PSP Swiss Property AG

Ladies and gentlemen, welcome to the PSP Swiss Property Q1 2026 results conference call. My name is Yousef, the course 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 and 1 on your telephone. For operator assistance, please press star and then 0. The conference must not be recorded for publication or for broadcast. At this time, it's my pleasure to hand over to Giacomo Baltarini, CEO of DSP Swiss Property. Please go ahead, sir.

Thank you, and good morning, everybody, and welcome to this short presentation and Q&A. As always, in the Q1 and Q3, I will limit myself to some headline updates and then leave the room for the questions. Today, we reported a very solid Q1 result in line with our expectations. We show a solid top-line growth, very stable cost base, basically very line and very predictable. The like-for-like growth was 0.6%. If you take out the one-offs on the cost of last year and really much here, 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 lending and transactional market is unchanged since the last peak end of February 2006. It's very supportive to our strategy, and what we observe is that our strategy to focus on prime assets, the primary cities, is certainly the winning one. Letting success in the first quarter led to an appreciation of one property on the Levenbrook. As you recall, we normally value the portfolio twice a year, but if we have a significant letting success which has an impact on an asset of more than $5 million, we have to value that asset by this value. This was the case in Levenbrook and resulted in a valuation uplift of more than $13 million. On the projects, and we will come into that in the Q&A, I'm sure, everything progresses as planned, especially an IACC development on the , which if you look at the whole site, which is more than 35,000 square meters, we're basically left with the two buildings, which make up roughly 2,500 square meters. We confirm our outlook on the vacancy rate of 3.5%, and we confirm our EBITDA guidance of 310 million for the full year. With that, 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 1 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 2. Anyone who has a question may press star 1 at this time. Our first question comes from Ken Hager, ZKB. Please go ahead.

Yes, good morning everyone. I've got three questions, very short ones. First one, what do you pay for the value-sharing asset that you acquired during queue 1?

This was a very small amount in a single digit.

Okay, thank you. The second one, could you give us a timing on the Valicellum sales, and 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. And 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 the mid-year results, I cannot tell you.

Okay, thank you. And the third and last one, how will you deploy the cash that you will receive from the potential sale of the value-saving assets?

In those situations, I think our overall funding strategy is pretty simple. Whenever we have a cash inflow coming in for rental income, coming in from disposals, it will go against that. So 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? And then secondly, on Lex Kohler, could you share maybe your view on what the impact could potentially be with all that's happening on the political front, especially here to Lex Kohler? Thanks.

Thank you, 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 Friedrichstrasse, but also Latin successes, which we have in Basel in two instances, in Lausanne and Geneva. So I think this is based on actual Latin successes plus a visibility on expiries, which we at this point are comfortable to get to this 3.5%. On the next corner, 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 four or five such motions, initiatives. They had a lifetime from a few months to 13, 14 months on the political process, so this is clearly always unpleasant because it creates uncertainty, but it's completely misguided to the subject. The federal government issued also an ask, an expert party to issue a broadly established study on potential implications. The findings of this study were clear that these measures have really low No source and no reasons to help to the residential market. It was issued by Godland, the partner, the federal government, the council. Anyway, he issued this consultation phase. In our view, it is a political exercise. But you have to keep in mind that technically this is a very long political process, also linked to politics. most likely the popular initiative of the 10 million Switzerland. So we are clearly following that very closely. We are talking to political exponents. But in our view, it is very, very unlikely that this goes through. And please keep in mind, as we always said, in 2013, in 2017, in 2020, in 2022, it's a political process which takes several years. through all the upper house and lower house, and it always vanished. So from today's point of view, we take it very seriously, but the last proposal is completely disconnected with the fundamental issue on the residential market.

Thank you. Thank you. Next question comes from Holger Frisch, Zurich International Bank. Please go ahead.

Good morning. Thanks for taking the question. I have two. First one would be an add-on on the value balance. So with the release of the full year results, it says that you are in final negotiations on two link transactions, the problem and the potential acquisitions. So now you are talking about the exchange and sales negotiations. So I would be interested in what is the current status of the potential acquisition. Are we still talking about two link transactions? And the second one would be about the sixth interest period, which has now fallen to 3.1 years. If I recall correctly, you want to consider the range of 3.5 to 4.5 years to be comfortable with. So currently we're being below that range. Does the range still apply, or do you intend to continue deliberately going for short-term financing?

Thank you, Oliver. So the first one can ask only about the disposal. So I answered only about the disposal. It's clear that we look at post-transactions and we are negotiating in post-transactions. And that, for us, this is rather a combination of the transactions. The second, we did two taps and end of the first quarter. To lengthen a bit, 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, and we are not so nervous if it's now 3.1 or 3.4 years. But clearly, if you look historically, We had, in fact, a few years where we were below three years. Three and a half years is a period we like, but I think we very much look also on how the market looks like.

Great. Thank you. Our next question comes from .

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 and any new information regarding the progress on the 2027 renewals? Thank you.

If you start with the second one, the biggest expiry is the Google one, which we mentioned already. couple of times we are in finalizing the extensions and there is nothing more to add that the largest one we have another expiry which is a smaller one which is on the Wasserwerksstrasse which will move out next year but also there we are already in discussions so for 27 There's nothing really material, I would say, to come up. With the expiries of the end of this year, the one which has no impact on the vacancy rate is in Q3, the Rothschild Bank. This building will be then reclassified and has been fully left. The same is true for the Lüneburgstrasse. We have some expires coming up in Zurich West. We have some expiries coming up in , but there's nothing really, really material which I would say gives us a sense that we cannot get to our 3.5% progress 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 1 on your telephone. Our next question comes from Thomas Reutheuser, Deutsche Bank.

Hi, morning. Just a general question on the Mideast 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?

Well, it's... It's a complicated question because we definitely don't feel too much at the moment. So I think there could be examples where some players benefit, others 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. We, 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 not, it's even not a big topic, I have to admit. But 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 lease is 5,600 square meters. So the impact of such shocks is always much more limited than perhaps other instances that have bigger exposures. So that's something we don't feel currently. And it's also difficult to monitor, but 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 Rene Rocha, Auto HR. Please go ahead.

Yes, good morning. I have two questions, but that's one on slide four. and you're mentioning the other low transactions of prime assets that could look high, so I was wondering if you could give us, I mean, let's see, you know, where the yields are in Geneva and perhaps also in Zurich, and then the second question on slide 34 might be a beginner question, but there I see the potential rental income of roughly 19.5%. expected to be early through the year 2026, 5.1 billion. So that means that target rent here is 5.1 million in 2026. And just in this context, I was wondering how do you think about the capital markets, you know, just to get a longer-term view, let's say, out to 2028 or 2030. Thank you.

Thank you very much. On the first question on slide four and the yields, if you look at recent transactions, and please keep in mind that on Prime, the transactions are very limited, not because there are no potential buyers, but there are almost no sellers. But the recent transactions we have seen were at two or below. So I think for a mature, stabilized asset, those are the deals, the transaction deals. But then it depends always on 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 rent link on those development projects are delivering. And if you look on the overall portfolio clearly, buildings in the heart of the interview have contributed to the bottom line. This is then, the initial one would be 14 million. With regard to your question, the capital markets outlook 2830, I would kindly ask back, what specifically do you mean? Interest rates, transactions, issuance, deployment?

Yeah. No, no. I mean, Jessica, you have to make your projections, you know. I mean, where do you think they're your portfolio, how it will grow, and what are the years and the FTA guidance. It's just a key thing. Yeah, go ahead.

Sorry. I think if you look, I think, forward, you can pretty much take a bit of our historical track record. The company has been built in a way that we clearly, on the one hand, benefit from inflation development. So 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. And this is our view that our locations, especially in Zurich, Geneva, and Bern will benefit. So we should have an embedded like-for-like growth in that. Besides the project pipeline you see in 34, we are working on several projects within the portfolio, which will come up probably after the period, in 29, 30, 31. There are projects we are working on in Northam. There are projects we are working on in Zurich, close to Stadelhofen, but then also predominantly in Zurich West. So I am absolutely not worried. about the growth trajectory of the company. Plus, if you look historically, we were always an opportunistic buyer when there was stress in the system. We bought for more than 700 million assets, prime assets, in the last five, six years. So I'm convinced that we will find those opportunities and continuously grow the portfolio, grow the top lines, and try to keep the cost base stable to really enlarge the EBITDA margin by keeping a very solid balance sheet. And 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, with those projects and expectations, we need to create value, and so we need to acquire value.

Understood. Thank you very much. Thank you. Our next question comes from Eleanor Frey in Barclays. Please go ahead.

Good 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 don't know, I apologize, but I got a couple of words, but I didn't get really the question, but 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 the state of the rate increased. We see that like-for-like growth was never clear, but I appreciate there was a one-off. So maybe some thoughts on the underlying growth and thoughts on the market in Geneva moving forward.

Well, Geneva is a supermarket for us, I have to admit. I have to say the like-for-like was exclusively driven by a cost benefit last year, which was this... Property tax, if we have, we got for six years. But overall, the Geneva market, we had an excellent letting of Hotel de Banque, which is now basically fully let in Coratry. We have let Archibus, so we are letting well. We had a little increase, if you want, in Rue de Bain, which we can move down. We have immediately relet. this space. So 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-off drags you over the next quarters. So this year it's a negative, but last year it was a positive. But this is, you know, we are positive in 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 Banserini for closing remarks.

Thank you very much to everybody for listening. We are available for any further questions, and I'm sure we'll see each other in the next couple of weeks, and I wish you all a very good day. Thank you. Bye-bye.

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