PSP Swiss Property AG / Key word(s): Quarter Results
30 April 2021
PSP Swiss Property with a successful Q1 2021. PSP Swiss Property considers itself well positioned for the current year.
In Q1 2021, PSP Swiss Property has managed the challenges related to the continuing corona crisis well. The corona crisis and the regulatory measures had only a marginal impact on the quarterly results. With its high-quality portfolio and its solid capital structure, PSP Swiss Property considers itself well positioned for the current year. Ebitda and vacancy rate guidances are being confirmed.
Real estate portfolio
At the end of March 2021, the value of the portfolio was CHF 8.641 billion (end of 2020: CHF 8.577 billion). In Q1 2021, the 'Seestrasse' development project in Kilchberg was sold for CHF 20.0 million and with a gain of CHF 7.3 million. At the "Residenza Parco Lago" project in Paradiso (near Lugano), further 13 condominiums were sold. In total, 62% of the units are sold and 4% are reserved. The project will be completed in the current quarter. Furthermore, the new building "ATMOS" in Zurich West has successfully been completed and reclassified to the investment portfolio. "ATMOS" was already fully let one year ago; it offers modern office space on approximately 24 000 m2. At present, the tenants are completing their interior work. The two investment properties located at Zeughausgasse 26/28 in Bern and Zollstrasse 6 in Zurich were reclassified as development projects. The current Hotel Metropole located at Zeughausgasse 26/28 in Bern's old town is undergoing extensive renovation since January 2021 (project 'Metropole'). The historic building will benefit from a new hotel concept as well as an expanded restaurant. The space is already 100% pre-let. The renovation will last until summer 2022, with an investment of around CHF 20 million. The property located at Zollstrasse 6 in Zurich is undergoing a complete renovation. The retail space on the ground floor will remain in operation during the construction work which will take until the end of 2021. The total investment amounts to around CHF 4 million.
At the end of March 2021, the vacancy rate stood at 3.1% (end of 2020: 3.0%). 0.5 percentage points of all vacancies is due to ongoing renovations. Of the lease contracts maturing in 2021 (CHF 52.4 million), 75% were done at the end of March 2021. The wault (weighted average unexpired lease term) of the total portfolio was 3.9 years. The wault of the ten largest tenants, contributing around 30% of the rental income, was 4.6 years.
Quarterly results Q1 2021 (January to March)
In the reporting period, a net income excluding gains/losses on real estate investments of CHF 61.8 million was achieved. This represents an increase of CHF 13.7 million or 28.5% compared to Q1 2020 (CHF 48.1 million). The increase was mainly due to higher rental income (+ CHF 3.4 million) and higher income from the sale of project developments and condominiums (+ CHF 12.4 million). With regard to rental income, it should be taken into account that corona-related rent reliefs of CHF 1.6 million were granted in Q1 2021 (there were no rent reliefs in the same period of the previous year). On the cost side, financing expenses were reduced (- CHF 0.9 million) compared to the previous year's period. Operating expenses remained relatively stable at CHF 13.2 million (Q1 2020: CHF 12.9 million). Earnings per share excluding gains/losses on real estate investments, which is the basis for the dividend distribution, amounted to CHF 1.35 (Q1 2020: CHF 1.05).
Net income reached CHF 88.8 million (Q1 2020: CHF 47.9 million). The increase in net income by CHF 40.9 million or 85.3% compared to the previous year's period is explained on the one hand by the effects mentioned above, on the other hand by the portfolio appreciation. This is because the internal value analysis as at the end of March 2021 led to a review by the external valuation expert. The appreciation amounted to CHF 33.2 million (Q1 2020: devaluation by CHF 0.2 million). Earnings per share amounted to CHF 1.94 (Q1 2020: CHF 1.04).
At the end of March 2021, net asset value (NAV) per share was CHF 98.26 (end of 2020: CHF 99.83). NAV before deducting deferred taxes amounted to CHF 118.25 (end of 2020: CHF 119.57). It should be noted that the shareholders' dividend entitlement for the 2020 business year took place on the date of the Annual General Meeting. On 31 March 2021, a dividend distribution of CHF 3.65 gross per share was resolved. Consequently, the distribution was already deducted in equity respectively in equity per share as at 31 March 2021. The dividend payment was made on 8 April 2021.
Strong capital structure
With total equity of CHF 4.507 billion at the end of March 2021 - corresponding to an equity ratio of 51.6% (end of 2020: CHF 4.579 billion or 52.8 %) - the equity base remains strong. Interest-bearing debt amounted to CHF 3.017 billion or 34.6% of total assets (end of 2020: CHF 3.057 billion or 35.3%). The average cost of debt was low at 0.38% (end of 2020: 0.47 %). The average fixed-interest period was 5.4 years (end of 2020: 5.0 years). Currently, unused credit lines amount to CHF 995 million (thereof CHF 700 million committed).
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.
Remarks with regard to the corona crisis
Thanks to its broad portfolio diversification and its focus on office use in central locations, the exposure of PSP Swiss Property in the sectors affected by the official business closures is manageable. Moreover, the impact on these tenants varies widely. Overall, rent reliefs in the amount of CHF 1.6 million were recognised during the reporting period (for the whole of 2020: CHF 4.6 million). The level of rent collection was high at 98% in Q1 2021 (2020: 97%). At the end of March 2021, outstanding lockdown-related rent receivables amounted to CHF 7.4 million (end of 2020: CHF 5.4 million).
Market environment and outlook 2021
A precise outlook for the current business year is, due to the ongoing pandemic, difficult. We expect the demand for office space to stagnate temporarily. The market for retail space, excluding high-street, will remain under pressure.
Our focus remains unchanged: we modernise selected properties, work on development projects and concentrate on our letting activities. We will only consider acquisitions if they allow for added value in the long term and continue to selectively dispose non-strategic assets. In financing, we will continue to pursue our proven conservative approach.
For the 2021 business year, we continue to expect an ebitda excluding gains/losses on real estate investments of around CHF 275 million (2020: CHF 271.1 million). With regard to the vacancies, we still expect a rate of around 4.5% at year-end 2021 (end of March 2021: 3.1%). The forecasts with regard to ebitda and vacancies are conditional on the future development of the corona crisis. They are based on the assumption of a continued gradual easing of the measures enacted by the authorities and, as a result, a normalisation of the business environment.
Giacomo Balzarini, CEO · Phone +41 (0)44 625 59 59 · Mobile +41 (0)79 207 32 40
Vasco Cecchini, CCO & Head IR · Phone +41 (0)44 625 57 23 · Mobile +41 (0)79 650 84 32
Report and presentation are available on www.psp.info
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PSP Swiss Property - leading Swiss real estate company
PSP Swiss Property owns a real estate portfolio of CHF 8.6 billion in Switzerland's main economic areas; its market capitalisation amounts to CHF 5.2 billion. The 99 employees are based in Geneva, Olten, Zug and Zurich.
PSP Swiss Property has been listed on the SIX Swiss Exchange since March 2020 (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.
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