Ladies and gentlemen, welcome to the PSP Swiss Property Q1 2026 results conference call. My name is Yusuf, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode and that the conference is being recorded. The presentation will be followed by a question and answer session. You can register for questions at any time by pressing star 1 on your telephone. For operator assistance, please press star 0. The conference must not be recorded for publication or for broadcast. At this time, it's my pleasure to hand over to Giacomo Balzarini, CEO of PSP Swiss Property. Please go ahead, sir.
Thank you. Good morning, everybody, welcome to this short presentation and Q&A. As always, in the Q1 and Q3, I will limit myself to some headline updates, then leave the room for the questions. Today, we reported a very solid Q1 results in line with our expectations. We show a solid top-line growth, very stable cost base, basically very in line, very predictable. The like-for-like growth was 0.6%. If you take out the one-off on the costs of last year on Rue du Marché, the like-for-like would have been 1.7%. That's also what we roughly guide for the full year, around the 1.5%-1.8% on the like-for-like.
The letting and transactional market is unchanged since we last speak end of February. 2006 is very supportive to our strategy, and what we observe is that our strategy to focus on prime assets, the primary cities is currently the winning one. Letting success in the first quarter led to an appreciation of 1 property on the Löwenbräu. As you recall, we normally value the portfolio twice a year, but if we have a significant letting success which has an impact on assets of more than CHF 5 million, we have to value that asset by the external valuer. This was the case in Löwenbräu and result in a valuation uplift of more than CHF 13 million. On the projects, and we will come into that in the Q&A, I'm sure, everything progresses as planned.
Especially nice is the development on the Quartier des Banques, which if you look at the whole site, which is more than 35,000 sq m, we are left with the 2 Petitau buildings, which make up roughly 2,500 sq m. We confirm our outlook on the vacancy rate of 3.5%, and we confirm our EBITDA guidance of CHF 310 million for the full year. With that, I would hand over to the Q&A.
Our first question comes from Ken Kagerer, ZKB. Please go ahead.
Yes, good morning, everyone. I've got 3 questions, very short ones. 1st one, what do you pay for the Wallisellen asset that you acquired during Q1?
This was a very small amount in a single digit.
Okay, thank you. Second one, could you give us a timing on the Wallisellen sales? Could you also tell us if this goes through, would you issue a press release or would this just come with the H1 results as a general communication?
I would confirm what I said end of February, that we are in negotiations on this disposal, that it is probable, likely that we have a chance to get through by mid-year. However, we are in full negotiations, so visibility is not guaranteed. I also said that if this transaction would go through, this would have an impact on the EBITDA guidance, and this would appear with the closing of the transaction. If this happens before the mid-year or after mid-year of the results, I cannot tell you.
Okay, thank you. The third and last one, how will you deploy the cash that you will receive from the potential sale of the Wallisellen asset?
In those situations, I think our overall funding strategy is pretty simple. Whenever we have a cash inflow, coming it for rental income, coming it from disposals, it will go against that. This is the normal procedure.
Okay. Thank you very much.
Our next question comes from Tommaso Operto, UBS. Please go ahead.
Good morning. Thanks for taking the question. I have just two questions. First, maybe if you could elaborate a bit on the vacancy reduction, how do you get from the 3.9 to 3.5? Secondly, on Lex Koller, you know, could you share maybe your view on what the impact could potentially be with all that's happening on the political front, especially geared to Lex Koller? Thanks.
Thanks, Tommaso. Well, on the letting, we have already several letting successes which start Q2, Q3, Q4, which give us the visibility that we are currently in line with getting to this 3.5%. These are a variety of lettings in Zurich, starting from the Füsslistrasse, but also letting successes which we have in Basel, in two instances, in Lausanne, in Geneva. I think this is based on actual letting successes plus a visibility on expiries, which we at this point are comfortable to get to this 3.5%. On the Lex Koller, if that's okay, I think in general, what we have to keep in mind, that's nothing new. We are confronted with this topic since 2013.
In various instances, we had 4 or 5 such motions initiatives. They had a lifetime from a few months to 13, 14 months on the political process. This is clearly always unpleasant because it creates uncertainty, but it's completely misguided to the subject. The Federal Government issued also asked an expert party to issue a broadly established study on potential implication. The findings of this study were clear that these measures have really no source and no reasons to help to the residential market. This was issued by Foreign Land Department, the Federal Government, the Council, anyway, issued this consultation phase.
In our view, it is a political exercise. We have to keep in mind that technically this is a very long political process, also linked to most likely the popular initiative of the Ten Million Switzerland. We are clearly following that very closely. We're talking to political exponents. In our view, it is very, very unlikely that this goes through. Please keep in mind, as we always said, since 2013, in 2017, in 2020, in 2022, it's a political process which takes several years to go through all the upper house and lower house. It always vanished. From today's point of view, we take it very seriously, the last proposal is completely disconnected with the fundamental issue on the residential market.
Great. Thanks.
Thank you.
Next question comes from Holger Frisch, Zürcher Kantonalbank. Please go ahead.
Yes. Good morning. Thanks for taking the questions. I have 2. First one would be an add-on on the Wallisellen. With the release of the full year results, you said that you are in final negotiations on 2 like-for-like transactions. The disposal and the potential acquisition. Now you're talking about the exclusive sales negotiations. I would be interested, what is the current status of the potential acquisition? Are we still talking about 2 like-for-like transactions? The second one would be about-
Well, Ken, yeah. Sorry.
Okay.
No, no. Go ahead. Go ahead. Go ahead. No, no, go ahead.
Okay. Second one would be about the fixed interest period, which has now fallen to 3.1 years. If I recall correctly, you once considered a range of 3.5-4.5 years to be comfortable with. Currently, we've been below that range. Does the range still apply, or do you intend to continue deliberately going for short-term financing?
Thank you, Holger. To the first one, Ken asked only about the disposal, so I answered only about the disposals. Clear that we look at both transactions, and we are negotiating on both transactions, and that for us, this is a rather combination of the transactions. The second, we did two taps and, end of the first quarter, to lengthen a bit. It's, I would say it's clearly an objective, but it's not a fixed target. We are always very opportunistic on the capital market. We look at when is probably a better time to issue. If you look today, Amazon is coming out with a jumbo issue, so it's probably likely that we wait for a few weeks to have this volume passed.
We are not so nervous if it's now 3.1 or 3.4 years. Clearly, if you look historically, we had beside a few years where we were below 3 years, three and a half years is a year that we like. I think we very much look also on how the market looks like.
Okay, great. Thank you.
Our next question comes from Matteo Lindauer, Vontobel. Please go ahead.
Yes, good morning, everyone. Thank you for taking my question. I've got a question on the open maturities of 11%. Can you give us some more information on what kind of spaces are still open to be renewed? Any new information regarding the progress on the 2027 renewals? Thank you.
If we start with the second one, the biggest expiry is the Google one, which we mentioned already a couple of times. We are in finalizing the extensions. There is nothing, I think, more to add that. That's the largest one. We have another expiry, which is a smaller one, which is on the Wasserwerkstraße. The FINMA which will move out mid of next year, also there we are already in discussions. For 2027, there's nothing really material, I would say, to come up.
With the expiries of the end of this year, well, the one which has no impact on the vacancy rate is in Q3, the Rothschild Bank, but this building will be then reclassified and has been fully let. The same is true for the Müllerbachstrasse. We have some expiries coming up in Zürich West. We have some expiries coming up in one in Basel, but there's nothing really material, which I would say gives us a sense that we cannot get to our 3.5% target as from today's point of view.
Perfect. Thank you very much, Giacomo.
As a reminder, if you wish to register for a question, please press star and then one on your telephone. Our next question comes from Thomas Rothäusler, Deutsche Bank.
Hi, morning. Just a general question on actually on the Mid East conflict and potential impact on the Swiss economy and real estate sector particularly. I mean, do you see any specific risks, I mean upside or downside for Switzerland here?
Well, it's a, it's a complicated question because we definitely don't feel too much at the moment. I think there could be examples where, some players benefit, others, you know, suffer. I think it's really a mix of exponents. If you look at the trading companies, probably they benefit a bit. Also some, luxury hotels destination when there were conventions. If you look at our tenant base at the moment, we don't feel it. We don't feel it also on the capital market, the interest rate level. It's even not a big topic, I have to admit. Clearly, we are, I think our business model with also the low debt level, with a very concentrated portfolio in the inner cities, with on average smaller floor plates.
If you think our average tenant leases 5, 600 sq m. The impact of such shocks is always much more limited than perhaps other instances where they have bigger exposure. That's something we don't feel currently. It's also difficult to monitor. When we talk to our tenants, we don't get the sense that our tenants are in the first line of action.
Okay. Thank you.
Our next question comes from René Rösch, Oddo BHF. Please go ahead.
Yes. Good morning all. I have two questions. The first one on slide 4, you're mentioning there's a low transaction yield for prime assets at good location. I was wondering if you could give us a little bit of feel, you know, where the yields are in Geneva and perhaps also in Zürich. The second question is on slide 34. It might be a little bit a beginner question, but there I see the potential rental income of roughly CHF 19.5 million, and then footnote 1 says, "Expected to be earned full year 2026, CHF 5.1 million." That means that target rent here is CHF 5.1 million in 2026.
Just in this context, I was wondering, how do you think about the capital markets, you know, just to get a bit a longer term view, let's say, out to 2028 or 2030. Thank you.
Yes. Thank you very much. On the first question on slide 4 and the yields, if we look at recent transactions, please keep in mind that on prime, the transactions are very limited, not because there are no potential buyers, there are almost no sellers. The recent transactions we have seen were at 2 or below. I think for a mature stabilized asset, those are a bit the yields, the transactional yields. It depends always in the certain circumstances. If you look on the slide 34, that's basically the rental income already earned within the portfolio. If you look historically, we always disclose on how much rental income those development projects are delivering.
If you look on the overall portfolio, clearly, buildings in Basel and Geneva contribute to the bottom line. This is the additional one would be CHF 14 million. With regard to your question, the capital markets outlook 28, 30, I would kindly ask back, what specific do you mean? Interest rates, transactions, issuance, deployments?
No, I mean, just to get a little bit of feel. You know, as an analyst, you have to make your projections, you know. I mean, where do you think we're?
Your portfolio, how it will grow, what are the yields, expenses, EBITDA guidance. It's just the key figures, you know.
Yeah.
Go ahead. Sorry. Go ahead.
No, no, no. I think if you look forward, you can pretty much take a bit our historical track record. The company has been built in a way that we clearly, on the one hand, benefit from inflation development. You take the inflation outlook, you have this as a top line. We have an embedded like-for-like growth due to the appreciation of the locations. This is our view that our locations, especially in Zurich, Geneva, and Bern will benefit. We should have an embedded like-for-like growth in that. Beside the project pipeline you see in 34, we are working on several projects within the portfolio, which will come up probably after your period, in 2029, 2030, 2031. There are projects we are working on in Lausanne.
There are projects we are working on in Zurich, close to Stadelhofen, also predominantly in Zurich West. I am absolutely not worried about the growth trajectory of the company. If you look historically, we were always an opportunistic buyer. When there was stress in the system, we bought for more than CHF 700 million assets, prime assets in the last 5, 6 years. I'm convinced that we will find those opportunities and continuously grow the portfolio, grow the top line, and try to keep the cost base stable to really enlarge the EBITDA margin by keeping a very solid balance sheet. I think that's something which you should and could expect from us.
In which year exactly, this happens, I think this is the approach we choose, because at the end, we need those projects and acquisition, we need to create value. We need to acquire well.
Mm-hmm. Sure. Understood. Thank you very much.
Thank you.
Our next question comes from Eleanor Frey, Barclays. Please go ahead.
Morning. Thank you for the presentation. Just a quick one. Can we have some thoughts on the Geneva market specifically? You noticed that the vacancy rate there increased. I see like-for-like rent growth is negative. Appreciate there was a one-off. Maybe some thoughts on the underlying growth there and the market moving forward.
Eleanor, I apologize, I got a couple of words, I didn't get really the question. It was more probably sound specific.
Sorry, is this any better? Can you hear me now?
Yes.
Some thoughts on the Geneva market specifically, noting that vacancy rate increased. See the like-for-like growth was negative. Appreciate there was a one-off. Maybe some thoughts on the underlying growth and thoughts on the market in Geneva moving forward.
Well, Geneva is a super market for us. I have to admit, I have to say the like-for-like was exclusively driven by a cost, by a cost benefit last year, which was this property tax free up we got for six years. Overall, the Geneva market, we had an excellent letting on the Rue de la Confédération in Hôtel de Banque, which is now basically fully let. In Corraterie, we have let Archibus, so we are letting well. We had a little vacancy increase in Q1 in Rue des Bains, which then moved down. We have immediately relet this space. We are very positive on the letting for our Geneva portfolio.
We had, I think the very positive one-off, it's a bit always the one-offs drags you over the next quarters. This year it's a negative, but last year it was a positive. This is No, we are, we are positive on Geneva.
Great. Thank you.
Thank you.
Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Giacomo Balzarini for closing remarks.
Thank you very much to everybody, for listening in. We are available for any further questions, and I'm sure we'll see each other on the next couple of weeks, and I wish you all a very good day. Thank you. Bye-bye.
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