PSP Swiss Property: Luciano Gabriel becomes Chairman of the Board of Directors

As announced by PSP Swiss Property in connection with the announcement of the 2016 annual results, Dr. Günther Gose, Chairman of the Board of Directors, will not stand for re-election. The current CEO, Dr. Luciano Gabriel, will be proposed as the new Chairman of the Board of Directors; he is to step down as CEO at the same time. Gabriel has also been Delegate of the Board of Directors since April 2007; this position will not be filled again.

All other six current members of the Board of Directors are standing for re-election. As a result, the Board of Directors will consist of seven (previously eight) members as of April 5, 2017. The Audit Committee and the Compensation Committee shall consist of the same four members: Prof. Dr. Peter Forstmoser, Adrian Dudle, Nathan Hetz and Josef Stadler, with Forstmoser as Chairman of both Board Committees.

Giacomo Balzarini becomes new CEO

Gabriel's successor as CEO will be the current CFO Giacomo Balzarini as of April 1. Balzarini will act in a dual capacity as CEO/CFO and remain responsible for capital market and banking matters as well as analyst contacts. Martin Heggli will be the new COO and member of the Executive Board. Heggli has been responsible for PSP Swiss Property's accounting matters since September 2005. Adrian Murer will remain a member of the Executive Board as Chief Investment Officer (CIO).

Portfolio devaluations impact earnings

Meanwhile, PSP Swiss Property reports an increase in EBITDA and profit - but without valuation effects: EBITDA (excluding valuation effects) amounted to CHF 241.6 million in the past financial year, compared with CHF 232.7 million in 2015. The real estate company generated a net profit (excluding valuation effects) of 172.5 million (2015: 161.3 million). According to the company, the improvement in earnings resulted primarily from the sale of condominiums at "Salmenpark" in Rheinfelden and the "Black" residential tower on the Löwenbräu site in Zurich West. As a result, income from the sale of condominiums increased by eleven million from 3.3 million in the previous year to 14.2 million.

Meanwhile, net income including valuation effects decreased from 187.7 million in 2015 to 134.9 million. According to PSP Swiss Property, the decrease is mainly due to devaluations in the real estate portfolio. These amounted to a total of 50.2 million in 2016. In 2015, there was an appreciation of 33.8 million.

As at the end of 2016, PSP Swiss Property's real estate portfolio comprised 161 office and commercial buildings as well as four development sites and six individual projects. The balance sheet value of the entire portfolio amounted to 6.894 billion (end of 2015: 6.724 billion). In 2016, an office and commercial building at Hardturmstrasse 101, 103, 105 / Förrlibuckstrasse 30 in Zurich was acquired for CHF 145.2 million. Two smaller properties in Fribourg and Zurzach were sold for a total of 12.9 million.

New projects and extensive renovations

According to PSP Swiss Property, work on the site developments and projects is proceeding according to plan. At "Salmenpark" in Rheinfelden, the first construction phase with office and commercial space, retirement and nursing home as well as rental and owner-occupied apartments has been completed. The investment totaled around 190 million. The revised building application for the second stage - 96 residential units for sale - with an investment sum of around 70 million was submitted at the end of 2016. Construction is scheduled to start in the fall of 2017 and be completed in 2020.

Construction for the new "Residenza Parco Lago" project in Paradiso near Lugano with around 13,000 square meters of usable space (condominiums as well as office, commercial and retail space) will begin in the first quarter of 2017. The investment total is around 80 million. After completion towards the end of 2019, all units are to be sold.

Several properties are undergoing extensive renovations, including the "Orion" project to replace the two buildings at Förrlibuckstrasse 178/180 and Hardturmstrasse 181, 183, 185 in Zurich West with a new office property. Construction is planned for 2018 to 2020 and the investment sum will amount to 120 million. The properties were reclassified from investment properties to development properties in the reporting year.

Vacancy rate increases mainly due to refurbishments

The vacancy rate at the end of 2016 was 9.3 percent (end of 2015: 8.5%), the reason for the increase being the aforementioned reclassifications of properties undergoing renovation. Of the 9.3 percent, 0.7 percentage points were due to ongoing renovation work. The properties in Zurich West and Wallisellen contributed a total of 2.1 percentage points to the vacancy rate. The remaining properties (i.e., the overall portfolio excluding properties undergoing refurbishment and those in Zurich West and Wallisellen) accounted for 6.5 percentage points.

For the financial year 2017, PSP Swiss Property expects EBITDA (excluding valuation effects) of approximately 225 million. The real estate company expects a decline because it forecasts lower income from the sale of condominiums compared to the past year. It also expects a slight decline in income from real estate - due to renovation work. The vacancy rate at the end of 2017 is expected to be around ten percent.