Swiss Prime Site: Significant increase in revenue and profit

Swiss Prime Site's operating income rose by a good ten percent to CHF 585.3 million, with both the core real estate business and the services segment increasing their earnings: In the real estate segment, there was an increase of 16 percent compared to the previous year, with income reaching CHF 244.8 million. In the services segment, operating income rose by a good seven percent to 382.5 million.

The real estate portfolio with 189 properties (two more than in the previous year) reached a new high of 10.8 billion, according to Swiss Prime Site. The net yield remained stable at 3.7 percent. The vacancy rate fell year-on-year from 5.5% to 4.7%. The goal for this year is to reduce the rate to below five percent.

Real Estate segment makes major contribution to EBIT

The operating result (EBIT) amounted to 232.9 million in the first half of 2018 (prior-year period: 215.8 million). At 217.0 million (prior-year period: 202.1 million), the Real Estate core segment continued to make the largest contribution.

The result includes revaluations of 35.6 million, mainly from development sites and properties under construction as well as premature and long-term lease renewals, according to Swiss Prime Site. Rising rental income and income from the Partial sale of the "Espace Tourbillon" project 6.8 million as well as a first tranche of 5.5 million from the Disposal of the "Weltpost Park" project.

Operating expenses in the core segment rose from 47.1 million to 69.5 million, which Swiss Prime Site attributes primarily to expenses in connection with the sale of real estate developments.

The Services segment generated EBIT of 15.9 million (+15.5%), with the growth primarily attributable to Tertianum and Wincasa. Operating expenses in the Services segment amounted to 366.2 million after 343 million in the previous year. According to the real estate company, this increase was primarily due to higher personnel expenses and depreciation.

Profit of 152 million

Swiss Prime Site's profit amounted to 152 million in the first half of the year, compared with 141 million in the previous year. Excluding revaluations and deferred taxes, profit amounted to CHF 151.1 million (previous year: CHF 131 million). Earnings per share amounted to CHF 2.13, or CHF 2.11 excluding revaluations and deferred taxes.

The equity ratio was 41.2% as at June 30, 2018; the loan-to-value ratio of the real estate portfolio was 47.7%. NAV after deferred taxes amounted to CHF 65.25/share and was thus one percent higher than the previous year's figure. Swiss Prime Site's return on equity amounted to 6.4 percent (previous year: 6.0%). According to the company, this is within the long-term target corridor.

Swiss Prime Site is confident about the second half of 2018. The company assumes that the economic environment will remain favorable and that further growth impetus will be reflected positively in the results, the company writes on the occasion of the publication of its half-year figures. It confirms the targets it set at the beginning of 2018, specifically an increase in operating income and EBIT before revaluation as well as a vacancy rate of less than five percent. Recurring income from real estate developments will also make a significant contribution to EBIT, Swiss Prime Site added.

The project pipeline, which currently has a volume of over two billion, will offer further room for growth, especially as the projects currently being realized and planned have a net yield above the portfolio average. Swiss Prime Site anticipates additional growth from the real estate-related Services segment. The company intends to adhere to its current distribution policy.