PSP Swiss Property AG

Ladies and gentlemen, welcome to the PSP Swiss Property Q3 Results 2020 conference call. I am Alessandro, the course call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Giacomo Balzarini, CEO of PSP Swiss Property. Please go ahead, sir.

Thank you and good morning to everybody from PSP. As always, I will conduct a very short introduction and then go directly into the Q&A. So the introduction will go for a couple of minutes. in order to have really best use of time on your question. Perhaps to start with, with regard to COVID-19 and our situation within the company, to say we, I think, internally weathered the storm pretty well so far, touch wood. We had, as I mentioned, a mid-year during the first lockdown. We have also had some employees at home. As for today, the majority of the employees are in the office. We can ensure and guarantee all the safety measures. We see, first of all, a high willingness of the employees to come to the office. They have the possibility to come by car, so avoiding all the traffic elements. We have all the sanitary measures, the social distancing. and we service food in order to avoid traffic over lunch going outside. But we feel in this context by being able to provide a reasonable good office product that the efficiency is quite high and that also the mute within the company and within the employees is high. And this is something which leads us always through the reflection how will this working from home implicate the future need for office and we have had a variety of discussions with larger corps. I think throughout, as soon as you have innovation element, if you have activities where people need to meet together, the employees want to go back to the office and also the companies want to have the people back into the office. So I think we have fostered a bit our view that this forced home office has proven to be digital viable, but that there is room and space for good products in the city centers with good accessibilities, good floor plates, and that not necessarily there is a need for less demand, but perhaps a bit of a different demand. If you go in a nutshell into what we see in the letting market that we have written also in our presentation and comment later this morning, Clearly, after a good start at the beginning of the year, we had a slowdown during the spring, a recap during the summer, and clearly the second wave, which is on the number side also in Switzerland, increasing. However, if you look at the traffic of the flow of people outside, it's not so perceivable. It had a bit of an impact also on the demand. And I would say more or less on the demand, but more on the interaction with potential tenants. You know, we have a semi-lockdown in Geneva and semi-lockdown in Cotonou. So the whole system in that region has a bit slowed down. But we are, on the other hand, also in letting activities, in discussions. But clearly, the decision-taking process has slowed down. Nevertheless, as you have seen, we confirmed our vacancy guidance around 3% for the year end, so we are convinced that we can achieve this number. Two words on the transactional market. Here we continue to see quite a strong appetite for CBD assets with good visible income streams. So I would say here from a yield perspective, we don't see widenings of yields. We see rather a stable or in certain cases also narrowing, and now we are getting towards the end of the year so that the amount of transaction has been reduced, but still there's still enough transactions out there to have certain data points. Last but not least, the capital market. If you look at today, I think it's in a healthy position. Spreads came in a bit, so accessibility to capital is there. In our view, it's always important to be very prudent, anticipate your capital needs, because if all of a sudden you need a bit too much of funding, there's a risk really that you depend then from the market. That's the reason why we have staggered all our fundings over the next years in a reasonable manner. to be very well positioned also for that. So in a nutshell, we confirmed our EBITDA guidance for the year. We have confirmed our vacancy guidance of the year. We feel strong about our balance sheet, about our visibility on the earnings, also the development aside, and we clearly come into it when we have the Q&A. We have no major changes on development sites and on the income perspectives. So from that end, I think it was a, a very good Q3 and we are positive on the Q floor and to finalize this full year result according to our expectations. With that, and I apologize if this was only a very quick intro, I'd like to really go into Q&A and take advantage of addressing basically all your questions.

We will now begin the question and answer session. Anyone who wishes to ask a question or make a comment may press star and 1 on the touchtone 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 2. Participants are requested to use only handsets while asking a question. Anyone who has a question or a comment may press star and 1 at this time. The first question comes from Ken from . Please go ahead.