PSP Swiss Property records profit increase in the first half-year

According to PSP Swiss Property, the increase in profit resulted primarily from higher rental income and an increase in own work capitalized. Rental income increased to 138.7 million (prior-year period: 136.4 million), while own work capitalized rose from 1.3 million to 3.3 million compared to the first half of 2017.

Operating expenses rose by 1.9 million to 29.0 million, while financial expenses fell by 1.5 million to 11.5 million.

PSP Swiss Property even recorded an increase in net profit including valuation effects of 64.1 million to 158.3 million (previous year: 94.2 million). According to the real estate company, this was mainly due to the revaluation of 91.5 million as part of the periodic revaluation of the properties (previous year: revaluation of 17.7 million). At the same time, tax expenses increased by 15.7 million to 40.5 million compared to the first half of 2017. Earnings per share including valuation effects amounted to CHF 3.45, while net earnings per share excluding valuation effects, which is the basis for the dividend distribution, amounted to CHF 1.87 (previous year: CHF 1.75).

At the end of June 2018, equity per share (net asset value; NAV) amounted to CHF 87.17 (end of 2017: CHF 86.96), including the dividend payment of CHF 3.40 per share in April. NAV before deduction of deferred taxes amounted to CHF 105.14 (end of 2017: 104.22).

The balance sheet value of the entire portfolio amounted to 7.342 billion at the end of June (end of 2017: 7.046 billion). Already in the first quarter the real estate portfolio acquired from Edmond de Rothschild has been integrated, and the Grosspeter Tower in Basel and reclassified to the investment portfolio. According to PSP, the striking building near the Basel SBB railroad station is now almost fully let.

Pre-letting for project developments

PSP has reported a number of pre-letting agreements for ongoing project developments: Co-working provider No18 will move into the renovation project opposite Zurich main station at the end of 2019. The German hotel group Ruby Hotels & Resorts will become a tenant at Beatenplatz; the opening of the first Ruby Hotel in Zurich with around 210 rooms is planned for 2021.

In the renovation property at Hardturmstrasse 161/Förrlibuckstrasse 150 in Zurich-West, 4,200 square meters have been leased to UBS. Westhive has been offering co-working spaces for start-ups and companies in the fields of marketing and technology in the property since April.

Demolition of the two Orion buildings at Förrlibuckstrasse 178/180, Hardturmstrasse 181/183/185, also in Zurich-West, began in March. An office building will be constructed here by 2021 for around 130 million. PSP has announced that a major rental agreement with a well-known anchor tenant could be concluded shortly.

Sales in Zurich and Rheinfelden pending

As part of a portfolio adjustment, the real estate company Property in Petit-Lancy sold for 55 million at the end of June 2018The pre-tax profit amounted to 2.3 million. The property at Bernerstrasse Süd 167/169 in Zurich and the Bahnhofareal development project in Rheinfelden are also on the verge of being sold, according to the statement.

The vacancy rate in the portfolio fell from 8.2% (as at the end of 2017) to 6.8% in the first half of the year. Of the total vacancy rate, one percentage point is attributable to ongoing refurbishment work. Of the rental agreements with a volume of 29.1 million expiring this year, 87% had been renewed or extended as at the end of June.

After the balance sheet date, with effect from July 31, 2018, PSP purchased the building lease property at Zeughausgasse 26 in Berne for 7.9 million.

PSP Swiss Property is raising its forecasts for the full year: A higher EBITDA (excluding valuation effects) of 240 million is now expected, compared to the previous forecast of 235 million. The vacancy rate at the end of 2018 is expected to be below six percent, compared with the previous forecast of around 7.5 percent. (ah)