28 February 2019

Swiss Prime Site: favourable results at all levels

 

PRESS RELEASE

Olten, 28 February 2019

 

Swiss Prime Site: favourable results at all levels

  • Operating income grows by 5.1% to CHF 1 214.1 million
  • Value of property portfolio rises by 5.4% to CHF 11.2 billion
  • Vacancy rate drops from 5.2% to 4.8%
  • Profit rises to CHF 310.9 million
  • Positive outlook

2018 was a successful year for Swiss Prime Site, with earnings growth of 5.1%. Operating income rose by CHF 59.3 million to CHF 1 214.1 million year-on-year. Both the core Real Estate business and the Services segment performed well. Real Estate increased its earnings by 6.4%. Real estate-related services grew by 4.8% year-on-year. At CHF 11.2 billion, the value of the property portfolio grew by 5.4%. At the same time, net yield decreased slightly to 3.6%. The vacancy rate fell significantly from 5.2% to 4.8%. A CHF 5.4 million or 1.8% increase in profit to CHF 310.9 million was reported. Swiss Prime Site anticipates stable or improving performance in the most important parameters for 2019 and over the medium term.

 

Operating income

The Swiss Prime Site Group increased its operating income by 5.1% to CHF 1 214.1 million in 2018. The core Real Estate business realised operating income of CHF 509.2 million. The increase of 6.4% or CHF 30.8 million can mainly be attributed to the increase in rental income and the development of properties and projects. At CHF 11.2 billion, the market value of the 190 properties [188] rose by 5.4% or CHF 571.3 million. The profitability of the portfolio, with a net yield of 3.6%, remains at an attractive level. The vacancy rate was 4.8%, improving by 0.4 percentage points. The income of the Services segment grew by 4.8%, realising CHF 790.7 million [CHF 754.6 million].

 

Wincasa realised an income from real estate services of CHF 144.4 million [CHF 142.2 million]. Switzerland’s leading real estate services provider was able to increase income from real estate services slightly, thanks to the introduction of various services (e.g. construction management). The market value of the portfolio managed by Wincasa amounts to around CHF 68 billion.

 

Tertianum is implementing its growth strategy and now has 77 locations across Switzerland. Investment in processes and IT should increase the attractiveness of Tertianum’s network of locations even further. Income from assisted living of CHF 396.9 million (+10.2%) was realised.

 

Jelmoli realised an income from retail on the floor space it operates of CHF 131.3 million [CHF 136.2 million]. Despite a challenging year, with trading revenue falling across Switzerland, the premium department store is holding its own.

 

Swiss Prime Site Solutions generated income of CHF 8.5 million [CHF 9.9 million]. The new management invested in expanding the customer base and services, as well as in employees and infrastructure. The real estate assets of Swiss Prime Investment Foundation managed by Swiss Prime Site Solutions amount to around CHF 1.6 billion.

 

Operating result

In 2018, Swiss Prime Site achieved an operating result (EBIT) of CHF 478.6 million [CHF 470.6 million]. This favourable result includes revaluation gains of CHF 67.6 million [CHF 65.9 million]. The EBIT figure excluding revaluation gains was CHF 411.1 million [CHF 404.8 million]. The core Real Estate business (+2.1%) continued to contribute the lion’s share to the result. The weighted average real discount rate was 3.22% as at the end of 2018, which was 13 basis points under the previous year. The core Real Estate business once again demonstrated its operational strength with this impressive result, which was achieved thanks to increasing rental income and the successful divestment of projects. The part-sale of the «Espace Tourbillon» project in Geneva, the sale of the «Weltpost Park» project in Berne, two investment properties and one earn-out generated pre-tax gains totalling CHF 33.9 million. At CHF 165.1 million, the operating expenses of the Real Estate segment increased by CHF 40.5 million. This was mainly attributable to expenses from the real estate developments sold.

 

The Services segment generated an EBIT of CHF 47.6 million [CHF 48.6 million]. Despite substantial investments in the future, the result was maintained at an almost stable level. An increase in operating expenses in the Services segment of CHF 742.6 million [CHF 705.7 million] was primarily due to rising personnel costs and depreciation.

 

Profit

In 2018 Swiss Prime Site generated a profit of CHF 310.9 million [CHF 305.5 million] or CHF 287.8 million [CHF 307.4 million] excluding revaluations and deferred taxes. Operational improvements in the group companies and recurring profits achieved from the sale of real estate developments and properties offset increased costs well. Once again, financial expenses fell slightly year-on-year due to attractive refinancing. Earnings per share (EPS), both including and excluding revaluations and deferred taxes, exceed the forecast dividend distribution. In the 2018 financial year, EPS were CHF 4.27 [CHF 4.27]. EPS excluding revaluations and deferred taxes were CHF 3.95 [CHF 4.30].

 

Balance sheet

Swiss Prime Site refinanced in 2018 by means of convertible and straight bonds as well as a share capital increase. The weighted average interest rate on financial liabilities is 1.4% [1.5%] and once again fell year-on-year. At the same time, the weighted residual term to maturity of interest-bearing financial liabilities reduced slightly to 4.3 years [4.7 years]. Compared with the net yield of 3.6% realised on the property portfolio, this results in an attractive interest rate spread of 2.2% [2.2%]. The equity ratio amounts to 43.9% as at year-end 2018. The loan-to-value ratio of the property portfolio stands at 45.3% [45.6%]. NAV after deferred taxes rose to CHF 67.74 per share, exceeding the previous year’s figure by 1.3%. Swiss Prime Site’s return on equity is 6.4%, placing it within the long-term target range.

 

Outlook

For 2019, Swiss Prime Site expects stable results both at the earnings and profit level. Active asset, portfolio and vacancy management and the implementation of the project pipeline will all contribute to these results. The properties constructed will provide significant growth impetus for rental income, starting from the 4th quarter 2019. The Company will maintain an attractive policy on dividend distribution to shareholders.

 

Annual General Meeting 2019

The Board of Directors will propose a dividend of CHF 3.80 per share to shareholders at the Annual General Meeting on 26 March 2019. As in previous years, the distribution will be paid from capital contribution reserves (ex-date: 2 April 2019, payment date: 4 April 2019). The Board of Directors will propose to the Annual General Meeting the election of Gabrielle Nater-Bass to the Board of Directors as well as to the Nomination and Compensation Committee. The existing members of the Board of Directors, with the exception of Klaus R. Wecken, are standing for re-election.

 

SELECTED KEY FIGURES

      

 

 

 in

 

31.12.2017

 

31.12.2018

 

 

 

 

 

 

 

Group key figures

 

 

 

 

 

 

Investment properties at fair value

 

CHF m

 

10 633.1

 

11 204.4

 

 

 

 

 

 

 

Rental income from properties

 

CHF m

 

 469.9

 

 479.4

Income from real estate development

 

CHF m

 

 51.7

 

 72.8

Income from real estate services

 

CHF m

 

 120.0

 

 116.7

Vacancy rate

 

%

 

 5.2

 

 4.8

Net property yield

 

%

 

 3.7

 

 3.6

Weighted average interest rate on financial liabilities

 

%

 

 1.5

 

 1.4

Total operating income

 

CHF m

 

1 154.8

 

1 214.1

 

 

 

 

 

 

 

Revaluation of investment properties, net

 

CHF m

 

 65.9

 

 67.6

Result from investment property sales, net

 

CHF m

 

 0.3

 

 18.4

 

 

 

 

 

 

 

Operating result before depreciation and amortisation (EBITDA)

 

CHF m

 

 487.1

 

 501.2

Operating result (EBIT)

 

CHF m

 

 470.6

 

 478.6

Profit

 

CHF m

 

 305.5

 

 310.9

 

 

 

 

 

 

 

Key figures Real Estate segment

 

 

 

 

 

 

Rental income from properties

 

CHF m

 

 424.4

 

 434.4

Income from real estate development

 

CHF m

 

 51.7

 

 72.8

Total operating income

 

CHF m

 

 478.4

 

 509.2

Operating result (EBIT)

 

CHF m

 

 422.0

 

 431.1

 

 

 

 

 

 

 

Key figures Services segment

 

 

 

 

 

 

Rental income from properties

 

CHF m

 

 100.7

 

 101.5

Income from real estate services

 

CHF m

 

 142.2

 

 144.4

Income from retail

 

CHF m

 

 136.2

 

 131.3

Income from assisted living

 

CHF m

 

 360.1

 

 396.9

Income from asset management

 

CHF m

 

 9.9

 

 8.5

Total operating income

 

CHF m

 

 754.6

 

 790.7

Operating result (EBIT)

 

CHF m

 

 48.6

 

 47.6

 

 

 

 

 

 

 

Group key financial figures

 

 

 

 

 

 

Shareholders´ equity

 

CHF m

 

4 777.5

 

5 145.1

Equity ratio

 

%

 

43.1

 

43.9

Loan-to-value ratio of property portfolio (LTV)

 

%

 

 45.6

 

 45.3

Return on equity (ROE)

 

%

 

 6.4

 

 6.4

Return on invested capital (ROIC)

 

%

 

 3.5

 

 3.4

 

 

 

 

 

 

 

Earnings per share (EPS)

 

CHF

 

 4.27

 

 4.27

NAV before deferred taxes per share1

 

CHF

 

 82.87

 

 83.40

NAV after deferred taxes per share1

 

CHF

 

 66.85

 

 67.74

 

 

 

 

 

 

 

Group key figures excluding revaluation and deferred taxes

 

 

 

 

 

 

Operating result (EBIT)

 

CHF m

 

 404.8

 

 411.1

Profit

 

CHF m

 

 307.4

 

 287.8

Earnings per share (EPS)

 

CHF

 

 4.30

 

 3.95

Return on equity (ROE)

 

%

 

 6.4

 

 5.9

       

1 Services segment (real estate-related business fields) included at book values only

     

Contact

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23 October 2019

Swiss Prime Site: good half-year results for 2019

08 August 2019

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