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PSP Swiss Property AG, with a market capitalization of CHF 7.6 billion, reported its first-quarter results for 2025, showing a financial performance that was slightly below market consensus but aligned with internal projections. The company experienced a positive valuation uplift of approximately CHF 13 million on the Garner’s Plot/Leidenhaus Plot building. The stock, currently trading at CHF 165.52, saw a significant decline of 4.09% in the past week, reflecting investor concerns. According to InvestingPro analysis, the company appears to be trading above its Fair Value, despite maintaining a "GOOD" overall financial health score. The company also provided forward guidance with EPS forecasts for future quarters and years.
Key Takeaways
- Q1 results were slightly below market expectations but met internal targets.
- A positive valuation uplift of CHF 13 million was recorded.
- Stock price experienced a significant drop post-earnings.
- Continued strong performance in prime real estate locations, particularly in Europe and Geneva.
- Future guidance shows stable EPS forecasts for upcoming quarters and years.
Company Performance
PSP Swiss Property AG’s performance in Q1 2025 was marked by a slight underperformance relative to market expectations, although the results were consistent with the company’s internal projections. The company benefitted from a one-time positive impact from a sustainability label at the William Marche building. With an impressive gross profit margin of 92.2% and a stable dividend yield of 2.73%, PSP Swiss Property continues to see positive sentiment in prime locations, with strong letting success. InvestingPro subscribers can access detailed analysis of the company’s financial health metrics and 12+ additional ProTips about PSP’s market position.
Financial Highlights
- Revenue: No specific revenue figures provided for Q1 2025.
- Positive valuation uplift: CHF 13 million on Garner’s Plot/Leidenhaus Plot building.
- Tax rate adjustment in Geneva: from 14% to 14.7%.
Outlook & Guidance
PSP Swiss Property AG has set EPS forecasts for future quarters: 1.52 USD for Q2 and Q3 FY2025, 1.54 USD for Q4 FY2025, and 2.4 USD for Q1 FY2026. The company projects stable revenue growth, with forecasts of 99.98 USD for Q2 FY2025, 100.07 USD for Q3 FY2025, and 103.44 USD for Q4 FY2025.
Executive Commentary
CEO Giacomo Bergzarini highlighted the positive sentiment in prime locations, especially in Europe and Geneva, and emphasized the company’s strategic approach to long-term value creation. He stated, "We continue to see a very positive sentiment on the prime locations, especially in Europe and Geneva."
Risks and Challenges
- Market bifurcation between prime and non-prime locations could impact future lettings.
- Adjusted tax rates in Geneva may affect profitability.
- Limited transaction market with few sellers could constrain growth opportunities.
- Structural vacancy rates could pose challenges if market conditions shift.
- Potential fluctuations in the cost of debt, although currently expected to remain around 1%.
PSP Swiss Property AG remains focused on managing lease expirations and strategic building repositioning, with plans to showcase projects in Geneva through a property tour.
Full transcript - PSP Swiss Property AG (PSPN) Q1 2025:
Chorus Call Operator, Chorus Call: Ladies and gentlemen, welcome to the PSP Swiss Property Q1 twenty twenty five Results Conference Call. I am Myra, Chorus Call operator. I would like to remind you that all participants will be in listen only mode and the conference is being recorded. The presentation will be followed by a Q and A session. The conference must not be recorded for publication or broadcast.
At this time, it’s my pleasure to hand over to Giacomo Bergzarini, CEO of PSPC’s property. Please go ahead, sir.
Giacomo Bergzarini, CEO, PSP Swiss Property: Good morning, everybody, and welcome to our q one results release. Otherwise, I will give a quick headline rundown on the on the major items we saw. As you know, q one follows pretty quickly the full year release. So if I have it, not much news. But if you start on the listing market, we continue to see a very positive sentiment on the prime locations, especially in Europe and Geneva.
That’s a continuum. Meanwhile, we saw that also on the listing side, and we continue to see a bifurcation between prime and non prime being on the letting side, being on the rent side. If you look at the at the letting success, it’s just a few highlights, which are probably not material with regard to the rental income, but are quite important with regard to letting levels or vacancy rates. The one is on the redevelopment of the Boulder in Berne, where we had a lasting success at rents at slightly above 400, which are pretty strong rents for Bern. Clearly, it’s a very centrally located building.
It’s a rather small space, but I think we are positive on that side. Secondly, we fully let now Limat Care. If you recall, we had offers to let the space is slightly below right a hundred. We tried to stick to our target, and we now have fully let the the building and the the and and relet the last two floors at rent above 800. And finally, non prime, but working on since about fifteen years, We have almost fully let the Rheinfelden with the remaining office space.
We have just a little bit of of retail data. I think these are quite nice successes also. As I said, not really material with regard to those rental income. With that, we are confirming and reiterating our vacancy rate guidance. If you go to the transaction side, the market is intact.
Also, we see limited transaction on the prime side. This is not due to the fact that there are not potential buyers, but there’s still very few potential sellers. There has been a transaction on the Coracree in Geneva, which an asset has been traded. There is an asset on the market slide one on really room, but there is still only few transaction in that market predominantly due to the fact that we don’t see really a sale from that end. If you go quickly to the results, on the one hand, also, are a bit below the market consensus.
We are fully in line with our projections. We have a slight positive impact on the cost side. This is due to an effect on the building at the William Marche where we got the Ashby label, the sustainability label. Through that, we are we we don’t need to pay the property taxes on that building for the next also twenty years. We had accrued an amount, the the yearly amount on this tax amount, and we were able to release it now in Q1 for the last five years.
This is a one off effect for the quarter, but this extra label, which is sustainability label in Geneva, has a positive impact on that building. The second element is on the valuations. As you know, we have typically no valuation change in q one and q three. But also this year, we had a positive incidence on a building on the Garner’s Plot, Leidenhaus Plot, where we had to ask the value due to leasing contract to review the valuation, which triggered an uplift of roughly 13,000,000 on that building, and you saw that on the income income line. With that, if you look forward on the valuations, and I anticipate a potential question, if you look at the current transaction market, if we look at the structural vacancies and the market rents, I would expect that there is a slight uplift on the values towards mid year if there’s nothing material which is changing, predominantly due to the fact to market rent levels and structural vacancy rate adjustments.
If you go quickly on the on the major highlights on the projects, the one to highlight is the project in Valisand and the risk deposit got the official rezoning. Although, they’re still in the field period going through, so legally, it will go through by midyear. But the local commonality and the population had a positive vote on the rezoning on all the projects which were planned, of which also our was part. And secondly, on the Levenbroich side, we are progressing with building permission and and potential operators on the repositioning of the Levenbroich Rett Building. Here, we’ll disclose more towards mid year, but we are also pretty positive on that side.
If you look a bit on the on the consensus difference on the income vis a vis what we delivered, you might interpret that the taxes were higher. And in fact, we have to adjust the the rate tax for the Geneva properties, order rate tax going forward. The tax rate has changed 14 to 14.7%, and this has an impact on the taxes we have to pay in Geneva, and this probably explains a bit the differences between our net income result and the. With that, I’d like to go straight to the q and a and open the night.
Chorus Call Operator, Chorus Call: We will now begin the question and answer session. Anyone who wishes to ask a question may press and 1 on their telephone. You will hear a tone to confirm that you’ve entered the queue. If you wish to remove yourself from the question queue, you may press and 2. Anyone who has a question may press and 1 at this time.
The first question comes from Steven Bowman from ABN AMRO. Please go ahead.
Steven Bowman, Analyst, ABN AMRO: Hey. Good morning, and thank you for taking my questions. Quick one. Like like growth insurance is slightly negative. Could you please comment on that one?
Giacomo Bergzarini, CEO, PSP Swiss Property: Can you can you repeat that? I didn’t understand it.
Steven Bowman, Analyst, ABN AMRO: Yes. Sure. So if I look at like for like growth insurance, it’s just slightly negative, minus 40 bps. Could you please comment on that?
Giacomo Bergzarini, CEO, PSP Swiss Property: Yes. If you if you recall last year, we had a strong contribution on the turnover rent in one building, which is on a repeat. And this is based on the fact why it goes it went to to do it.
Steven Bowman, Analyst, ABN AMRO: Okay. Clear. And the second one, since you are adding the the engineer for the redevelopment, Could you please comment if there are any other developments also in that area? And what I mean is that the municipality in the past mentioned that they want to revitalize the the to share the bugs a bit. So maybe if there’s some update on that.
Giacomo Bergzarini, CEO, PSP Swiss Property: I would say I say I would say nothing really material. There was a a larger transaction of the Benpe building in that area, but that’s a few years back to repositioning. I think the overall reversal revitalization of that area is ongoing. There are also the buildings which were at the time sold by Lombardier, which will be reconverted, but I think that adds all to the quality of the custody bond. So nothing we would be worried about, but rather positive for the overall area and our project.
And we have seen that, by the way, also by the letting success to a bank already on the on the on the and and also on the letting success of the really as we have seen. So we are rather positive on this side.
Steven Bowman, Analyst, ABN AMRO: Okay. Clear. Thank you so much.
Chorus Call Operator, Chorus Call: The next question is from Ken Cagar from ZKB. Please go ahead.
Ken Cagar, Analyst, ZKB: Good morning, everyone. I have two questions. The first one is regarding the expiries in 2017 and ’eighteen. We see there 16%, which is a rather high number. Could you give us a bit of a color on the potential effects on the vacancy rate there or where you see those renewals?
And the second question is on Vale seven. Last time you said once you have the permission, you will give us a bit of a color on on on on where this journey is going, which if we would sell the whole project, what the the potential associated profit with such a sale would be, how far you would go in development by yourself if you were to take an s x swap with, for example, a Swiss lodge as an option. That’s that’s basically it. Thank you very much.
Giacomo Bergzarini, CEO, PSP Swiss Property: I think for the second one, you’re absolutely right that we don’t have the permission yet. I think we have to wait for the previous period. Oh, I think it is I think it is fair. We will we will disclose more details in the half year or in q three. Think this is a it’s quite a rather complex project with many both parties, and and one has to really think through before making public statements.
I think what we can reiterate is the overall commonality, the mayor, the whole city are in favor of this overall rezoning, which will bring more more residential areas to the commonality. We are positively impacted, but we are working together with the local authorities to develop an interesting project. And and how it will then look once we approve, we will also obviously, in our responsibility, disclose it. But whatever we pay talk now, it’s it’s premature. So I hope you you understand.
With regards to the no. No. But I think this is this is more than fair. With regard to ’26, as as as you remember, we had an expiry on the media customers with with the tenant of Pictet. We are working there, on the one hand, on the relating of the full bidding.
We are in discussions with tenants. Secondly, we are also thinking about the potential reconversion. So I think this is the the largest in in in the in the next year. And then and then we have in in ’27, we have some retail expiries, but we are very positive based on the demand we see that that we can really relet or prolong those contracts. And there is one or two office tenants, which we know that this this will come to maturity.
But I think this 16% is an ordinary process, and then we will we will provide the vacancy rate guidance as we get closer to it.
Ken Cagar, Analyst, ZKB: Thank you very much.
Giacomo Bergzarini, CEO, PSP Swiss Property: Thank you, Ken.
Chorus Call Operator, Chorus Call: The next question comes from Eleanor Few from Barclays. Please go ahead. One just one question from me. So your cost of debt has been quite flat for the last few quarters. Maybe just how do you see it developing over the years to come?
Giacomo Bergzarini, CEO, PSP Swiss Property: Well, we we are currently also looking at the market that we could refund at those rates. We could issue a bond today at those rates. So I think I don’t see, at the moment, major increases. If we work on the credit side, we are rather decreasing even. So I think we would be at order around the 1% plus minus.
I don’t see at the moment, also based on the refinancing needs, substantial impact to it. Thanks very much. Thank you.
Chorus Call Operator, Chorus Call: The next question comes from Holger Frisch from Zurcher Consumer Bank. Go ahead.
Ken Cagar, Analyst, ZKB: Good morning. Two questions from my side. So first one would be on on the income taxes. Could you just remind us the background for the unusually high income taxes in this period?
Giacomo Bergzarini, CEO, PSP Swiss Property: Yes. It’s I I mentioned at the beginning, but perhaps it was not so clear. We have to adjust the the local tax rate in Geneva from 14 to 14.7% as they’re moving up towards targeting the 15% tax rate, and this explains the tax adjustment in q one. Okay. Thank you.
Ken Cagar, Analyst, ZKB: And then on the conversion of the Leuvencoiret to a service department, you also have some service department in in Basel. And if I’m not wrong, you are not operating them on your own. Right? So this will be Absolutely. And could you remind us how how many service partners do you have in your portfolio currently?
Giacomo Bergzarini, CEO, PSP Swiss Property: The only one we have is sizable is really the the Hochschlaffen. That’s the only one we have. We had one we had one in theory, which we swapped in the transaction with this life.
Ken Cagar, Analyst, ZKB: Okay. Thank you.
Giacomo Bergzarini, CEO, PSP Swiss Property: Yes. But just just to add, I think in general, we are not operating any of those activities. We are always looking what is the best user of the building, which medium, long term can provide us with the the highest rental income and add value to the overall area and to the overall building. And then we we go through normal bidding processes once we have identified it.
Chorus Call Operator, Chorus Call: Once again, to ask a question, please press star and one on your telephone. Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Darko Vazarini for any closing remarks.
Giacomo Bergzarini, CEO, PSP Swiss Property: Yes. Thank you very much. Before wishing you all a happy week, we have, as as most of you know, a plan for a property tour Thursday night and Friday morning in Geneva. Thank you for all those attending. If there’s anybody who would like to attend, we’ll host a dinner in the Caisse De Debonco on Thursday night, where we have also guest speaker on the local market, and we will do a property tour visiting all the projects and access in Geneva Friday morning.
So everybody who is not perhaps now already signed up, have been invited. You can do that online or can you can write to Vasco or myself. Thank you very much. Have a good week. Thank you.
Chorus Call Operator, Chorus Call: 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.
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