion Rental income CHF million Rental income CHF 19.6 million Implied yield, net 3.5 % Vacancy rate 6.3 % Rentable area m² Implied yield, net 2.7 % Vacancy rate 17.4 % Rentable area m² C Basel area D Bern area Portfolio value CHF 0.5 billion Portfolio value CHF 0.3 billion Rental income CHF 18.6 million Rental income CHF 9.6 million Implied yield, net 3.9 % Vacancy rate 2.2 % Rentable area m² Implied yield, net 3.8 % Vacancy rate 10.4 % Rentable area m² E Lausanne area Other locations Portfolio value CHF 0.3 billion Portfolio value CHF 0.4 billion Rental income CHF 12.9 million Rental income CHF 14.6 million Implied yield, net 4.3 % Vacancy rate 6.7 % Rentable area m² Implied yield, net 4.1 % Vacancy rate 15.8 % Rentable area m²

10 10 PSP Swiss Property Short report Q1 Q Rent by use 5% Parking 4% Gastronomy 11% Other 17% Retail 62% Office Rent by type of tenant 17% Other 20% Retail 6% Government 8% Gastronomy 19% Services 9% Financial services 9% Technology 12% Telecommunication Rent by largest tenants 11% Swisscom 69% Other 4% Google 2% Roche 2% Schweizer Post 2% Bär & Karrer 9% Next five largest tenants

11 PSP Swiss Property Short report Q1 Q Dornacherstrasse 210, Basel

12 12 PSP Swiss Property Short report Q1 Q3 2017

13 PSP Swiss Property Short report Q1 Q Laupenstrasse 18 / 18a, Bern

14 14 PSP Swiss Property Short report Q1 Q Consolidated statement of profit or loss (January to September) (in CHF 1 000) Q1 Q Q1 Q Rental income Net changes in fair value of real estate investments Income from property sales (inventories) Expenses from sold properties (inventories) Income from other property sales Income from investments in associated companies 10 7 Capitalised own services Other income Total operating income Real estate operating expenses Real estate maintenance and renovation expenses Personnel expenses Fees to subcontractors General and administrative expenses Impairment charge properties Depreciation Total operating expenses Operating profit (ebit) Financial income Financial expenses Profit before income taxes Income taxes Net income attributable to shareholders of PSP Swiss Property Ltd Earnings per share in CHF (basic and diluted) Consolidated statement of comprehensive income (January to September) (in CHF 1 000) Q1 Q Q1 Q Net income attributable to shareholders of PSP Swiss Property Ltd Items that may be reclassified subsequently to profit or loss: Changes in interest rate hedging Attributable taxes Items that will not be reclassified subsequently to profit or loss: Changes in pension schemes Attributable taxes Other comprehensive income Comprehensive income attributable to shareholders of PSP Swiss Property Ltd

15 PSP Swiss Property Short report Q1 Q Consolidated statement of financial position (in CHF 1 000) 1 January December September 2017 Cash and cash equivalents Accounts receivable Deferrals Derivative financial instruments Sites and development properties for sale Investment properties for sale Total current assets Tangible assets Intangible assets Derivative financial instruments Accounts receivable Financial investments Investments in associated companies Sites and development properties Own-used properties Investment properties Deferred tax assets Total non-current assets Total assets Accounts payable Deferrals Current tax liabilities Bonds Derivative financial instruments Total current liabilities Debt Bonds Derivative financial instruments Pension liabilities Deferred tax liabilities Total non-current liabilities Share capital Capital reserves Retained earnings Revaluation reserves Total shareholders equity Total liabilities and shareholders equity

16 PSP Swiss Property Ltd Kolinplatz 2 CH-6300 Zug info@psp.info Agenda Publication FY February 2018 Annual General Meeting April 2018, Lake Side, Zurich Publication H August 2018 Publication Q1 Q November 2018 Stock exchange, trading symbol SIX Swiss Exchange: Symbol PSPN, Security number , ISIN CH Reuters: PSPZn.S Bloomberg: PSPN SW Further publications and information are available on This Short report is an extract from the Quarterly report Q1 Q The Quarterly report Q1 Q is available under PSP Swiss Property, 13 November 2017 Publication Q May 2018