PSP Swiss Property AG

Ladies and gentlemen, welcome to the PSPC's property Q1 2025 results conference call. I am Moira, the call 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 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 Giacomo Barzarini, CEO of PSPC's property. Please go ahead, sir.

Good morning, everybody, and welcome to our Q1 results release. As always, I will give a quick headline rundown on the major items we saw. As you know, Q1 follows pretty quickly the full year release, so there's by habit not much news. But if you start on the left-wing market, we continue to see a very positive sentiment on the prime locations, especially in Buick Engineering, but that's a continuum. Meanwhile, we saw that also on the left-wing side, and we continue to see a bifurcation between prime and non-prime, being on the left-wing side, being on the range side. If you look at the left-wing success, it's just a few highlights. which are probably not material with regard to the rental income, but are quite important with regard to leasing levels or vacancy rates. The one is on the redevelopment of the boulders in Bern, where we have a leasing success at rents at slightly above 400, which are pretty strong rents for Bern. Clearly, it's a very centrally located building. It's a rather small space. But I think we are positive on that side. Secondly, we fully let now Limmatke. If you recall, we had offered to let the spaces slightly below 800. We tried to stick to our target and we now have fully let the building and re-let the last two floors at rent above 800. And finally, non-prime, but working on since about 15 years. We have almost fully left Reinfelden. With the remaining office space, we have just a little bit of retail vacant. I think these are quite nice successes also. As I said, not really material with regard to lower rental income. With that, we are confirming and reiterating our vacancy rate guidance. If you go to the transaction side, the market is intact, although we see limited transaction on the prime side. This is not due to the fact that there are not potential buyers, but there are still very few potential sellers. There has been a transaction on the Covaxie in Geneva, which has been traded. There is an asset, and I will mark the slide one on the video. but there is still only few transactions in that market, predominantly due to the fact that we don't see really sellers on that end. If we go quickly to the results, on the one hand, although we are a bit below the market consensus, we are fully in line with our projections. We have a slight positive impact on the cost side. This is due to an effect on the building at the Rue du Marché, where we got the Ashgier sustainability label. Through that, we don't need to pay the property taxes on that building for the next 20 years. We had a yearly amount on this tax amount, and we were able to release it now in two months for the last five years. This is a one-off effect for the quarter. But the HDR label, which is a sustainability label in Geneva, had a positive impact on that building. The second element is on the valuations. As you know, we have typically no valuation changes in Q1 and Q3, but also this year we had a positive incidence on a building on Barmoss Plots, Risenhouse Plots, where you had to ask the value due to a leasing contract to review the valuation, which triggered an uplift of roughly 13 million on that building, and you saw that on the income line. With that, if you look forward on the valuations, and I anticipate a potential question, if you look at the current transactional market, If we look at the structural vacancies and the market rents, I would expect that there is a slight uplift on the values towards mid-year if there's nothing material which is changing, predominantly due to the fact to market rent levels and structural vacancy rate adjustments. If we go quickly on the major highlights on the projects, the one to highlight is is the project in Wallisveldum, the Rixie Park, we got the official rezoning, although there is still an appeal period going through, so legally it will go through by mid-year, but the local community and the population has a positive vote on the rezoning on all the projects which were planned, of which also ours was part, and secondly, on the Löwenbräu side, we are progressing with building permission and potential operators on the repositioning of the Löwenbräu-Reth building. Here we will disclose more towards mid-year, but we are also pretty positive on that side. If you look a bit on the condenser systems, on the income, this is really what we delivered. you might interpret that the taxes were higher, and in fact, we had to adjust the rate tax for the Geneva properties. The rate tax going forward, the tax rate has changed 14 to 14.7%, and this has an impact on the taxes we had to pay in Geneva, and this probably explains a bit the differences between our net income result and the conventus. With that, I'd like to go straight to the Q&A and open the mic.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their telephone. You will hear a call to confirm that you've entered the queue. If you wish to remove yourself from the question queue, you may press star and 2. Anyone who has a question may press star and 1 at this time. The first question comes from Steven Bowman from ABN AMBRO. Please go ahead.