PSP Swiss Property reports strong 2005 results (CH)

PSP Swiss Property delivered very positive operational results despite the still difficult letting market for office space: net income excl. real estate revaluation effects rose by 7.5% from CHF 113.2 million to CHF 121.7 million. Net income incl. revaluations amounted to CHF 143.3 million. The Board of Directors proposes a cash payment of CHF 2.10 per share, up 6% from CHF 1.98 in 2005. As in the previous year, this payment will be in the form of a nominal value reduction.

Strong increase in rental income and EBITDA
In 2005, rental income rose by 9.2% to CHF 226.6 million (2004: CHF 207.5 million). EBITDA excl. gains/losses on real estate investments rose by 8.8% to CHF 189.3 million (2004: CHF 174.1 million). The EBITDA margin improved to 73.9% (2004: 70.8%), which reflects effi-ciency gains after completion of the REG-integration.

Expanded real estate portfolio
In July 2005, PSP Swiss Property took over GFG Gesellschaft für Grundeigentum, Zürich, with a portfolio of approx. CHF 238 million, consisting of 17 prime commercial properties (29 000 m2 of retail and office space). The GFG buildings are located mainly in Zurich, Bern and Basel and generate an annual rental income of CHF 13.9 million (at a vacancy of 4.9%). In December 2005, ten commercial properties (95 000 m2 of primarily office space) were acquired for about CHF 185 million. These properties are located mainly in Lausanne, Basel and Geneva. They generate an annual rental income of CHF 17.3 million (at a vacancy of 17.7%). 38 non-strategic properties were sold for CHF 193.8 million. The additional rental income in 2005 resulting from the mentioned acquisitions was approximately equal to the lost rental income due to the property sales. Most of the contribution to rental income from the newly acquired properties will materialise in later years.
The revaluation of the portfolio combined with the first time valuation of newly acquired properties and completed development projects led to a mark up of CHF 31.9 million.
At year-end 2005, the overall real estate portfolio amounted to CHF 4.6 billion (end of 2004: CHF 4.3 billion); the vacancy rate was 12.4% (end of 2004: 11.7%).

Solid financial structure
At year-end 2005, equity stood at CHF 2.4 billion (end of 2004: CHF 2.3 billion) corresponding to 51.1% of total assets. This strong equity base provides substantial financial flexibility for future growth.

Outlook for 2006
Due to its strong market position and its promising real estate portfolio, PSP Swiss Property is confident for the future. Apart from the ongoing tasks of reducing vacancies and optimising the existing real estate portfolio, the implementation of further strategic growth initiatives will be at the top of the agenda. Consolidated EBITDA excl. gains/losses on real estate investments is expected to reach CHF 207 million in 2006 (+ 9.3%). From todays perspective, the risk of negative valuation adjustments at the revaluation of the properties at the end of 2006 is regarded as low. Overall, the average vacancy rate for the investment portfolio as a whole is expected to level of between 10 and 12%.

Source: PSP Swiss Property

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