Ad hoc announcement pursuant to article 53 LR
- Pandemic without impact on space demand
- Strong growth in real estate asset management for third parties
- Capital recycling and adapted capital management principles unleash additional possibilities
- Strong results 2021 expected
At the Capital Markets Day 2021, Swiss Prime Site's presentation showed how the company intends to develop into the preferred investment platform for real estate investments over the coming years. The aim is to offer investors an optimal opportunity to invest directly or indirectly in real estate or derived products from one of Europe's leading real estate companies. The operational plans are embedded in an adapted financing strategy and a clear focus on sustainable business management.
Pandemic without impact on space demand
The COVID-19 pandemic has accentuated various trends in the real estate market. Customers are focusing even more on prime locations and high flexibility of space. Topics such as health and sustainability have also gained in importance. Swiss Prime Site found these trends confirmed in a tenant survey conducted in summer 2021. One of the key results of the survey is that the vast majority of tenants expect demand for space to remain constant or grow slightly. In addition, tenants gave Swiss Prime Site very good marks in the dimensions of overall satisfaction and loyalty. Like the company itself, many tenants want to reduce their CO2 emissions directly and indirectly. This is supported by significant investments in the existing property stock. For example, CO2 emissions have already been reduced by 24% since 2018. The company's goal is to be CO2-neutral by 2040 at the latest. In order to reach the goal more quickly and efficiently, the management of Swiss Prime Site has decided to rely on circular performance economy wherever possible. The associated membership of Madaster and the first major transformation project on Müllerstrasse in Zurich, which is based on the principles of the circular economy, support this plan.
Strong growth in real estate asset management for third parties
The forecast growth of Swiss Prime Site Solutions will increase the significance of the services segment. The company currently has about CHF 3.4 billion in assets under management (AuM) and a customer project pipeline of approximately CHF 600 million. Client mandates will bring further growth of about CHF 1 billion over the coming years. In addition to management of the Swiss Prime Investment Foundation and real estate services for third-party customers (including mandates for the pension funds BASF, edifondo, Asga), Swiss Prime Site Solutions will be in a position to develop its business with fund products for qualified investors from November 2021. It received the required FINMA authorisation in September 2021. To launch its first product, Swiss Prime Site will sell a one-off seed portfolio of CHF 80 million to the fund. In addition, exclusivity has been agreed for a pipeline of around CHF 180 million. This brings the target volume of the initial issue to approximately CHF 200 - 250 million. The target is annual growth of about CHF 300 million over the next few years. In the medium term, the aim is to list the fund on the SIX Swiss Exchange.
Capital Recycling and adapted capital management principles unleash additional possibilities
In view of the very attractive market environment, Swiss Prime Site decided to focus its real estate portfolio on CHF 12 - 13 billion in 2020. Based on this, properties worth around CHF 140 million were sold in the first half of 2021 and the proceeds reinvested in the attractive development pipeline. In addition to the realisation of potential sales profits, this approach will also allow significant valuation reserves to be raised from the projects over the coming years. In addition, this strategy can be implemented without higher debt or capital increases. Swiss Prime Site will continue to pursue this strategy over the next few years and, based on this, is planning annual investments and sales of around CHF 200 - 250 million each. Based on this, Swiss Prime Site is planning a further reduction in the LTV ratio (around 42% at the half-year). In addition, new accents will be set in the composition of debt financing. It is planned to increase the proportion of unencumbered assets and to replace the outstanding mortgages with unsecured loans.
Strong results 2021 expected
Swiss Prime Site expects strong results at various levels for the 2021 financial year. Rental income is projected to grow by over 2.5% on a comparable basis versus the previous year. At the operating result (EBIT) level before revaluations, the company foresees an increase of over 5% on a like-for-like basis, also due to improved cost efficiency. Swiss Prime Site anticipates the vacancy rate to remain stable at 4.6% - 4.8%.