DJ PSP Swiss Property with a very successful business year. Proposal for an increased dividend of CHF 3.75 per share.
PSP Swiss Property AG / Key word(s): Annual Results PSP Swiss Property with a very successful business year. Proposal for an increased dividend of CHF 3.75 per share. 22-Feb-2022 / 07:00 CET/CEST Release of an ad hoc announcement pursuant to Art. 53 LR The issuer is solely responsible for the content of this announcement.
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Annual results as per 31 December 2021 (12 months)
PSP Swiss Property has achieved a very good operational result. With its high-quality portfolio and its strong capital structure, PSP Swiss Property considers itself well positioned. For the current business year, an increase in ebitda and a stable vacancy rate are guided.
Real estate portfolio
At the end of 2021, the value of the portfolio was CHF 9.127 billion (end of 2020: CHF 8.577 billion).
During the reporting period, several projects were successfully completed and reclassified into the investment portfolio. The modern 'ATMOS' building in Zurich West with approximately 24 000 m^2 of rentable space was completed. The areas (hotel, restaurant and office) of the very extensive renovation on Bahnhofquai and Bahnhofplatz in Zurich were handed over to the tenants. The property located at Zollstrasse 6 in Zurich was completely renovated. The properties Zurich, Schaffhauserstr. 611, and Locarno, Via Respini 7/9, as well as a part of the property located in Wabern, Gurtenbrauerei 32/37, were sold. No investment properties were bought.
Four investment properties were reclassified as development projects. At Zeughausgasse 26/28 in Bern, the outdated building structure will be comprehensively renovated by mid-2022 and the hotel use will be extended to all upper floors. SV Group will open its extended-stay hotel 'Stay Kooook' with 85 rooms there in summer 2022. The restaurant on the ground floor will be extended to include the neighbouring retail space. The investment amounts to around CHF 20 million. At Gartenstrasse 32 in Zurich, the facade and technical installations will be completely renewed by mid-2022 as part of a comprehensive renovation. A modern photovoltaic system will also be installed. The investment sum amounts to around CHF 7 million. Negotiations with a renowned bank for the lease of the entire building are about to be concluded. The property located at Freie Strasse 38 in Basel is an ideal commercial building for mixed retail and office use. After the main tenant moved out, the building is undergoing a comprehensive refurbishment until mid-2022. The investment sum amounts to around CHF 5 million. Following the departure of the single tenant from the office building Richtistrasse 3 in Wallisellen, various alternative uses are being examined and clarified for this property. The main focus is on a new concept for the usable space. Around CHF 3 million will be invested until mid-2022.
The 'Residenza Parco Lago' development in Paradiso (Lugano), which was under construction since 2017, was successfully completed. By year-end 2021, 76% of the units were sold and further 7% were reserved. Furthermore, we sold a development project in Kilchberg, a part of a site in Wädenswil and further residential units in Rheinfelden. No sites or projects were bought.
At the end of 2021, the vacancy rate stood at 3.8% (end of 2020: 3.0%). 0.5 percentage points of the vacancy is due to ongoing renovations. Of the lease contracts maturing in 2022 (CHF 54.8 million), 72% had been renewed by the end of 2021. The wault (weighted average unexpired lease term) of the total portfolio was 4.0 years. The wault of the ten largest tenants, contributing around 30% of the rental income, was 3.6 years.
Sustainability
More and more investors invest in line with sustainability criteria. In this respect, we benefit from our long-term focus on sustainability that has always been an integral part of our strategy. External benchmarks such as CDP or GRESB and the repeated 'Great Place to Work^(R)' certification attest to the fact that we are on the right track. 'Great Place to Work^(R)' is testament to an excellent workplace culture and high employer attractiveness. In autumn 2021, we achieved a second certification as 'Great Place to Work^(R)'.
Going forward, we will continue to reduce the specific CO[2] emissions of our properties in order to make our contribution to achieving the national and international goals for combating climate change. In the reporting year, we implemented the target defined in 2020 (to halve the specific CO[2] emissions by 2035 compared to 2019) and the related CO[2] reduction path in our tools and planning. In the coming years, we intend to engage our tenants and suppliers even more in our sustainability efforts.
Annual results 2021 (12 months)
In the reporting period, we achieved a net income excluding gains/losses on real estate investments of CHF 221.1 million. This represents an increase of CHF 5.3 million or 2.5% compared to the previous year's period (2020: CHF 215.8 million). This rise was mainly due to higher rental income (+ CHF 13.4 million) as well as higher income from the sale of project developments and condominiums (+ CHF 3.9 million). With regard to rental income, it should be taken into account that corona-related rent reliefs of CHF 3.7 million were granted (2020: CHF 4.6 million). Capitalised own services decreased by CHF 3.8 million and other income also by CHF 3.8 million. On the cost side, financing expenses were reduced (- CHF 2.1 million). Compared to the previous year's period, overall operating expenses rose by CHF 3.1 million. Earnings excluding gains/losses on real estate investments per share, which is the basis for the dividend distribution, amounted to CHF 4.82 (2020: CHF 4.70).
Net income reached CHF 595.0 million (2020: CHF 292.1 million). The increase in net income by CHF 302.9 million compared to the previous year's figure was due, on the one hand, to the effects mentioned above, but, above all, it resulted from the portfolio appreciation of CHF 464.9 million (2020: CHF 101.6 million); of which CHF 331.9 million accrued in the valuations in the course of the financial year until the end of September 2021. The main reason for the appreciation was the reduction of discount rates due to the further decline in investors' yield expectations and successful lettings. Earnings per share amounted to CHF 12.97 (2020: CHF 6.37).
At the end of 2021, net asset value (NAV) per share was CHF 109.42 (end of 2020: CHF 99.83). NAV before deducting deferred taxes amounted to CHF 131.84 (end of 2020: CHF 119.57).
Strong capital structure
With total equity of CHF 5.019 billion at the end of 2021 - corresponding to an equity ratio of 54.7% (end of 2020: CHF 4.579 billion or 52.8%) - the equity base remains strong. Interest-bearing debt amounted to CHF 3.013 billion or 32.8% of total assets (end of 2020: CHF 3.057 billion or 35.3%). The average cost of debt was low at 0.40% (end of 2020: 0.47?%). The average fixed-interest period was 5.1 years (end of 2020: 5.0 years). Currently, unused credit lines amount to CHF 900 million (thereof CHF 600 million committed).
PSP Swiss Property has an Issuer Rating A3 and a Senior Unsecured Rating A3 (outlook stable) from Moody's.
Remarks with regard to the corona crisis
Thanks to its broad portfolio diversification and its focus on office use in central locations, the exposure of PSP Swiss Property in the sectors affected by the corona crisis is manageable. Overall, rent reliefs in the amount of CHF 3.7 million were recognised during the reporting period (2020: CHF 4.6 million). The level of rent collection was at 100% in the reporting period (2020: 97%). At the end of 2021, outstanding lockdown-related rent receivables amounted to CHF 3.5 million (end of 2020: CHF 5.4 million).
Subsequent events
On 11 February 2022, a 0.0% private placement (all-in -0.45%) with a volume of CHF 100 million and a maturity in August 2022 was issued.
With effect from 17 February 2022, we entered an asset swap with Swiss Life AG and the Anlagestiftung Swiss Life. We acquired two commercial properties in Zurich, at Lintheschergasse 10 and Mühlebachstrasse 2, for a total of CHF 67.6 million. In return, we sold three properties (Rue du Pont 22 in Lausanne, Lintheschergasse 23 and Löwenstrasse 16 in Zurich) for a total of CHF 59.8 million. The balance was settled in cash.
Material proposals to the Annual General Meeting on 31 March 2022
For the business year 2021, the Board of Directors proposes an increase in the ordinary dividend payment to CHF 3.75 per share (previous year: CHF 3.65). In relation to net income excluding gains/losses on real estate investments, this corresponds to a payout ratio of 77.8%; in relation to the 2021 year-end share price of CHF 113.70, it corresponds to a yield of 3.3%.
All members of the Board of Directors and the Compensation Committee as well as Mr. Luciano Gabriel as Chairman of the Board of Directors stand for re-election. The Audit Committee and the Compensation Committee shall consist of the three current members: Peter Forstmoser, Adrian Dudle and Josef Stadler; Peter Forstmoser is again foreseen as Chairman of both committees. The Nomination Committee shall also consist of the current three members, Josef Stadler (Chairman), Corinne Denzler and Adrian Dudle.
In addition, the Board of Directors proposes to the Annual General Meeting of 31 March 2022 the election of Mr. Mark Abramson as new member of the Board of Directors. Mr. Abramson, 1970, American and Israelian citizen, resident of New York City, U.S.A, MA in Economics (American University, Washington D.C., USA), is an independent advisor for private and publicly traded real estate investment firms and companies. From 2005 to 2017, Mr. Abramson was working in Munich, Germany - most recently - as partner and co-head of the public equity investment management business of Heitman LLC, Chicago, U.S.A., a large global real estate investor. (For his more detailed biography see also www.psp.info > company > board).
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