PSP Swiss Property – Solid half-year operating results. FY13 forecast confirmed.

During the reporting period January to June 2013, operating net income excluding changes in fair value remained with CHF 85.2 million at essentially the same level as in the previous year’s period. At the end of June 2013, NAV per share amounted to CHF 81.29, 1.0% higher than at year-end 2012 (CHF 80.48). NAV per share before deducting deferred tax liabilities grew by 1.6% to CHF 96.52 (end of 2012: CHF 95.00).

Real estate portfolio

At the end of June 2013, the real estate portfolio included 165 office and commercial properties in prime locations. In addition, there were five development sites and four individual construction projects. The carrying value of the total portfolio was CHF 6.428 billion (end of 2012: CHF 6.283 billion). During the reporting period, no investment properties were acquired nor sold. Already during the first quarter of 2013, the following new constructions in Zurich were successfully completed and transferred to the investment property portfolio: i) Brandschenkestrasse 152b (“Kesselhaus”), ii) Limmatstrasse 250-254/264/266 („Löwenbräu Red“) and iii) Theaterstrasse 22 („Vorderer Sternen“). The other ongoing site developments progressed as planned.

At the beginning of May 2013, the decision was made to invest approximately CHF 30 million in the construction of a health spa on the grounds of the “Genève Plage” in Geneva/Cologny, Port Noir. Construction of the building complex, which is already let to an expert operating company, will take until 2015. This project follows the successfully completed spas in Zurich (Thermalbad & Spa Zürich, Hürlimann site) and Locarno (Termali Salini & Spa, Lido Locarno). Furthermore, demolition of the property at Löwenstrasse 16 in Zurich and construction of a new building began in June 2013. The investment sum for this new building with mixed use (office and retail spaces) will be around CHF 7 million. Construction is likely to take until the end of 2014. The new developments and conversions on the other sites progressed as planned.

At the end of June 2013, the vacancy rate stood at 9.1% (end of 2012: 8.0%). 1.9 percentage points of the 9.1% were due to ongoing renovation work on various properties. Thereof 1.2 percentage points related to the properties at Bahnhofplatz/Bahnhofquai in Zurich. 0.4 percentage points concerned the renovation of the property at Bahnhofplatz 2 (formerly Aarbergstrasse 94) in Biel. The properties in Zurich West and Wallisellen (carrying value CHF 0.9 billion) contributed 3.4 percentage points to the overall vacancy rate. The remaining properties with a carrying value of CHF 5.0 billion (i.e. the total investment portfolio excluding the objects under renovation as well as those in Zurich West and Wallisellen) made up 3.8 percentage points. Of the lease contracts maturing in 2013 (CHF 42.0 million), 70% had already been renewed respectively extended at the end of June 2013.

As in the previous year’s period income from sold properties (inventories) was significantly higher, due to the sale of a part of the Löwenbräu site called „White“, net income excluding changes in fair value decreased slightly from CHF 86.0 million (previous year’s period) to CHF 85.2 million (H1 2013). Most of the other income and expense components, in particular financial expenses, progressed positively compared to the previous year’s period. Corresponding earnings per share (excluding net changes in fair value) amounted to CHF 1.86 (previous year’s period: CHF 1.94). The slight decrease reflected also the dilution effect of the sale of own shares in 2012 . For PSP Swiss Property, net income excluding net changes in fair value is the basis for the distribution to shareholders.

Net income including net changes in fair value amounted to CHF 158.7 million (previous year’s period: CHF 178.9 million). The decline resulted mainly from the lower appreciation of the properties (H1 2013: CHF 95.7 million) compared to H1 2012 (CHF 119.3 million). Of the CHF 95.7 million appreciation, CHF 43.1 million came from the initial application of the new IFRS 13 standard (Fair Value Measurement using the new concept of “Highest and Best Use”). Earnings per share including net changes in fair value amounted to CHF 3.46 (previous year’s period: CHF 4.04).

Rental income increased to CHF 138.1 million (previous year’s period: CHF 137.0 million). With CHF 26.2 million, operating expenses remained virtually unchanged from the previous year’s period. Financial expenses decreased by CHF 4.3 million respectively 21.5% to CHF 15.8 million due to the benign interest rate environment and the favourable effect of the newly entered interest rate swaps.

At the end of June 2013, net asset value (NAV) per share was CHF 81.29 (end of 2012: CHF 80.48). NAV before deducting deferred taxes amounted to CHF 96.52 (end of 2012: CHF 95.00). It should also be mentioned that a dividend payment of CHF 3.20 per share was made mid-April 2013.

With a loan-to-value of 30.0% (end of 2012: 28.4%), the capital structure remains very solid. Currently, unused committed credit lines amount to CHF 410 million.

Thanks to interest rate hedging transactions, PSP Swiss Property will continue to benefit from the historically low interest rate levels in the medium term. At the end of June 2013, the passing average interest rate amounted to 1.85% (end of 2012: 2.20%) and the average fixed-interest period was 3.3 years (end of 2012: 3.7 years). No major committed bank loans will mature until 2018.

In March 2013, the rating agency Fitch confirmed PSP Swiss Property Ltd’s rating with an “A-” and stable outlook.

Subsequent events

There were no subsequent events.

Outlook 2013

Despite all the economic imponderabilities, PSP Swiss Property remains confident about the future: the Company is well established in the Swiss real estate market with a strong capital base and a high-quality property portfolio.

The Company sticks to its long-term, value-oriented and judicious acquisition strategy and to its conservative financing policy.

Focus will be kept on renovation and modernisation of selected properties as well as on the development of the sites and projects.

Based on the assumption of an unchanged property portfolio, PSP Swiss Property still expects an EBITDA excluding changes in fair value of approximately CHF 240 million for 2013 (2012: CHF 238.3 million). With regard to vacancies, a rate of approximately 10% at year-end 2013 is expected (end of June 2013: 9.1%).

Key figures

Further information

2013 half-year report and presentation

Both documents are available as PDF on www.psp.info.

http://www.psp.info/reports

http://www.psp.info/presentations

Agenda

PSP Swiss Property – leading Swiss real estate company

PSP Swiss Property owns office and commercial properties valued at around CHF 6.4 billion in prime locations in Switzerland’s main economic areas; its market capitalisation amounts to CHF 3.8 billion. The 87 employees are based in Geneva, Olten, Zug and Zurich.

Since March 2000, PSP Swiss Property is listed on the SIX Swiss Exchange (symbol: PSPN, security number: 1829415, ISIN CH0018294154).

None of the information in this press release constitutes an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. None of the securities of the Company referred to in this press release have been or will be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), or under the applicable securities laws of any state or other jurisdiction of the United States.