Swiss Prime Site 2023 with less profit – operational improvements
Published: Thursday, Feb 8th 2024, 08:40
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The real estate group Swiss Prime Site once again performed well operationally in the past financial year. However, special factors had an impact on the result. The company is positive about the future outlook.
The largest listed Swiss real estate group increased its rental income by 1.3 percent to CHF 438.3 million, according to figures released on Thursday. This was due to indexation, successful new lettings and a further reduction in the vacancy rate. The demand for modern, centrally located office buildings remains strong, the statement continued.
Meanwhile, income at Swiss Prime Site Solutions, the asset management division of SPS, fell by 4.4 percent to CHF 49.7 million. Due to last year's setbacks on the financial markets, numerous institutional investors had an increased real estate quota and therefore hardly made any new investments. Nevertheless, assets under management increased by a whopping nine percent to CHF 8.4 billion.
Overall, operating income amounted to CHF 658.6 million (+1.9%).
High profit from Wincasa sale
Profit before revaluations amounted to CHF 459.8 million after CHF 300.6 million in the previous year. The sale of Wincasa for just under CHF 150 million had a particularly positive impact.
Devaluations amounted to CHF 250.5 million after CHF +169.7 million in the previous year. The decline is largely due to the increase in discount rates. Rising interest rates have a negative impact on property valuations.
Profit from continuing operations amounted to CHF 86.7 million (previous year: CHF 397.1 million). On a consolidated basis, i.e. including the gain on the sale of Wincasa, this amounted to CHF 236.0 million.
The value of the entire portfolio remained unchanged at around CHF 13.1 billion. Added to this is CHF 8.4 billion from asset management, bringing real estate assets under management to a total of CHF 21.5 billion. Meanwhile, the vacancy rate fell from 4.3 percent to 4.0 percent.
SPS is on a solid footing, as the "A3" credit rating from rating agency Moody's shows. The equity base is strong with a loan-to-value (LTV) ratio of 39.8% (38.8%) for the real estate portfolio. Free funds from the property sales and the sale of Wincasa were used for development projects and targeted acquisitions as part of the capital recycling strategy, as was emphasized.
Optimistic outlook
Swiss Prime Site is optimistic for 2024. The new space handed over to tenants would contribute to higher rental income. SPS also intends to sell further properties as part of its capital recycling strategy in order to finance growth investments without additional borrowing and to keep the LTV ratio below 40% on a sustainable basis. In addition, the company expects only a slight increase in financing costs in 2024.
Specifically, Swiss Prime Site expects an increase in consolidated FFO I to CHF 4.10 to 4.15 per share in 2024 (2023: CHF 4.05). In operational terms, Swiss Prime Site anticipates a vacancy rate of less than 4% and a further increase in assets under management at Swiss Prime Site Solutions to over CHF 9 billion
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