PSP Swiss Property AG

Thank you, Maria, and good morning to everybody to our release of the annual results of 2025. As every year, I will have a quick rundown through the major highlights of the year, and then I will open for the Q&A in order to have enough time to address the questions.

As stated already at the press release, clearly, we are happy and pleased to report an excellent year-end results for 2025, which is predominantly backed by very good business sentiments in our major markets of Zurich and Geneva, which reflects roughly 80% of our portfolio. We have seen major relettings within our portfolio, and we are very positive on the letting market in general in those areas, specifically in the city areas.

There's a clear bifurcation between city center and surrounding and secondary locations. That's a trend we have seen now since a couple of years.

Second point, we are confronted with a huge amount of liquidity, which needs to be invested in the real estate, first and foremost residential, but then also prime office and that has also driven the valuations last year, backed by the letting successes. If we go into the headline results, and we start with Slide 9, we see that the operating income went up by 9.4%, clearly driven by the net changes in fair value, which we will address separately.

The rental income was flat, also driven by the fact that we have disposals last year, which has reduced the top line. On the other hand, we had positive contributions by the finish of the projects in Basel, in Zurich and [indiscernible] acquisition in Geneva.

We had one slight gain from a disposal of an investment property in Bern, Gurten, which ends basically the development side we owned in Bern and contributed CHF 7.7 million gain. We have no gains out of disposal from inventories, and we have seen no acquisitions during the year.

I will come later to that point. On the expense side, you see an overall reduction of the operating expenses by a further 1.2%.

The biggest contributor was the property tax refund we had in Geneva last year, which reduced the operating expenses by 12.8%. For the ongoing year, you will see a bit of a rebalancing of that line back to the roughly CHF 11 million.

Besides that, we have and demonstrated continuously high cost discipline and we turned in this year with an EBITDA margin slightly above 85%. Financial expenses on Slide 11 have leveled out roughly at CHF 35 million.

This is a run rate we should see also on '26, considering today's interest rate environment and the taxes of CHF 95.5 million were separated CHF 31 million in current taxes and CHF 65 million deferred taxes, whereof CHF 50 million were linked to the valuation gains. With that, the Board proposes, again, an increase in the dividend of CHF 0.05, CHF 3.95.

You see that on Slide 12, which results in a payout ratio of 80%. If we go into the portfolio on Slide 15 and 16, we see that the vacancy rate came in as expected to 3.5%.

We had a higher vacancy report in Q3. If you remember that, I think this can always happen depending on the expiry profile, but we were pretty convinced that we get to this 3.5%.

If you look on the details, Slide 16, we see letting successes in [indiscernible] , the Grubenstrasse, which with the current lettings is led by almost 80%, and we are confident that we will lease out the remaining spaces over the next couple of months. And the second big letting successes were at [indiscernible] where we are today at letting of almost 85%, but have advanced negotiations of the remaining small retail space and one office floor.

On the lease expiries on Slide 17. The major highlight is that for this year, we are almost done.

We are left with 16% of lease expiries that helped us to give also a guidance of 3.5% vacancy rate for '26. And the major highlight for '27, always the big question on the release renewal on Google.

Google made a public statement beginning of the year that they will concentrate on 2 sites in Zurich, one is [ Europaallee ] and second is the Hurlimann site. And on this end, we are now in the paperwork and finalizing the renewal.

These lease expiries still within the numbers of '27. If you go to the valuation gains and the overall portfolio appreciation, for '25 was roughly 2.9% if we include the investments.

The valuation gains per se was CHF 231 million. The one part, CHF 13.7 million was in Q1.

We added -- the value added another CHF 97 million in the half year and for the fourth quarter, another CHF 118.5 million. Besides the yield compression overall of 2 basis points, one of the key drivers on the Q4 valuation gain was the letting of 2 high street retail contracts at the rent of above 25% plus to the in-place rent, and this triggered a revaluation gain in Q4.

It may make up the full amount, but clearly, it was a significant contributor. And as we observed over the last 2, 3 years, the high street retail, especially in Zurich, at the right location is sought after, and there is quite a lineup of tenants looking for those spaces.

If you go into the capital structure, I will not go into the detail of the green finance policy authorities at our [indiscernible] . All the funds coming from the bonds, coming from the credits and coming from the private placements are linked to our ambition to reduce emissions.

Overall, on the debt, we have still roughly CHF 1 billion of committed unused credit lines. But if you go to Slide 23, for us, the highlight is really that the loan-to-value came further down to 33.1% today, clearly backed by the one hand, the valuation gains in the portfolio predominantly.

Today, we fund at roughly 80, 90 basis points or on a 4, 5 years. So I think the funding environment for us continues to be very interesting.

Some highlights on the developments. If you look on 25, we are finishing the Hotel des Postes.

We are there with a lease of leasing level of 50%. We have leased out the retail space.

We have signed roughly 6 office leases, all at rents between CHF 450 million and CHF 490 and we have a reasonable good letting level that we expect that we could lease up the whole building within the next 6 to 12 months. The overall Quartier des Banques develops very well.

If you look at the detail, for instance, on the #5, the Rue de l Arquebuse is almost fully let. We are left with one floor.

As you know, we have let also to a private bank on Slide 27, the full building Banques Henriette. And on Slide 28, we have received a building permission for Jean-Petitot 15 and they are in negotiation with the bank.

On 12 Jean-Petitot, we are still waiting the building permissions. I will address the Wallisellen Richtipark at the end.

On Slide 29, I would like to first highlight the progress of Lowenbrau Red, Slide 30. We got the building permission.

We have identified an operator. We are signing contracts with that operator.

And we are positive that we will soon be able to open a hotel in Lowenbrau Red by end '28. Two further projects in Bern, Eigerstrasse, Slide 31.

Here, we are planning serviced apartments. We are in the face of submitting the building permissions.

Rue de Hesse in Geneva will start this year in summer, the reconversion in the hotel where we have fully signed lease agreement and on Slide 33 and 34, we are starting the works in Marktplatz in Basel. Very central building location.

The rendering is not really providing the full beauty of that building, but it's on the central marketplace of Basel and Muhlebachstrasse is a very small project, but it's on the Stadelhofen where you will hear more over the next couple of years on what we plan to do on that side. A quick update on Wallisellen and I think this will be then also part of the Q&A.

We are in final negotiations on 2 transactions, which would include the disposal of the Richtipark and the acquisition of a very center located asset. We have signed head on terms and are in a final due diligence on -- with the 2 parties.

So this is something -- if everything goes well, should be expected within the next 6 months. However, this is quite a complex transaction.

So we will have to continue to work on it. This leads me to the end, to the guidance for '26.

We guide for an increased EBITDA of CHF 310 million for 2026 and a guidance on the vacancy rate of roughly 3.5%. That would end my outlines, and I would like to hand over for the questions.

I've got some questions on the investment market. So could you please update on the general investment markets or how much deals are in the market versus 6 months ago?

Second, you mentioned the one acquisition, can you provide a bit of idea on the size? And also if there is possibility, are you looking at more than that's only deal?

And the third one, what is the probability that you would equity markets to fund external growth in '26?

On the first question, the number of deals, we see more liquidity in the market. We have seen a huge amount of raisings through the funds.

On our spectrum on the really prime. There are a few transactions we are observing.

But as always, on that level of quality, there's not a huge amount of transactions available. I think this will clearly support in my view, the yields and probably even put a bit pressure on the yields, but number of transactions not materially changed.

I hope you understand I cannot give you insights on the transaction related to Wallisellen we are pursuing. I think this is a highly delicate operation at the moment.

And yes, I think by the rest, we are looking at acquisitions, we would only tap the equity market if we see a substantial large portfolio, which is accretive day 1 and only then. And considering that, I would exclude it for the moment.

Okay. That is very clear.

Then if I may, one last question on artificial intelligence. Could you provide me any updates on the perceived risks there?

For example, has there been any tenant stating that they want to downsize due to that? Just any color would be helpful.

I think it's a quite broad topic, which is a topic which we follow very intensively probably all the market participants. In a nutshell, we see optimization within our organization.

And by seeing that, clearly, we see that also with other corporates. What we observed, and I think this is especially true a bit for the major cities of Zurich and Geneva that the impact of this optimization within the organization will lead more of freeing up space in larger plots, larger office spaces outside of the city centers.

In the city centers, the buildings are typically of a smaller size. The companies which are there, they are trying really to have their key people there.

So I think from a first wave if we see optimizations with the tenants, which we currently are not seeing on a big scale, leading space, this would be absorbed rather quicker in the city centers than outside. But without any question, there will be an optimization of space.

I think our tactic over the last years has been to provide Grade A space in very central locations. And within that, we see that there's a continuous demand for it.

But it's clearly something we continue to observe and therefore, that's also a very important reason. We are very conservative in acquiring buildings, which are not centrally located, which have large floor plots, and which are then perhaps a bit more exposed to optimizations of tenants.

My first question refers to the relatively low LTV ratio that you carry currently that should give you theoretically the opportunity to do accretive acquisitions. Nevertheless, you've said prices are high.

What can we expect from you there? And is there any way that you come back to a growth trajectory for your company?

Well, I think the accretive transactions, if I may say, is independent from the loan to value. It's just that you have a bit more fire power to do the acquisitions.

So that's clear. I meant you could do acquisitions as opposed to others out of an increase in the leverage.

Absolutely. I think it's a valid point.

However, I think we keep going on with a very strong discipline on the acquisitions. We need -- when we buy a building, we need to be able to create value in the medium term by either increasing the rents, by either increasing the floor price or by either having a very good visibility that the land value will increase due to the scarcity.

The things we have observed the transaction last year has not led to that. I think at the premise, we observed that an investor can also leverage himself.

So we will leverage if we really see those accretive transactions. From a pure earnings per share point of view, it's a no-brainer.

We have a significant or an interesting yield pickup, but this does not justify just the sake of a transaction. We are convinced, if you look back over the last 5 years, we bought for more than CHF 600 million.

We have not done acquisitions last year. We are monitoring the market, and we are for sure that if there is something interesting for us, we can be ready to do those acquisitions.

The next question refers to the integration of Credit Suisse into UBS. Could you give us an update on the threats and opportunities that you see from the consolidation of the office space, predominantly in the Zurich region and Geneva region?

On the Zurich region, I think what we learned from the announcement of Google is that they take over space, which is giving back by UBS in the Europaallee. What we observed is that UBS and what they publicly say is concentrating their activities around [indiscernible] Paradeplatz with significant investments, especially in the Paradeplatz, which is, I would say, central for us.

So this is a very, very strong commitment of the bank in the central location how they then plan tactically. Their 3 locations being in [indiscernible] [indiscernible] and [indiscernible] I think that's a question to be addressed to them.

The direct impact for us is due to their concentration positive. Then as I said before, on AI, also they will optimize their space.

But by their commitment to the city center, I fundamentally believe that they attract other companies who want to be close to the bank and to the financial center. To that end, I'm very positive on that combination.

With regard to Geneva, I would say it's neglectable in a broad large scale. It's not comparable to what we observed in Zurich.

And maybe 2 quick ones. One on the [indiscernible] part?

Could you tell us if it's accretive on the yield post investment, the new use compared to the previous years? Or what would be the impact there?

We are signing a quite a long lease with a very good tenant in a residential type although it's a hotel or similar to a hotel concept. So I would expect same or slightly reduced yields.

However, for us, it's an attractive rental contract, which provides higher rent than in-place rents, we would have. So I think from that end, predominantly reason for entering it that is to increase cash flow yield.

But I think it's a derisking of that asset in that location.

And the last one on Globus on Bellevue. I mean we hear that Globus is not very happy with the performance of this location.

Are you in discussions with them? What is the situation there?

To put it in perspective, without offending, it's a very small contract in the overall piece. We are in discussions with all our tenants, but here, we have a rental contract, and I think there's not much to discuss on the rental contract and to discuss today on this.

So if I understand it correctly, in Q4, there was another deferred tax release. Do you see more of such effects in 2026 and '27?

And should it be considered a recurring item looking at how it also happened in '25 -- '24?

Well, the deferred tax release, you were referring goes back to a system change we have disclosed in '22, '23, which will take from that point on 20 years. So today, I think we are in year 3.

So for the next 17 years, you can probably plot in a CHF 5 million to CHF 10 million deferred tax release. It was CHF 14 million last -- CHF 10 million last year, CHF 40 million this year.

So I think that's something we can plot in and which we have in length, I think, disclosed in '23.

Okay. That's clear.

And looking at the funds that are being raised in the market, do you see this as competitors to the type of investments that you are looking at? Or does this open opportunities for you to recycle some capital?

-- the funds, which have raised our only in very limited way probably competing with us.

The funds which we have raised are only in very limited way, probably competing with us. These are funds which will be deployed either on the resi, on secondary commercial, if it's a very stable prime, prime, but for the value add, which we look at, we observed that those institutional players, and we have seen that in the past, are not really looking to potentially buy vacancy, repositioning a prime asset, touching a historically protected building.

So I would say, clearly, these are funds in the market. But for the respective transactions we have done in the past, I don't see them so competing.

But clearly, they will have to deploy those funds, and this will probably drive yields a bit further down.

One question on guidance. So is it -- I guess Richtipark is not included in the guidance, right?

And so if that's correct, where does this additional CHF 10 million of EBITDA come from? Is that really from -- mostly from Hotel des Postes that was being finalized?

Or does this also like take into account the selling of [ Aarau, ] which has already happened this year? Or where does it come from?

Thanks, Tommaso, it's a very good question. I can confirm that Wallisellen is not part of the guidance.

Secondly, this additional CHF 10 million, CHF 10 million CHF 15 million you were mentioning are coming from development sales of inventories. We are working since we said over the last year of repositioning office buildings, which we believe are not anymore office buildings for the future in condominiums.

We had reclassified those. We are in process of evaluating and conducting a disposal, and we have factored a potential gain into the EBITDA guidance in the amount plus/minus you mentioned.

But I can confirm again that Wallisellen is not part of that equation.

Very clear and then additional questions, if I may. One on the payout ratio or the dividend.

I mean, combining the relatively low payout ratio and low LTV. Is there any chance that sooner rather than later, you will start raising the dividend by CHF 0.10 instead of CHF 0.05?

Normally, a payout ratio go from 0 to 100% and we are at 80%. So calling this relatively low, I would say, I think it's a fair payout ratio.

As we said, we want to give a continuity. We want to give predictability.

Clearly, there is room theoretically for a stronger increase but we prefer to first work on the cash flows and the earnings and then subsequently, in case further increased the dividends. If you look historically, our payout ratio was always around 80, 85, 90, that's correct.

But I think this is a fair development. On the loan-to-value, I'd like to add and without giving any signals of being bearish but we are really operating in a very low interest environment and the sensitivity is not neglectable.

So we are very happy with the loan-to-value of 33%. It gives us all the flexibility, but it gives us also all the protection.

Because we have to be aware that if there is a change on the rates, which we wouldn't expect. These are not only an impact on the leverage, but it has then also an impact on the funding levels.

And I think here, we are pretty safe to be able to continue to fund on those spreads we are currently funding because we have quite of a lead weight on the loan to value. Being on the funding, big and also doing opportunistic acquisitions but we wouldn't leverage now on this strength to increase the dividends by another CHF 0.05, CHF 0.10.

So we are focused on earnings quality, on cash flow generation and the continuous improvement of the payouts.

And then last question on the [ Gurtenbrauerei ] property you sold. I mean it was a relatively small transaction, but the gain was quite significant.

So where does that gain come from? Was that book value there just so conservatively estimated?

We have seen that also when we did the last disposal in Rheinfelden and when we did the last disposals on Lugano, when you do clearly the last value. Typically, the book is what is the book value, but you clean up really then the site.

And I think that's a bit then the last risk protection you have on those sites, which goes in, you release all your costs and then it's the gain you realize. But clearly, it was a large project over many years, and the book value is then also always very, very difficult to estimate by the value of what is left there.

And then it's a bit of probably at the edge also a bit of release of reserves because it's difficult to estimate. If it's CHF 7 million or CHF 6 million.

Clearly, it depends also on the buyer and for the buyer, this was key as a key asset, and this results in this gain of CHF 7.7 million. But I wouldn't now do a read across of conservatism in those book values.

But this is typical on those sites you have for 20 years at the end, you clean it up. And if you are fine somebody really wants this block, then you have this gain, which materializes.

A couple of questions. So firstly, some healthy guidance on EBITDA.

Can you give us any help on where you expect your EPRA earnings per share to land over the year? Would it be fair to assume a similar year-on-year growth rate maybe?

Well, if we look -- if you look on our earnings per share, and if we take the EPRA earnings per share and they take out this disposal gain I mentioned, we would see a slight uptick on the earnings per share. We see a flat development on the top line.

As mentioned beforehand, we expect the disposal gain. But if you take that one out, we see a slight increase of the EPRA earnings per share.

Okay. And then you mentioned some very strong reletting prints on High Street retail.

How does that compare to offices?

I hardly hear you. Can you try to ask again?

Sorry, yes, is this clear now? You mentioned strong relettings on high street retail.

How does that compare to offices?

Well, I think in a magnitude, it has been never comparable because these are completely 2 different worlds. The high street retail is a handful, we can say basically to a handful of buildings.

And if you there have at the moment, an expiry or a new tenant coming in, you have this strong demand. However, also in the prime office in Zurich and in Geneva, we are letting at market.

We are sometimes letting above market. If you look, for instance, [indiscernible], the overall rent we get is higher than the underwriting we have seen.

So I think generally, we have a solid development. but it's predominantly there where we do investments in prime office, repositioned the asset where you can then increase the rents.

We have seen, by the way, last year, a mathematical like-for-like of 1.3%. If we take out this, if you recall, in 2024, we had to book twice the turnover rent, if you take out that one-off we had a like-for-like of 2% coming from indexation 1%, rents 40 bps, and another reduction of the vacancy of 40 bps.

And we expect also for this year a like-for-like of roughly 1.5%, which is not including this high street retail because this was an option in 1 year. So we will see that in '27.

One question on the letting activity of the high street retail segment. Could you tell us the price per square meter you have renewed for?

And the second one is on the 6 office building into Quartier des Banques. Did you have a look at it?

Of course, Swiss francs that acquired it, but did you have a look at it?

On the first question, the high street retail, it's always a blend of underground ground floor, first floor. And I can just say at the moment that we significantly increased the rents as mentioned above 25%.

We typically disclose also the per square meter from the market -- from the value in the annual report, but this will be in '26. We have a certain confidentiality until then really moved in.

So from that end, I will keep it at that level and not disclose per square meter rent. With regards to the assets you mentioned, it's clear we look at every asset, we have our reason why we are perhaps not the best bidder.

As I mentioned at the beginning, for those assets, in general, we observed last year, either we have seen no positive reversion or even negative reversion, or we have seen CapEx which needs to be invested to either fill the building or put the building back into a multi-tenant solution. And thirdly, we are very much looking on what could be the land appreciation going forward.

And that's the reason why we probably didn't want to buy this asset.

Yes, I'd like to thank all the participants. I wish you a great day, and clearly, we will talk soon on a separate note.

Thank you. Bye-bye.