PSP Swiss Property AG (PSPN) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the PSP Swiss Property Half Year Results 2026 Conference Call. I am Myra, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Giacomo Balzarini, CEO of PSP Swiss Property. Please go ahead, sir.

Thank you. Good morning, everybody, and welcome to our release of the half year results. As always, I will do a quick rundown of the key highlights and then open for questions as I have seen, we have many participants. We are pleased to report strong half year results. The predominantly driven by the already announced disposal of the Richtipark sale. We report an adjusted like-for-like growth of 1.7%. You remember that Q1 '25, we had a one-off effect on the costs, which would have had a negative impact. So without that, it is 0.7%, but on a like-for-like basis and adjusted 1.7%. We report a strong valuation gains of CHF 112 million on the back of already a reported gain in Q1. And we demonstrate and continue to demonstrate a very strong cost discipline and a very stable financials, which has been recognized by Moody's with an upgrade on the rating from an A3 to A2. Furthermore, we have seen again lower taxes, release of deferred taxes more than CHF 10 million in the first half, which clearly helps the earnings per share growth on an EPRA basis. If you look at the market, we are confronted with a very healthy letting market. The vacancy rate in the half year went slightly up to 4%. That's driven by the reclassification of the Hôtel des Postes. But also here, we have a strong visibility for letting successes. And here, we are already at the letting status of more than 70%. So the vacancy rate by year-end will come back down to 3.5%. And we see some early signs of recovery in Basel, especially in the Peter Merian building. We had some letting successes, and we are in discussions for further lettings. So we see first signs of a recovery also in that market. On the transactional side, we continue to see a very strong market. Also, there are rather little opportunities in our target segment. But clearly, the valuation gains were a demonstration by the strong market, but also by a strong cash flow development. Our outlook is confirmed at the EBITDA guidance of CHF 335 million was the vacancy rate. Guidance is confirmed at 3.5% despite a slight increase in the half year. The top line will come a bit down by the year-end due to the disposals of the Richtipark and the Gurten of last year and developments which are going on. But overall, we are on target to continue our shareholder-friendly dividend policy throughout the year. So all in all, a very solid and strong half year result. With that, I would like to end my entry remarks and hand over for Q&A.

[Operator Instructions] The first question comes from the line of Ken Kagerer from ZKB.

The first two with regards to the financing, the credit financing. Firstly, I mean, I've seen that the duration is becoming shorter and shorter. What is the strategy behind here? Do you just intend to go more below 3 years? Or is it again something that you think about a longer duration? The second one is with regards to the pricing of potential bonds following the rating change by Moody's. What is the impact there we can expect in your opinion? And the last one is on the like-for-like growth. You have shown some adjustments here. Could you please detail the reasons for those?

Thank you, Ken. On the duration, as you remember, we are of the opinion, first of all, that we have a very strong inflation linked in the portfolio of more than 90%. So we have a strong protection on inflation increase, which in our view, would then clearly be triggering the interest increase. We have seen that in the last cycle. Secondly, the low debt and the lowering debt is an additional protection for us. And I think if you look back historically, we always navigated within a duration of 2.5 to 4 years. What we try to do is to have a constant maturity of the debt. And then whenever we have a maturity, we clearly look at the curve. So for us, a 3 year is fine. But obviously, whenever we see that there's a window, we go a bit longer. But with the protections I mentioned with inflation linked and with the low debt, I think we are fine to be a bit on the shorter end of the duration, which has been a bit our strategy over the last 25 years. With regard to the pricing of the bond, I think it's a bit early days. I think what can be said that it's a rating improved. So it's clearly, if you look at the bond pricing and credit pricing, they're very strongly linked to a rating. How much this then makes up, we will see when we come up with the next bond pricing. We are in discussions continuously with the banks and the DCM teams. So I would expect an improvement. However, I think we talk on a single-digit levels with regard to spread levels. And you have also keep in mind that those spread levels change also over the time. So it's also difficult then to compare with former spread levels. On the like-for-like adjustment, this is just -- if we would just report the like-for-like as we did and we report, it's a 0.7% increase. If you recall, last year, on the Rue du Marché in Geneva in the first quarter, we had a very strong tax benefit, which reduced the Q1 costs disproportionately. If you take out that effect, the like-for-like of this half year would be 1.7%. This is only based on the letting activities without a single cost effect coming out of the Rue du Marché.

The next question comes from the line of Holger Frisch from Raiffeisen.

I have 2 questions. First one would be on the 2 earn-out agreements relating to the sale of the Richtipark and the acquisition of the property Steinentorberg Strasse So what do the earn-out agreements entail? And what is the time frame for the payments? And could you remind us of the annual rental income of the newly acquired property? That would be the first one.

The earn-outs, there are 3 earn-outs on the Richtipark, which are linked to the progress of the developments and the permissions of the developments. These are earn-outs which are linked to CHF 10 million and CHF 5 million. Probability, I would say, it's difficult to say because it's really now in the hands of the new owner in that phase. And we will review every quarter what the status is and if the probability of having a successful potential earn-out is 50%, we will book out that earn-out phase. With regard to the Steinentorberg Strasse, the new rental income is roughly CHF 2 million per year.

And I...

I hardly hear you, Holger.

Maybe better this way. Second question would be on the increase in the property values in Zurich. You said they were broadly based. But were there -- are they broadly based or were the individual properties that saw more significant increases in the first half of the year?