Ladies and gentlemen, welcome to the PSP Swiss Property Q1–Q3 2026 Results Conference Call. I am Mireille, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode, and the conference has been recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or 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 very much, and good morning to everybody. I will have the Q3 presentation as a baseline, with a quick introduction. I will reference to a few slides, and then as usual, in the Q1 and Q3, we go rather quickly into the Q&A, if that's okay. If we look at the market since we reported our half-year results in August, we are confronted still with a very solid letting market in our prime locations of Zurich, Geneva, but also Lausanne, and lately also Basel. I think from the letting side, we see rather healthy and strong re-lettings. We're also confronted with a strong and solid transaction market, which on the one hand, it makes it not easy to undergo transactions, although we are currently working on two acquisitions. But it is also clearly a comfortable side for the yields.
There's a strong demand for real estate and prime assets in Switzerland in our locations. I think these are two very solid baseline signs. If you go to the numbers on slide nine, as we have outlined already mid-year, the rental income is coming slightly down. This is predominantly due to the disposal we had in the first half of the year, the disposal of the Richtipark, which was not compensated and not fully compensated through the acquisition of Schützengasse. That's something we will see going through for this year and next year also. Still a healthy like-for-like quick outlook as indexation came out for next year. Like-for-like for next year is expected 1.8- 2 percentage points for our portfolio, backed by an indexation of 1.4%. On the income from property sales inventories, I think this is what we have referenced on the Richtipark.
You have nothing seen. After that, I will come to the valuations on the next slide. Overall, the operating income +8.6%, but nothing major on the third quarter. As it is also from the corporate expenses, as you know, a very solid trajectory, a very strong cost discipline. Nothing major to highlight on the expense side, as it is also for the financial expenses. On the taxes, year-to-date, we have a deferred tax release of CHF 10 million, which will amount roughly to CHF 15 million for the full year. This on slide 11. If you go then on the vacancy rate, slide 15, vacancy rate came down to 3.7% compared to the 4% mid-year, and will come down to 3.5% by year-end. In detail, slide 16, Place Saint-François, we have one outstanding contract, which should come in by year-end.
This would lead the vacancy rate then to 16%, and we are close to signing a next one, which should come in Q1, which will bring down the whole vacancy to 6%, 7%. The remaining floors, we are very positive. You see also the Peter Merian in Basel, which by Q1 will be down below 10%, and also Grubenstrasse is already by year-end back down to 10%. So we see strong re-lettings, and Füsslistrasse, which took a bit longer, now is fully let. So this will lead then also to the 3.5%. If you look on slide 17 for 2027, we have re-leased already a very large part of leasing agreements, predominantly Google and FINMA. So we are very confident that also the vacancy rate for next year will be in the magnitude of this year, if not even lower.
If you look on slide 18, as a reminder, we have full valuations of the portfolio in the half year and the full year. In Q1 and Q3, we do a valuation based on letting successes. We had to revalue a building in the Seefeldstrasse, where we have re-leased the contract for a longer period at higher rents, which triggered a valuation gain of CHF 6.5 million. We typically don't give forecasts on year-end valuations, but considering the re-lettings we have done for the year-end and also ready for 2027, we see a further uplift on the valuations for the year-end coming. This is predominantly due to earnings growth on the single lettings and longer re-letting phases after the expiry.
If you go quickly to the balance sheet, slide 23, you see a very strong balance sheet with a loan-to-value of 32.5%, which depending on acquisitions, excluding acquisition, would come further down, and which puts us in a very strong position of taking advantage of opportunities. Beside that, financial costs are stable, maturities are stable, so no surprises on the balance sheet for us. On the development projects, we are in line and in target with all the developments. I think from that end, I would say a very solid Q3, very positive on the outlook for the company, and then I would hand over to the Q&A.
We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Anyone who has a question may press star and one at this time. The first question comes from the line of Matteo Lindauer from Vontobel. Please go ahead.
Yes, good morning, everyone. Thank you for taking my question. My first question is on top-line development for Q4. Any guidance for rental income in the upcoming quarter? Could you share your view on 2027 top-line development? My second question is maybe any comment on today's article of a newspaper saying that the Werdhölzli will be sold and your view on its implications for the Zurich office market. Thank you.
Thank you, Matteo. I think we never give top-line guidance for the following year before the year results. I indicated the like-for-like growth we expect based on the indexations. There have been no material changes to the portfolio despite disposal of the Richtipark, so I think here, I wouldn't expect major changes. With regard to the article in the NZZ, in general, I think there is a long lease contract still with the existing tenant. I think it's an interesting area, probably predominantly for residential. I think any new product which is developed in Zurich increases even more the attractiveness of the city of Zurich, so we are positive on the developments and look forward to understand who it is.
Thank you.
The next question comes from the line of John Wong from BNP Paribas Exane. Please go ahead.
Hi, good morning. Thank you for taking my questions. It sounds like your tone on acquisitions changed a bit, as you mentioned in your outlook that major acquisitions are unlikely, but at the beginning of this call, I think you mentioned you were working on two. I suppose those are a bit more smaller, on the smaller side. What has changed here in your tone? Is the investment market more competitive, or is it driven by cost of capital?
The tone changes if there's an opportunity. If we don't have opportunities, we are not working on the acquisitions. If we see an opportunity, then we are positive. I think if you look backwards over the last six, seven years, we always were able to undergo large transactions. We only do it if we see value creation behind it. We are currently looking at two, I would say, partly off-market transactions, which are not so small. Always difficult to judge if it goes through, but this is our approach. I think there's not too much to read across. It's an opportunistic approach on assets which fit into our credentials and are able to create value. Yes.
Okay, thank you. You also mentioned that re-letting is quite strong and that vacancy is likely to come down further in 2027. Just wondering what you're seeing in terms of market rent growth, and what is the magnitude of reversion that you're capturing?
It is very lease-specific. What we have seen now is that we are able to re-let at higher terms than the market rent, which is in the valuation probably also because the value assumes a lower market rent at the expiry of the contract. Selectively, we're even able to increase the in-place rents, but it's very asset-specific. I think overall, then it translates in the expected like-for-like we highlighted from the 1.8%-2% for the full year.
Just to confirm, that is without spending any major renovation spends?
On the ones I mentioned, yes, without.
Okay. Okay, clear. Thank you.
Thank you.
Next question comes from the line of Ken Kagerer from Zürcher Kantonalbank . Please go ahead.
Thank you very much for taking my question. Good morning, everyone. I've got three short questions. The first one is also regarding two acquisitions. Besides the two deals you're looking at right now, if you were to find attractive assets at the right price, which city would you currently like to add, just one?
We are not used to getting cornered. I think CBD of Zurich and Geneva are very attractive, but we are also looking always at Lausanne and Bern. I would say at the moment, we are still, although we see a stabilizing of the market for Basel, we are a bit more reluctant, but for the other four markets, we are quite positive.
Thank you very much. The second one, you have been quite successful with the expiries 2027. Nevertheless, where do your discussions stand with the remaining 6%, and what can we expect from there? I mean, you have given a bit of an indication with your vacancy guidance, but also in the context of the previous question, would you expect higher rents with those 6% or not? Do you think that could be something that would go into vacancy or renovation, or do you feel very confident that we will see this washed out rather sooner than later?
I think you see, as in general, almost all three elements. We have one lease which goes in development. We have one lease which goes partially in vacancy because the tenant will give back a bit of space, and we have two leases where we talk about slight rent increases. I think this is normal in such a large portfolio. The one specific one, Mühlebachstrasse, is also declared as a project, and the tenant there goes in expiry, but we are already on the Mühlebachstrasse negotiating with the tenant for a full lease of the whole building.
Thank you. Now my last question, which is a bit tricky. It refers to slide 39 in your presentation, and it is actually with respect to the current political situation. What's your best guess of the non-registered in terms of foreign ownership and Swiss ownership? What would you believe would be the total foreign ownership ex-Europe with your company?
You refer to slide 41?
For me, it's 39, but shareholder base.
I would say let's stick to the current process of the debate. The debate is supposed, the Aeschi motion is supposed to come to the Legal Affairs Committee of the Council of States in the first quarter of next year. I think there's a strong headwind to it. We continue to be convinced that it will not pass in that way. I think all the rest, with all respect, is speculations. I think I would clearly emphasize that this motion will create no additional residential unit. Everybody is aware of it. The external studies which have been conducted by the federal government confirm these conclusions. I think at the moment, there's a political process, and we clearly are all involved and engaged. But I think more than that, there's nothing to say additionally, in my view.
Okay, this was a very elegant way of not answering my question, but it's okay. I mean, I understand it's very hard to say where the non-registered are domiciled. Thank you very much.
Thank you.
Any further questions, please press star and one on your telephone. The next question comes from the line of Tommaso Operto from UBS. Please go ahead.
Yeah, good morning. I have one question on the like-for-like growth. At H1 results, like-for-like was still at 0.7%, if I am not mistaken. It was now 0.5%, so that indicates Q3 was quite a deceleration. Is that correct reading?
Yes, we have a little win. But the first quarter was also driven by the turnover rent contribution from the Hotel Ruby, which always comes in Q1. You have to take into account that the overall year is negatively affected by the very positive contribution on the tax side last year. So if you take that down, you are again above 1%. The property tax in Geneva, which had a positive impact last year, clearly had a negative impact because it is not recurring. This goes down to that.
Okay. Thank you. Then another follow-up on the two acquisitions that you mentioned. I mean, do you have a bit more color on potential timeline or potential transaction yields that you would be looking at? Can you kind of quantify what it means if you say they are not small? What kind of range can we expect?
I think the only thing I would add is, it is perhaps comparable to what we did in the past years.
All right. Understood. That is all. Thank you.
Thank you.
The next question comes from the line of Holger Frisch from Raiffeisen. Please go ahead.
Yes, good morning, and thanks for taking the questions. I have two. First one, average interest costs have fallen slightly, almost more or less stable, but the loan maturity has also shortened further. What are your current expectations regarding interest costs for 2027, and what are your plans for the upcoming refinancing of maturities, which sum up to more than CHF 600 million for the next 12 months? That would be the first one.
Thank you, Holger. I think we will continue to look on bonds. Today, if we would issue a five, six-year bond, we would issue it at roughly 1.20%, 1.25%. We are looking at fixed credits, and we can draw on our own credit lines. I think the refinancing is not really an issue for us. It is more a question which instrument we take to have always a bit of a balance and reserves. Then the maturity will probably go slightly up, depending on how long we go, but it will not materially change.
Okay, great. Thank you. Second question, I saw on page 32 of your presentation that overall CapEx for 2027 increased from CHF 55 million to CHF 64 million. This is basically due to the delay from 2026 to 2027. What were the drivers behind the delay in CapEx?
Well, one big delay was Saint-François. There, we had delays within the developments because for every adjustment, clearly, we needed an extra building permission or adjustment permission, and we had also an increased cost, which is reasonable. But these two factors were driving the additional CapEx.
Okay, great. Thank you.
The next question comes from the line of Reto Portmann from zCapital. Please go ahead.
Question concerning the guidance. To reach your CHF 335 million EBITDA guidance, you need a bit higher EBITDA in Q4 than in Q3. Does this assume booking one of the Richtipark earn-out tranches?
No, we don't expect for the moment earn-out contributions from the Richtipark. This is not currently foreseen.
Okay, thank you.
For any further questions, please press star and one. Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Giacomo Balzarini for any closing remarks.
Thank you very much to everybody, and I look forward to further exchanges, and have a good day. Thank you. Bye-bye.
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