PSP Swiss Property (SIX Swiss: PSPN) Q1 2026 Earnings Call

0:00 Ladies and gentlemen, welcome to the PSP Swiss Property Q1 twenty twenty six Results Conference Call. My name is Youssef, the Chorus Call operator. I would like to remind you that all participants will be in listen only mode and that the conference is being recorded. The presentation will be followed by a question and answer session. The conference must not be recorded for publication or for broadcast. At this time, it's my pleasure to hand over to Giacomo Valzarini, CEO of PSP Swiss Property. Please go ahead, sir. Thank you, and good morning, everybody, and welcome to this fourth presentation and Q and A, as always, in the Q1 and Q3.

0:47 I will limit myself to some headline updates and then leave the room for the questions. Today, we reported a very solid Q1 results in line with our expectations. We show a solid top line growth, very stable cost base, basically very in line and very predictable. The like for like growth was 0.6%. If you take out the one off on the cost of last year on RIDIMOUR CHE, the like for like would have been 1.7%, and that's also what we roughly guide for the full year, around the 1.5%, 1.8% on the like for like.

1:33 The lending and transactional market is unchanged since the last week and February 2006 is very supportive to our strategy and what we observed is that our strategy to focus on prime assets, the primary cities is certainly the winning one. Letting success in the first quarter led to an appreciation of one property on the Ledenbroi. As you recall, we normally value the portfolio twice a year, but if you have a significant lending success, which has an impact on assets of more than $5,000,000 we have to value that asset by this revalue. This was the case in Lilleberg and resulted in a valuation of risk of more than 13,000,000 On the projects, and we will comment on that in the Q and A I'm sure, everything progresses as planned, especially an ISS development on the Takhire Evanc, which if you look at the whole site, which is more than 35,000 square meters, we are basically left with the two thirty two buildings, which make up roughly 2,500 square meters.

2:45 We confirm our outlook on the vacancy rate of 3.5% and we confirm our EBITDA guidance of $310,000,000 for the full year. With that, I would hand over to the Q and A. We will now begin the question and answer session. Anyone who wishes to ask a question, may press star and one on their telephone. Our first question comes from Ken Kager, ZKB. Please go ahead. Yes. Good morning, everyone. I've got three questions, very short ones. First one, what did you pay for the value selling asset that you acquired during Q1?

3:41 It was a very small amount in a single digit. Okay. Thank you. Second one, could you give us a timing on the Valucelain sales? And could you also tell us if this goes through, would you issue a press release or would this just come with the H1 results as a general communication? I would confirm what I said end of February that we are in negotiations on this disposal, that it is probable and likely that we have a chance to get through by mid year. However, we are in full negotiations, so visibility is not guaranteed.

4:28 And I also said that if this transaction would go through, this would have an impact on the EBITDA guidance and this would appear with the closing of the transaction. If this happens before the mid year or after mid year's results, I cannot tell you. Okay, thank you. And the third and last one, how will you deploy the cash that you will receive from the potential sale of the value saving asset? In those situations, I think our overall funding strategy is pretty simple. Whenever we have a cash inflow coming it for rental income, coming it from disposals, it will go against debt. So this is the normal procedure. Okay, thank you very much.

5:16 Our next question comes from Tomaso Oberto, UBS. Please go ahead. Good morning. Thanks for taking the question. I have just two questions. First, maybe if you could elaborate a bit on the vacancy reduction, how do you get from the 3.9 to 3.5? And then secondly, on Lexcolo, could you share maybe your view on what the impact could potentially be with all all that's happening on the political front, especially here to next caller. Thanks. Thank you, Tomato. Well, on the late thing we have already several late thing successes which start Q2, Q3, Q4, which give us the visibility that we are currently in line with getting to this 3.5%.

6:12 These are a variety of lettings in Zurich starting from the Friedrichsdaucer, but also letting successes which we have in Basel, in two instances Northern and Geneva. So, I think this is based on actual latex successes plus visibility on expires, which we at this point are comfortable to get to this 3.5%. On the lexicolor, if that's okay, I think in general what we have to keep in mind that's nothing new. We are confronted with this topic since 2013.

6:58 In various instances, we had four or five such motions, initiatives. They had a lifetime from a few months to thirteen, fourteen months on the political process, so this is clearly always unpleasant because it creates uncertainty, but it's completely misguided to the subject. The federal government issued also an expert party to issue a broadly established study on potential implications. The findings of this study were clear that these measures have really no source and no reasons to help with the residential market, this was issued by the the federal government, the council anyway issued this consultation phase.

7:55 In our view it is a political exercise, but we have to keep in mind that technically this is a very long political process, also linked to most likely the popular initiative of the 10,000,000 Switzerland. So we are clearly following that very closely. We're talking to political exponents, but in our view, it is very, very unlikely that this goes through. And and please keep in mind, as we always said, in 2013, in 2017, 2020, in 2022, this takes it's a political process which takes several years to go through all the upper house and lower house, and it always vanished.

8:44 So from today's point of view, we take it very seriously, but the last proposal is completely disconnected with the fundamental issue on the regulation. Great, thanks. Thank you. Our next question comes from Holga Frisch, Societe Generale Bank. Please go ahead. Yes, good morning. Thanks for taking the question. Have two. First, want to add on the value planning. So So with the release of the full year results, you said that you are in final negotiations on two lean transactions, the disposal and the potential acquisitions. So now you're talking about the sales negotiations. So I would be interested what's the current status of the potential acquisition? Are we still talking about two main transactions?

9:34 And Well, again, yeah. Sorry? Okay. No. Go ahead. Go ahead. No. No. Go ahead. Okay. Second one would be about the fixed interest period, which has now fallen to three point one years. If I recall correctly, you want to consider the range of three point five to four point five years to be comfortable with. So currently, we've seen below that range. Does the range still apply or do you intend to continue deliberately going for short term financing? Thank you, Aldo. So the first one, Ken asked only about the disposals. Answered only about the disposals. Clear that we look at those transactions and we are negotiating those transactions. And that for us, this is rather combination of the transactions. The second, we did two taps and end of the first quarter to lengthen a bit, I would say it's clearly an objective, but it's not a fixed target.

10:34 We are always very opportunistic on the capital market. We look at when is probably a better time to issue. If you look today, Amazon is coming out with a jumbo issue, so it's probably likely that we wait for a few weeks to have the volume pass and we are not so nervous if it's now three point one or three point four years. But clearly, if you look historically, we had, besides a few years where we were below three years, three point five years is year to be like, but I think we very much look also on how the market looks like. Okay, great. Thank you. Our next question comes from Mathieu Lindauer, Vontobel.

11:21 Please go ahead. Yes, good morning, everyone. Thank you for taking my question. I've got a question on the open maturities of 11%. Can you give us some more information on what kind of spaces are still open to be renewed and any new information regarding the progress on the 2027 renewals? Thank you. If you start with the second one, the biggest expiry is the Google one, which we mentioned already a couple of times. We are finalizing the extensions. There is nothing more to add to that, but the largest one we have another expiry, which is a smaller one, which is on the Wassafragstaff, the FINMA which will move out later next year, but also there we are already in discussions.

12:18 So, for 'twenty seven, there's nothing really material, I would say, to come up. With the expiries of the end of this year was the one which had no impact on the vacancy rate in Q3, the Rothschild Bank, but this building will be reclassified and has been fully let. The same is true for the middle of our class. We have some expiries coming up until the rest. We have some expiries coming up one in Basel, but there's nothing really material which gives us a sense that we cannot get to our 3.5 progress from today's point of view.

13:11 Perfect. Thank you very much, Giacomo. Our next question comes from Thomas Reuthoisler, Deutsche Bank. Hi, morning. Just general question on the Mideast conflict and potential impact on the Swiss economy and and real estate sector particularly. I mean, do you see any specific risks? I mean, upside or downside for Switzerland here? Well, it's a it's a complicated question because we definitely don't feel too much at the moment. So I think there could be examples where some players benefit, others, you know, suffer.

14:01 I think it's really a mix of exponents. If you look at the trading companies, probably they benefit bit, also some luxury holders destination when there were conventions. We if you look at our tenant base at the moment, we don't see it. We don't see it on the also on the capital market, the interest rate level. It's not it's even not a big topic, I have to admit. But clearly, we are I think our business model with also the low debt level with a very concentrated portfolio in the inner cities with, on average, smaller floor plates.

14:47 If you think our average tenant lease is five hundred-six 100 square meters. So impact of such shocks is always much more limited in perhaps other instances where they have bigger exposures. That's something we don't feel currently. And it's also difficult to monitor. But when we talk to our tenants, we don't get the sense that our tenants are in the first line of action. Okay. Thank you. Our next question comes from Rene Rocha, AutoPhijas. Please go ahead. Yes. Good morning. I have two questions. The first one on slide four, you're mentioning the the low transaction needs of prime assets at Google. So I was wondering if you could give us a little bit of feel, you know, where the units are in Geneva and perhaps also in Chile.

15:50 And then the second question is on slide 34. It might be a little bit I begin the question about the actual potential rental income of roughly 19,500,000, and then footnote one is expected to be early full year 2026, 5,100,000,000. So that means that target rent here is 5,100,000 in 2026. And just in this context, I was wondering how do you think about the capital markets, just to get a bit of longer term view, let's say, out to 2028 or 2030? Thank you. Yes. Thank you very much. On the on the first question on slide four and the leads, if you look at recent transactions, and please keep in mind that on on prime, the transactions are very limited, not because there are no potential buyers, but there are almost no sellers.

16:55 But the recent transactions we have seen were at two or below. So I think for a mature, stabilized asset, those are the deals, the transactional deals, but then it depends always in the certain circumstances. If you look on the Slide 34, that's basically the rental income already earned within the portfolio. If you look historically, we always disclose on how much rent to income those development projects are delivering. And if you look on the overall portfolio, clearly, buildings in the other region will contribute to the bottom line. This is then the additional one would be a $14,000,000 With regard to your question, the capital markets outlook twenty eightthirty, I would kindly ask back what specifically you mean? Interest rates, transactions, issuance, deployment?

18:05 It's Yeah. No. No. I I I mean, just because they're not you know, I've managed, you have to make your projections, you know. I mean, where do you think where your portfolio how will we grow? What are the years expenses, EBITDA guidance. It's just for. Yeah. Go ahead. Sorry. No. No. No. I think I think if you if you look, I think, forward, you can pretty much take a bit our historical track record. The company has been built in a way that we clearly, on the one hand, benefit from inflation development, so you take the inflation outlook, you have this as a top line, you have an embedded like for like growth due to the appreciation of the locations.

18:57 And this is our view that our locations, especially in Zurich, Geneva and then we'll benefit. So we should have an embedded like for like growth in that. Beside the project pipeline you see in '34, we are working on several projects within the portfolio, which will come up probably after the period, twenty nine, thirty, thirty one. There are projects we are working on in Northern, the projects we are working on in Zurich, also Stadenhofen, but then also predominantly in Zurich West. So I'm absolutely not worried about the growth trajectory of the company. Plus, if you look historically, we were always an opportunistic buyer when there was stress in the system. We bought for more than 700,000,000 prime assets in the last five, six years.

19:52 So I'm convinced that we will find those opportunities and continuously grow the portfolio, grow the top line and try to keep the cost base stable to really enlarge the EBITDA margin by keeping a very solid balance sheet. And I think that's something which you should and could expect from us. In which year exactly this happens, I think this is the approach we choose because at the end we need with those projects and acquisition, we need to create value, and so we need to acquire value. Understood.

20:37 Thank you very much. Thank you. Our next question comes from Eleanor Frey, Barclays. Please go ahead. Good morning. Thanks for the presentation. Just a quick one. Can we have some thoughts on the Geneva market specifically? You noticed that the vacancy rate there increased. I see like flat rent for the same period. Appreciate that as a one off. So maybe some thoughts on the underlying growth there and the market moving forward. Edenora, I apologize, but I I got a couple of words, but I didn't get really the question. But it was more probably sound specific. Sorry. Is this any better? Can you hear me now? Yes. Some thoughts on the Geneva market specifically, noting that PSP rate increased. Did it like for like growth with Medecave? Appreciate those as one off. So maybe some thoughts on the underlying growth on thoughts on the market in Geneva moving forward.

21:31 Well, Geneva is a supermarket for us, as to admit. I have to say the like for like was exclusively driven by a cost benefit last year, which was this property tax free up with us for six years. But overall, the Geneva market, had an excellent lending of Rue Confernaci in Hotel de Branc, which is now basically fully let in Corvatri. We have let Archibis, so we are letting well. We had a little vacancy increase in Q1 in Rue De Brin, which then moved down. We have immediately re let this space.

22:19 So we are very positive on the lending for our Geneva portfolio. We had I think the very positive one off, it's a bit always the one offs drags you over the next quarters, So this year is the negative, but not the positive. But this is, no, we are are closely familiar. Great. Thank you. Thank you. Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Giacomo Valverier for closing remarks. Thank you very much to everybody for listening in. We are available for any further questions and I'm sure we'll see each other on the next couple of weeks and I wish you all a very good day. Thank you.

23:13 Bye bye. Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.