PSP raises operating forecast slightly
After the first half of the year, PSP Swiss Property is adjusting its Ebidta forecast excluding revaluation slightly upwards. Including revaluation, however, profit recently fell by 66%.
In the first half of 2023, PSP Swiss Property increased its rental income by CHF 3.5% to CHF 163.3 million compared to the same period of the previous year. Operating income excluding gains/losses on real estate investments increased by CHF 20.9% to CHF 150.5 million. The reversal of deferred taxes made a positive contribution of CHF 30.6 million. On the other hand, profits from the sale of development projects and condominiums reduced the result by CHF 11.2 million. Operating expenses fell by CHF 5.3% to CHF 27.2 million, while financing costs increased by CHF 42.4% to CHF 8.2 million. The fact that net profit fell massively - by CHF 66.1% to CHF 76.9 million - is primarily due to the portfolio devaluation of CHF 90.7 million. In the same period of the previous year, the portfolio had been revalued by CHF 131.9 million.
The balance sheet value of the portfolio rose from CHF 9.4 billion to CHF 9.6 billion in the first half of the year. The vacancy rate rose from 3.0 to 3.2%, of which 0.3 percentage points are attributable to ongoing refurbishment work. A vacancy rate of less than 4% is still expected at the end of 2023. The forecast is supported by lettings after the reporting date: the new wooden building "Clime" in Basel and the two properties at Bleicherweg 14 and Förrlibuckstrasse 60/62 in Zurich are now fully let, PSP reports.
The revaluations of the properties totaling CHF -90.7 million break down into CHF -100.9 million for the investment portfolio and CHF +10.1 million for sites and development properties. The weighted average discount rate for the entire portfolio amounted to a nominal 3.81% as at mid-2023 (end of 2022: 3.48%). The higher discount rate was the main reason for the devaluation, while higher market rents due to the indexation of rental agreements had a selective net value-increasing effect, according to the statement. Lettings in central locations were satisfactory in H1, while the market for older office properties in B and C locations and non-food retail space in secondary locations remained challenging.
EBITDA forecast increased by CHF 5 million
For the year as a whole, PSP expects higher property income than in the previous year due to indexation, completions and acquisitions, despite temporary rent losses as a result of renovations. However, PSP reports that income from the sale of development projects and condominiums will decline. EBITDA excluding gains/losses on real estate investments should amount to CHF 295 million - this corresponds to a slightly higher target than previously (CHF 290 million). (aw)
