Gold prices bounce off 3-week lows; demand likely longer term
Introduction & Market Context
PSP Swiss Property AG (SIX:PSPN) presented its Q1 2025 financial results on May 13, 2025, revealing a mixed performance with declining earnings despite growth in portfolio value. The Swiss real estate company, which focuses on commercial properties in prime locations, reported that its portfolio value increased to CHF 9.9 billion, up 0.3% from December 2024, while net income fell 25.2% year-over-year.
The company operates in a bifurcated Swiss real estate market, with strong demand for prime office properties in major markets like Zurich and Geneva, while secondary locations continue to experience weak demand. According to the presentation, Switzerland’s economic outlook remains positive, with projected GDP growth of 1.4% in 2025 and 1.6% in 2026, providing a stable backdrop for the company’s operations.
Quarterly Performance Highlights
PSP Swiss Property reported a net income of CHF 60.6 million for Q1 2025, down 25.2% from CHF 81.0 million in Q1 2024. Net income excluding appraisal revaluation effects declined 11.7% to CHF 50.0 million. Rental income decreased by 2.5% to CHF 86.9 million compared to the same period last year.
As shown in the following comprehensive financial overview, earnings per share fell to CHF 1.32, a 25.2% decrease from Q1 2024, while the NAV per share increased to CHF 119.35, up 1.2% from December 2024:
The company maintained its strong financial position with a low leverage ratio (LTV) of 33.6%, slightly improved from 34.1% at the end of 2024. The average cost of debt remained low at 1.04%, compared to 1.05% in December 2024. PSP Swiss Property continues to benefit from its Moody’s Long Term Issuer Rating of A3 with a stable outlook.
Portfolio & Vacancy Analysis
PSP Swiss Property’s portfolio consists of 149 investment properties and 12 development properties, with a strong concentration in Switzerland’s major economic centers. The geographical distribution shows Zurich dominating with 61% of the portfolio value (CHF 6.0 billion), followed by Geneva at 15% (CHF 1.4 billion) and Basel at 8% (CHF 0.7 billion).
The following map illustrates the regional distribution of the company’s property portfolio across Switzerland:
The company’s vacancy rate increased slightly to 3.5% in Q1 2025, up from 3.2% at the end of 2024. Management expects the vacancy rate to remain at 3.5% by year-end 2025. The following chart shows the portfolio value growth and vacancy rate trends over the past two years:
The largest vacancies in the portfolio include properties in Zurich and Basel, with the Grubenstrasse 6, 8 property in Zurich having the highest vacancy rate at 65.5%, contributing 0.5 percentage points to the total vacancy rate.
Looking at lease expirations, 16% of leases are set to expire in both 2026 and 2027, with 70% of the Q2-Q4 2025 maturities already renewed. The weighted average unexpired lease term (WAULT) stands at 5.0 years for the overall portfolio and 5.4 years for the ten largest tenants, who contribute approximately 25% of rental income.
Green Finance & Sustainability Initiatives
PSP Swiss Property has placed significant emphasis on its sustainability strategy, with a commitment to reaching net zero carbon emissions by 2050. The company has fully implemented its green finance concept, with 100% of its bond portfolio classified as green bonds.
The following slide details the company’s Green Finance Policy, which was implemented in November 2022 and updated in May 2025:
The company’s sustainability credentials include various certifications and ratings, such as Great Place to Work, Fair-ON-Pay, EPRA sBPR (Gold), GRESB (3 Stars), CDP (A-), and MSCI (AAA). In February 2023, PSP Swiss Property implemented sustainability-linked loans with its lending banks, further aligning its financing with its environmental goals.
Forward-Looking Statements
PSP Swiss Property’s presentation indicates a stable outlook for the Swiss real estate market, particularly for prime office properties in major markets. The company expects the vacancy rate to remain at 3.5% by the end of 2025, suggesting a relatively stable occupancy outlook.
The company’s dividend policy continues to show steady growth, with the most recent distribution of CHF 3.90 per share for the business year 2024 paid on April 9, 2025. The following chart illustrates the company’s consistent dividend growth over the years:
According to the earnings call transcript, CEO Giacomo Bergzarini highlighted the "positive sentiment in prime locations, especially in Europe and Geneva," while acknowledging challenges including market bifurcation between prime and non-prime locations and the adjusted tax rate in Geneva from 14% to 14.7%.
The company’s focus remains on managing lease expirations and strategic building repositioning, with plans to showcase projects in Geneva through a property tour. Despite the decline in quarterly earnings, PSP Swiss Property’s strong position in prime locations and its sustainability initiatives position it to navigate the current market environment.
Full presentation:
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.