PSP: Balance sheet value rises to just under 7 billion
In the first three quarters of this year, the listed company PSP Swiss Property Ltd increased its net profit (excluding valuation effects) by 4.6 percent to CHF 138.2 million compared to the same period last year.
According to the real estate company, the increase in net profit was primarily due to the Sale of the "Salmenpark II" residential project in Rheinfelden resulted. At the end of September 2017, the real estate portfolio comprised a total of 158 office and commercial buildings and twelve sites and projects. The balance sheet value of the entire portfolio was 6.954 billion, compared with 6.894 billion at the end of 2016. The vacancy rate fell from 9.3 to 8.3 percent from year-end to the end of September. Of this, 0.6 percentage points were attributable to ongoing refurbishment work. A further 1.5 percentage points came from the Avenue des Morgines 8/10 property in Petit-Lancy.
Positive tax effect in the canton of Vaud
Rental income decreased by 3.4 million in the reporting period, due in particular to the termination of the lease with the sole tenant in the Petit-Lancy property, according to PSP. Net income (including valuation effects) was 165.1 million (Q1-Q3 2017) compared to 102.8 million (Q1-Q3 2016). The increase compared to the same period of the previous year resulted mainly from a revaluation of CHF 17.7 million in the context of the semi-annual revaluation of the properties (Q1-Q3 2016: devaluation of CHF 38.4 million) as well as from the higher income from the sale of condominiums or projects.
Furthermore, tax expense decreased by 2.1 million to 20.6 million. The announced new lower corporate tax rate in the canton of Vaud resulted in a positive effect (release of deferred taxes) of 17 million. Of this, 12.9 million relates to revaluations of the real estate portfolio, which have no impact on earnings excluding valuation effects. Earnings per share (including valuation effects) amounted to CHF 3.60 (Q1-Q3 2016: 2.24). PSP Swiss Property's equity amounted to 3.893 (end of 2016: 3.867) billion at the end of September, the equity ratio came in at 53.4 (54.9) percent.
Look ahead
PSP Swiss Property expects the real estate market for office and retail space to remain "challenging". It is encouraging that the office market seems to be stabilizing, especially in good locations. Due to better economic forecasts for 2017 and 2018, there could be an improvement in demand for office space, the real estate company said. The acquisition market for good properties, on the other hand, is likely to remain fiercely competitive - due to the persistently low interest rate level and the resulting investment emergency among institutional investors.
