Speaker #1: Ladies and gentlemen, welcome to the PSP Swiss Property Q3 2026 results conference call. I am Maria Licorns, your call operator. I would like to remind you that all participants are in anonymous mode, and the conference is being recorded.
Speaker #1: The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone.
Speaker #1: For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Giacomo Bazzarini, CEO of PSP Swiss Property.
Speaker #1: Please go ahead, sir.
Speaker #2: Thank you very much, and good morning to everybody. I will use the Q3 presentation as a baseline, with a quick introduction. I will reference a few slides, and then, as usual in Q1 and Q3, we go rather quickly into the Q&A, if that's okay.
Speaker #2: If we look at the market, since we reported our half-year results in August, we are still confronted with a very solid letting market in our prime locations of Zurich, Geneva, but also Lausanne, and lately also Bern and Basel.
Speaker #2: So I think from the letting side, we see, rather healthy and strong relettings. And we also confronted with a strong and solid transactional market, which on the one hand, it makes it, not easy to, undergo transactions, although we are currently working on, on 2 acquisitions.
Speaker #2: but it is also a clearly, a comfortable side for the yields. There's a strong demand for, real estate and prime assets in, in Switzerland in our location.
Speaker #2: I think these are two very solid baseline signs. If we go to the numbers on slide 9, as we have outlined already, mid-year, the rental income is coming slightly down.
Speaker #2: This is predominantly due to the disposal we had in, in the first half of the year, of the disposal of the real estate park, which was not compensated and not fully compensated through the acquisition of Schützengasse.
Speaker #2: That's something we will see going through for this year and next year also. Still, a healthy like-for-like, quick outlook as indexation came out for next year.
Speaker #2: Like-for-like for next year is expected to be 1.8 to 2 percentage points for our portfolio, backed by indexation of 1.4%. On the income from property sales inventories, I think this is what we have referenced on the Richter part.
Speaker #2: You have seen nothing after that. I will come to the valuations on the next slide. So overall, the operating income was up 8.6%, but nothing major in the third quarter.
Speaker #2: As it is also from the consolidated expenses, as you know, a very solid trajectory, very strong cost discipline. I think nothing major to highlight on the expense side.
Speaker #2: As it is also for the financial expenses, on the taxes,
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Speaker #3: Depending on acquisitions, excluding acquisitions, we come further down, which puts us in a very strong position to take advantage of opportunities. Besides that, financial costs are stable.
Speaker #3: Maturities are stable, so no surprises on the balance sheet for us. And on the development projects, we are in line and on target with all the developments.
Speaker #3: I think from that end, I would say a very solid Q3—very positive on the outlook for the company. And then I would hand it over to the Q&A.
Speaker #1: We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and 1 on their telephone. You will hear a tone to confirm that you have entered the queue.
Speaker #1: If you wish to remove yourself from the question queue, you may press star and 2. Anyone who has a question may press star and 1 at this time.
Speaker #1: The first question comes from the line of Matteo Lindauer from Vontovel. Please go ahead.
Speaker #4: Yes, good morning everyone. Thank you for taking my question. My first question is on topline development for Q4. Do you have any guidance for rental income in the upcoming quarter?
Speaker #4: And could you share your view on 2027 topline development? And my second question is, maybe any comment on today's article in a newspaper saying that the Überhof will be sold, and your view on its implications for the Zurich office market.
Speaker #4: Thank you.
Speaker #3: Thank you, Matteo. I think we never give topline guidance for the following year before the year's results. I indicated the like-for-like growth we expect based on indexations.
Speaker #3: There have been no material changes to the portfolio, despite the disposal of Richter Park. So, I think here, I wouldn't expect major changes.
Speaker #3: With regard to the article in the NZZ, in general, I think there is a long lease contract still with the existing tenant.
Speaker #3: I think it's an interesting area, probably predominantly for residential. I think any new product which is developed in Zurich increases, even more, the attractiveness of the city of Zurich.
Speaker #3: So, we are positive on the developments and look forward to understanding who it is.
Speaker #4: Thank you.
Speaker #1: The next question comes from the line of John Wong from Van Lanschot Kempen. Please go ahead.
Speaker #5: Hi, good morning. Thank you for taking my questions. it's, it's felt like your tone on acquisitions changed a bit. As you mentioned in your outlook that major acquisitions are unlikely, but at the beginning of this call, I think you mentioned you were working on two.
Speaker #5: So I suppose those are a bit more smaller, on, on the smaller side. so, so what, what has changed here in, in, in your tone?
Speaker #5: Is the investment market more competitive, or is it driven by cost of capital?
Speaker #3: The tone changes if there's an opportunity. So, if we don't have opportunities, you know, we are not working on the acquisitions. If we see an opportunity, then we're positive.
Speaker #3: I think if you look back over the last six or seven years, we have always been able to undergo a large transaction. We only do it if we see value creation behind it.
Speaker #3: We are currently looking at two, I would say, part-of-market transactions which are not so small. It's always difficult to judge if it goes through, but this is our approach.
Speaker #3: So I think there's not too much read-across. It's an opportunistic approach on assets which fit in to our credentials and are able to create value.
Speaker #3: yes.
Speaker #5: Okay, thank you. And you also mentioned that reletting is quite strong and that Fakes is likely to come down further in 2027. So, just wondering what you're seeing in terms of market rental growth and what is the magnitude of reversion that you're capturing?
Speaker #3: It is very, it's very lease-specific. What we have seen now is that we are able to relet at higher terms than the market rent.
Speaker #3: Which is in the valuation, probably also because the value assumes a lower market rent at the expiry of the contract. Selectively, we're even able to increase in-place rents, but it's very asset-specific.
Speaker #3: I think overall, that then translates into an expected like-for-like. We highlighted the range from 1.8% to 2% for the full year.
Speaker #5: And just to confirm, that's without spending any major renovation spend?
Speaker #3: On the ones I mentioned, yes, yes—without.
Speaker #5: Okay. Okay. Clear. Thank you.
Speaker #3: Thank you.
Speaker #1: The next question comes from the line of Ken Kagerer from ZKB. Please go ahead.
Speaker #6: Thank you very much for taking my question. Good morning, everyone. I have three short questions. The first one is also regarding two acquisitions. Besides the two deals you're looking at right now, if you were to find attractive assets at the right price, which city would you currently like to add?
Speaker #6: Just one.
Speaker #3: We are not used to getting cornered. So I think the CBDs of Zurich and Geneva are very attractive, but we are also always looking at Lausanne and Bern.
Speaker #3: I would say at the moment, we are still, although we see a, a, a stabilizing of the market for Basel, we are a bit more reluctant.
Speaker #3: But for the other four markets, we are quite positive.
Speaker #6: Thank you very much. The second one—you have been quite successful with the expiries in 2027. Nevertheless, where do your discussions stand with the remaining 6%?
Speaker #6: And, what can we expect from there? I mean, you have given a bit of an indication with your vacancy, your vague vacancy guidance, but, also in the context of the previous question, would you expect higher rents with those 6% or not?
Speaker #6: Do you think that could be something that would go into, vacancy or renovation, or do you feel very confident that we will see this washed out, rather sooner than later?
Speaker #3: I think, I think you see, in general, almost all three elements. We have one lease which goes into development. We have one lease which goes partially into vacancy because the tenant will give back a bit of space.
Speaker #3: And we have two leases where we're talking about slight rent increases. I think this is normal in such a large portfolio. The one specific one, Mühlenbachstraße, is also declared as a project, and the tenant there goes in expiry.
Speaker #3: But we are already on the Mühlenbachstraße, negotiating with the tenant for a full lease of the whole building. Sorry.
Speaker #6: Thank you. Now, my last question, which is a bit tricky. It refers to slide 39 in your presentation. And it's actually with respect to the current political situation.
Speaker #6: I mean, what's your best guess, of the non-registered, in terms of foreign ownership and Swiss ownership? And, and, and what would you believe would be the total foreign ownership ex-Europe, with your company?
Speaker #3: You referred to slide 41.
Speaker #6: For me, it's 39, but shareholder base.
Speaker #3: Okay. I would, I would say let's, let's stick to the current process of the debate. The, the debate is supposed this, motion of, of Vesci is supposed to come to the legal, commission of the upper house in the first quarter of next year.
Speaker #3: I think there's a strong headwind to it. We continue to be convinced that it will not pass in that way. I think all the rest, with all respect, is speculation.
Speaker #3: So I think I would clearly emphasize that this motion will create no additional residential unit. Everybody is aware of it. The external studies which have been conducted by the federal government confirm these conclusions.
Speaker #3: I think at the moment, there's a political process, and we clearly are all involved and engaged. But I think, more than that, there's nothing additional to say in my view.
Speaker #6: Okay, this was a very elegant way of not answering my question, but it's okay. I mean, I understand it's very hard to say where the non-registered are domiciled.
Speaker #6: Thank you very much.
Speaker #3: Thank you.
Speaker #1: Any further questions? Please press star and one on your telephone. The next question comes from the line of Tomaso Perto from UBS. Please go ahead.
Speaker #4: Yeah, good morning. I have one question on the like-for-like growth. At H1 results, like-for-like was still at 0.7%, if I'm not mistaken. It is now 0.5%.
Speaker #4: So that indicates Q3 was quite a deceleration. Is that a correct reading?
Speaker #3: Yes, we have. Yes, a little win. But the first quarter was, yeah, the first quarter was also driven by the turnover rent co-contribution from the hotel Ruby, which always comes in Q1.
Speaker #3: And you have to figure, take into account that the overall year is negatively affected by the very positive contribution on the tax side last year.
Speaker #3: So if you take that down, you have, again, above 1%. You know, the property tax in Geneva, which had a positive impact last year, clearly had a negative impact there because it's not recurring.
Speaker #3: This goes down to that.
Speaker #4: Okay, thank you. And then, another follow-up on the two acquisitions that you mentioned. Do you have a bit more color on the potential timeline, or potential transaction yields, that you would be looking at?
Speaker #4: And can you kind of quantify what it means if you say they are not small? What kind of range can we expect?
Speaker #3: I think the only thing I would add is that it's perhaps comparable to what we did in past years.
Speaker #4: All right. Understood. That's all. Thank you.
Speaker #3: Thank you.
Speaker #1: The next question comes from the line of Holger Frisch from Raiffeisen. Please go ahead.
Speaker #7: Yes, good, good morning and thanks for taking the questions. I have two. first one, average interest costs have fallen slightly, almost more or less stable, but the low maturity has also shirten forward.
Speaker #7: So, what are your current expectations regarding interest costs for 2027, and what are your plans for the upcoming refinancing of maturities, which sum up to more than $600 million for the next 12 months?
Speaker #7: That would be the first one.
Speaker #3: Thank you, Holger. I think we will, continue to look, on bonds. today, if we would issue a five, six-year bond, we would issue it at roughly 120, 125.
Speaker #3: We are looking at fixed credits, and we can draw, on our own credit lines. So I think the refinancing is not really an issue for us.
Speaker #3: It's more a question of which instrument we take to have always a bit of a balance and reserves. and then the maturity will probably go slightly up, depending, you know, on, on, on how long we go.
Speaker #3: But it will not materially change.
Speaker #7: Okay. Great. Thank you. And the second question, I saw on page, 32 of your presentation that overall CapEx for 2027 increased from 55 to 64 million.
Speaker #7: That is basically due to the delay from 2026 to 2027. So, what were the drivers behind the delay in CapEx?
Speaker #3: Well, one, one big delay was San Francois. I think there we had delays on, on within the developments because for every adjustment, clearly, we, we needed an extra building permission or, or adjustment permission.
Speaker #3: And we had also an increased cost, which is reasonable. But these two factors were driving the additional CapEx.
Speaker #7: Okay. Great. Thank you.
Speaker #1: The next question comes from the line of Reto Portman from Z Capital. Please go ahead.
Speaker #8: question concerning the guidance. To reach your 33, 35 EBITDA guidance, you need a bit, higher EBITDA in Q4 than in Q3. Does this assume booking one of the Richter Park earn-out tranches?
Speaker #3: No, we don't expect, for the moment, earn-out contributions from the Richter Park. This is not currently foreseen.
Speaker #8: Okay. Thank you.
