Swiss Prime Site increases profit and raises guidance

Swiss Prime Site (SPS) was successful in the first half of 2022 and has already achieved or exceeded some of its targets for the year as a whole, according to its own figures: Profit increased by 6.3 percent, FFO growth per share was 7.2 percent, real estate assets under management reached CHF 20 billion and the vacancy rate sak to 4.4 percent.

Against the background of these results, the real estate company is raising its targets for the full year: "Specifically, we now expect real estate assets under management to exceed 20 billion (previously 19-20 billion). Vacancy for the full year is expected to remain below 4.4 percent (previously <4.6%) and FFO growth for the full year is expected to be at the upper end of the range of three to five percent," SPS wrote in a statement. EBIT of around CHF 30 million is expected for the Swiss Prime Site Solutions division, it adds. Previously, the forecast was CHF 27 to 28 million.

Revenue and profit increase

Operating income increased by 2.5 percent to CHF 378.9 million, to which all Group companies contributed. Profit including revaluation effects reached 267.4 million (PY: 251.5 million; +6.3%), and the return on equity (ROE) generated was 8.3 percent (PY: 8.2%). Due to the integration of the Akara Group and the growth of the Group companies, operating costs increased by 1.7 percent.

The slightly lower sales gains compared to the previous year depressed Group EBIT excluding revaluations as well as the EBIT margin: EBIT reached CHF 198.8 million (previous year: 214.2 million), and the corresponding EBIT margin was 52.5 percent, compared to 57.9 percent in the same period of the previous year. Due to higher gains on sales as well as a continued good operating business, a significant improvement of these key figures is expected in the second half of the year, SPS said.

Rental income increases

During the period under review, SPS re-let or re-let more than 102,000 sqm in its own real estate portfolio. As this was often done on better terms, rental income increased to CHF214.2 million (+1.9% on a like-for-like basis), the company said. The vacancy rate decreased from 4.7 percent to 4.4 percent. The WAULT remained stable at 5.5 years.

The like-for-like rental growth and the vacancy reduction led to higher revaluations amounting to CHF 166.6 million. The net property yield generated by the portfolio is 3.1 percent.

High sales gains expected in the second half of the year

According to SPS, the rental successes more than compensated for the rent (3.3 million) still included in the previous year from the modernization project on Müllerstrasse in Zurich and the loss from the sale of properties. This involved a portfolio of seven properties sold to the new Swiss Prime Site Solutions Investment Fund Commercial and two further properties in St. Gallen. This resulted in a pre-tax gain of CHF 14.7 million.

In the second half of the year, sales profits will increase due to property sales already signed amounting to more than CHF 165 million, the real estate company announces. Among other things, SPS is selling House B of the large-scale Espace Tourbillon project in Plan-les-Ouates.

Asset Management posts strong growth

In the period under review, Swiss Prime Site Solutions raised CHF 235 million in new money in its real estate funds and handled acquisitions of CHF 1.2 billion for various clients and vessels. Real Estate Assets under Management increased by one billion to CHF 6.9 billion compared to year-end 2021.

Income from asset management jumped from CHF 8.3 million to CHF 27.2 million, with the Akara Group, acquired in January, contributing CHF 11.3 million. The division's EBIT grew to 17.1 million (previous year: 3.8 million), corresponding to an EBIT margin of 62 percent. (ah)