2020

27.02.2020 – Swiss Prime Site AG

Swiss Prime Site doubles profit in 2019

PRESS RELEASE

Olten, 27 February 2020

Swiss Prime Site doubles profit in 2019

  • Profit rose by 95.7% to CHF 608.5 million and increase in NAV by 6.1%
  • Operating income increased by 3.7% to CHF 1 258.8 million
  • Value of the real estate portfolio grew by 5.0% to CHF 11.8 billion
  • Vacancy rate fell to 4.7%
  • Wincasa und Tertianum achieved total target EBIT of above CHF 50 million
  • Positive outlook

2019 was a very successful year for Swiss Prime Site. Operating income rose by 3.7% to CHF 1 258.8 million, with both the Real Estate and the Services segments making a positive contribution to this pleasing growth. The core real estate business increased income by 2.0%. Real estate services increased their contribution to the group by 4.8% compared to the previous year. The value of the real estate portfolio grew by 5.0% to CHF 11.8 billion during the course of the year. The vacancy rate fell to 4.7% [4.8%] and, together with an attractive net yield of 3.5% [3.6%], reflects the quality of the portfolio. Profit doubled to CHF 608.5 million [CHF 310.9 million]. In addition to operating improvements, increases in value in the real estate portfolio and a one-time positive tax effect arising from tax reductions in some cantons contributed to this result. Swiss Prime Site anticipates that profit will significantly improve across 2020 before revaluations and deferred taxes. This includes a material profit from the sale of the Tertianum Group.

Operating income

Swiss Prime Site reported a 3.7% increase in operating income to CHF 1 258.8 million in 2019, with both segments making a positive contribution to this growth. In the core real estate business, performance was in line with expectations and operating income increased to CHF 519.5 million. The increase of CHF 10.3 million or 2.0% was primarily due to the increase in income from real estate developments. Active vacancy management and forward-looking letting and renewal activities also contributed significantly to this result.

In the Services segment, operating income rose by 4.8% to CHF 828.4 million in 2019. Wincasa increased income from real estate services by CHF 148.1 million (+2.5%) compared to the previous year. The digitalisation of the business model and the accompanying cultural change is being systematically implemented. The portfolio of real estate managed by Wincasa reached a market value of around CHF 71 billion.

Jelmoli – The House of Brands achieved income from retail of CHF 127.8 million [CHF 131.3 million]. In challenging market conditions, the premium department store accelerated the expansion of its services and brand offerings.

Tertianum expanded its network of residential and care centres. The company now has more than 80 locations across Switzerland and achieved income from assisted living of CHF 423.9 million (+6.8%) in 2019.

Swiss Prime Site Solutions conducted two capital increases for the Swiss Prime Investment Foundation, resulting in significant acquisitions. Assets under management thus increased from CHF 1.6 billion to CHF 2.3 billion. Income from asset management rose significantly by 60.2% to CHF 13.5 million [CHF 8.5 million].

Operating result

Swiss Prime Site’s operating result (EBIT) jumped by 31.3% to CHF 628.3 million [CHF 478.6 million]. The Real Estate segment contributed the lion’s share of this increase. EBIT from core business reached CHF 572.9 million (+32.9%). This includes revaluations of CHF 204.4 million [CHF 68.3 million]. The growth reflects the generally high appeal and quality of the real estate in the portfolio. In particular, the property at Müllerstrasse 16, 20 in Zurich made a major contribution to this growth due to a big revaluation gain after a new, long-term contract was signed. As at the end of 2019, the weighted average real discount rate stood at 3.06%. This was 16 basis points below the previous year’s figure. Excluding revaluations, EBIT also rose by 3.4% to CHF 424.9 million [CHF 411.1 million]. The pro rata pre-tax profits of the sold development projects in Plan-les-Ouates (Espace Tourbillon) and Berne (Weltpost Park), a retail property in Geneva sold in the first half of the year and additional minor sales in the second half of 2019 totalled CHF 37.6 million. The operating expenses of the Real Estate segment increased by CHF 6.3 million to CHF 171.4 million [CHF 165.1 million]. This increase is primarily due to expenses in connection with the property developments sold. The Services segment produced EBIT of CHF 55.5 million [CHF 47.6 million]. Tertianum and Swiss Prime Site Solutions achieved particularly strong operating results.

Profit

Swiss Prime Site achieved a large profit of CHF 608.5 million [CHF 310.9 million] in 2019. This was due to operational improvements, higher revaluations and the release of deferred tax liabilities amounting to CHF 172.5 million from cantonal tax rate reductions. Attractive refinancing and higher recognised borrowing costs connected to real estate developments reduced financial expenses to CHF 70.7 million [CHF 75.8 million]. Excluding revaluations and deferred taxes, profit amounted to CHF 315.7 million (+9.7%). Earnings per share (EPS) rose clearly to CHF 8.00 [CHF 4.27]. Excluding revaluations and deferred taxes, EPS was CHF 4.14 [CHF 3.95], including an increase of 4.6% in the weighted number of shares.

Balance sheet

Swiss Prime Site issued two bonds on the capital market in 2019 – an 8-year, 1.25% bond of CHF 350 million and a 12-year 0.375% bond of CHF 170 million. The weighted average interest rate fell to 1.2% [1.4%]. The weighted average residual term to maturity of interest-bearing financial liabilities was 4.2 [4.3] years. The comparison between the interest rate on financial liabilities of 1.2% and the net yield of 3.5% achieved on the property portfolio shows that the interest rate spread remains attractive at 2.3% [2.2%]. As at the end of 2019, the equity ratio of Swiss Prime Site stood at solid 44.4% [43.9%]. The loan-to-value ratio of the property portfolio was 45.7% – virtually unchanged from the previous year [45.3%]. At CHF 71.87 per share, the NAV after deferred taxes was 6.1% higher than the previous year’s figure. This takes into account the withholding tax-free distribution of contribution reserves of CHF 3.80 per share as at 4 April 2019. Swiss Prime Site’s return on equity reached 11.5% [6.4%].

Outlook

For 2020, Swiss Prime Site expects the economic and political conditions to be similar to those of the previous year. This should create opportunities, for both the Company and the real estate industry. The completion of development projects, active asset, portfolio and vacancy management, recurring income from real estate development projects and the realisation of the project pipeline will help the group achieve its operational and strategic goals in the core real estate business in 2020. Swiss Prime Site anticipates contributions from the real estate-related Services segment as planned. Selling the Tertianum Group will lead to a one-time increased profit before revaluations and deferred taxes and to a change in the income statement and balance sheet structure. The Company will maintain an attractive policy on dividend distribution to shareholders.

Peter Lehmann (1958), CEO of Swiss Prime Site Immobilien, will leave the company at his own request at the end of 2020 after over 20 years. However, he will continue to be available to Swiss Prime Site on a mandate basis. The Board of Directors and Executive Board would like to thank him already today for his tireless efforts and strategic foresight. Swiss Prime Site will provide further information on the future management and organisation of the core Real Estate segment in the course of the year.

Annual General Meeting 2020

The Board of Directors will propose a distribution of CHF 3.80 per share to shareholders at the Annual General Meeting on 24 March 2020 (ex-date: 30 March 2020, value date: 1 April 2020). Half of the distribution will be now paid out of reserves from capital contribution reserves (no withholding tax deduction) and half as ordinary dividend (with 35% withholding tax deduction). Furthermore, the Board of Directors proposes to the Annual General Meeting of Shareholders that Ton Büchner be elected to the Board of Directors and as Chairman of the Board. The current members of the Board of Directors, with the exception of Hans Peter Wehrli, are standing for re-election. Swiss Prime Site put the audit mandate out for tender in 2019. After analysing the bids and presentations in detail, the Board of Directors recommended to the Annual General Meeting that KPMG Zurich be re-elected as auditors.

If you have any questions, please contact:

Investor Relations, Markus Waeber

Tel. +41 58 317 17 64, markus.waeber@sps.swiss

Media Relations, Mladen Tomic

Tel. +41 58 317 17 42, mladen.tomic@sps.swiss

Link to online Annual Report

https://sps.swiss/reporting

Link to presentation

https://sps.swiss/en/group/investors/presentations

Link to webcast

https:/sps.swiss/pressconference

Invitation to the ordinary Annual General Meeting

https://sps.swiss/en/group/governance/annual-general-meeting

Swiss Prime Site

Swiss Prime Site AG is the leading listed real estate company in Switzerland. Its high-quality real estate is worth over CHF 11 billion and consists of properties with good value retention in prime locations, which predominantly comprise office and retail floor space. Swiss Prime Site Immobilien AG invests in high-quality buildings and land, which together with conversion and development of entire areas form the company’s core business. One of the real estate-related group companies is the leading premium department store in Switzerland, Jelmoli – The House of Brands, in Zurich, the most important property in the portfolio. Third-party shop-in-shop concepts and its own formats are managed there on 23 800 m2 of retail floor space. Wincasa is the biggest and most important integral real estate service provider in Switzerland and ideally complements Swiss Prime Site’s core business. Its innovative range of services cover the entire property life cycle. Assets under management amount to approximately CHF 71 billion. Tertianum, the leading Swiss service provider in the promising area of assisted living, further expands the Swiss Prime Site Group. Quality living with associated autonomy, individual services, safety, and care and support are the core focus of Tertianum and its more than 80 residential and care centres. In 2017, an asset manager focusing on the real estate sector was founded with Swiss Prime Site Solutions. The business develops tailor-made services and investment products for third-party clients.

Swiss Prime Site is distinguished by its experienced management team, high earnings continuity and outstanding risk-return profile. The company has been listed on the SIX Swiss Exchange since 2000 and has a market capitalisation of over CHF 9 billion.

SIX Swiss Exchange | Symbol SPSN | Securities number 803 838

SELECTED KEY FIGURES

      

in

31.12.2018

31.12.2019

Group key figures

Investment properties at fair value

CHF m

11 204.4

11 765.4

Rental income from properties

CHF m

479.4

486.9

Income from real estate developments

CHF m

72.8

79.8

Income from real estate services

CHF m

116.7

117.5

Vacancy rate

%

4.8

4.7

Net property yield

%

3.6

3.5

Weighted average interest rate on financial liabilities

%

1.4

1.2

Total operating income

CHF m

1 214.1

1 258.8

Revaluation of investment properties, net

CHF m

67.6

203.4

Result from investment property sales, net

CHF m

18.4

20.8

Operating result before depreciation and amortisation (EBITDA)

CHF m

501.2

653.4

Operating result (EBIT)

CHF m

478.6

628.3

Profit

CHF m

310.9

608.5

Key figures: Real Estate segment

Rental income from properties

CHF m

434.4

437.3

Income from real estate developments

CHF m

72.8

79.8

Total operating income

CHF m

509.2

519.5

Operating result (EBIT)

CHF m

431.1

572.9

Key figures: Services segment

Rental income from properties

CHF m

101.5

106.0

Income from real estate services

CHF m

144.4

148.1

Income from retail

CHF m

131.3

127.8

Income from assisted living

CHF m

396.9

423.9

Income from asset management

CHF m

8.5

13.5

Total operating income

CHF m

790.7

828.4

Operating result (EBIT)

CHF m

47.6

55.5

Group key financial figures

Shareholders´ equity

CHF m

5 145.1

5 459.2

Equity ratio

%

43.9

44.4

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

%

45.3

45.7

Return on equity (ROE)

%

6.4

11.5

Return on invested capital (ROIC)

%

3.4

5.6

Earnings per share (EPS)

CHF

4.27

8.00

NAV before deferred taxes per share1

CHF

83.40

86.34

NAV after deferred taxes per share1

CHF

67.74

71.87

Group key figures excluding revaluations and all deferred taxes

Operating result (EBIT)

CHF m

411.1

424.9

Profit

CHF m

287.8

315.7

Earnings per share (EPS)

CHF

3.95

4.14

Return on equity (ROE)

%

5.9

6.3

       

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

  

THIS PRESS RELEASE IS NOT BEING ISSUED IN THE UNITED STATES OF AMERICA AND SHOULD NOT BE DISTRIBUTED TO UNITED STATES PERSONS OR PUB­LICATIONS WITH A GENERAL CIRCULATION IN THE UNITED STATES. THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER OR INVITATION TO SUBSCRIBE FOR OR PURCHASE ANY SECURITIES. IN ADDITION, THE SECURITIES OF SWISS PRIME SITE AG HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR DELIVERED WITHIN THE UNITED STATES OR TO U.S. PERSONS ABSENT FROM REGISTRATION UNDER OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE UNITED STATES SECURITIES LAWS.


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