Home » Com­men­ta­ries » Annu­al Report for the year 2018

28. Febru­ar 2019

Annu­al Report for the year 2018

Markus Meier, CFO Swiss Prime Site

Mar­kus Mei­er, CFO

2018 was a suc­cess­ful year for Swiss Prime Site, with ear­nings growth of 5.1%. Ope­ra­ting inco­me rose by CHF 59.3 mil­li­on to CHF 1 214.1 mil­li­on year-on-year. Both the core real estate busi­ness and the Ser­vices seg­ment per­for­med well. Real estate increa­sed its ear­nings by 6.4%. Real estate-rela­ted ser­vices grew by 4.8% year-on-year. At CHF 11.2 bil­li­on, the value of the pro­per­ty port­fo­lio grew by 5.4%. At the same time, net yield decrea­sed slight­ly to 3.6%. The vacan­cy rate fell signi­fi­cant­ly from 5.2% to 4.8%. A CHF 5.4 mil­li­on or 1.8% increa­se in pro­fit to CHF 310.9 mil­li­on was repor­ted. Swiss Prime Site anti­ci­pa­tes sta­ble or impro­ving per­for­mance in the most important para­me­ters for 2019 and over the medi­um term.

Once again, the Swiss eco­no­my per­for­med well in 2018. Switz­er­land com­pe­ted suc­cess­ful­ly in the glo­bal mar­ket­place as a loca­ti­on for many inter­na­tio­nal busi­nes­ses, and the real estate mar­ket bene­fi­ted from this. Inte­rest rate move­ments remai­ned sta­ble. Swiss Prime Site per­for­med well under the­se con­di­ti­ons, with growth and good results to report in both seg­ments for 2018.

Swiss Prime Site inve­sted exten­si­ve­ly in its core real estate busi­ness. The stock of first-class pro­per­ties was expan­ded with major purcha­ses. The Com­pa­ny also stream­li­ned its port­fo­lio by sel­ling mino­ri­ty inte­rests in pro­per­ties, tra­ding them for attrac­tive sole ownership of other pro­per­ties. In addi­ti­on, the Com­pa­ny for­ged ahead with deve­lop­ment pro­jects and new con­struc­tion pro­jects. The pipe­line was expan­ded with new ven­tures. Focus­sing the Company’s stra­te­gy and busi­ness model on suc­cess­ful manage­ment of the port­fo­lio of exi­sting pro­per­ties and its own deve­lop­ments once again pro­ved suc­cess­ful. In the past finan­ci­al year, Swiss Prime Site fina­li­sed new lea­ses or con­tract rene­wals on around 190 000 m2 (12% of ren­tal floor space) wit­hin the pro­per­ty port­fo­lio. During the cour­se of 2018, several tran­sac­tions were con­clu­ded, which fine-tun­ed the port­fo­lio of exi­sting pro­per­ties and deve­lop­ments fur­ther: In Janu­a­ry, Swiss Prime Site purcha­sed a com­ple­te­ly lea­sed site with gre­at poten­ti­al for fur­ther deve­lop­ment in Regens­dorf near Zurich. This was fol­lo­wed mid-year by the purcha­se of the «West-Log» con­struc­tion pro­ject in Zurich, the majo­ri­ty of which was alrea­dy under lea­se. The foun­da­ti­on stone for this pionee­ring urban logi­stics pro­per­ty was laid in autumn. In Mon­they (can­ton of Valais), Swiss Prime Site acqui­red land for the con­struc­tion of a pro­per­ty for the Ter­tia­num group com­pa­ny. A ful­ly lea­sed office pro­per­ty at Beet­ho­ven­stras­se 33 in the heart of Zurich – near Para­de­platz and the lake – is a valu­able new addi­ti­on to the port­fo­lio. The «Welt­post Park» resi­den­ti­al pro­ject in Ber­ne was sold as plan­ned. The pro­ject will be han­ded over to the buy­er rea­dy for occup­an­cy at the start of 2020. In the last quar­ter of 2018, Swiss Prime Site and the majo­ri­ty owner of the «Sihl­ci­ty» urban enter­tain­ment cent­re in Zurich agreed on a swap of the co-ownership sha­re of 24.2% in exchan­ge for three attrac­tive pro­per­ties. They are ful­ly lea­sed and com­ple­ment the port­fo­lio of exi­sting pro­per­ties per­fect­ly. Two of the pro­per­ties are loca­ted in Zurich, and one in Wor­blau­fen in the can­ton of Ber­ne, whe­re Swiss Prime Site alrea­dy held a co-ownership sha­re of 49%. In addi­ti­on, the Com­pa­ny dive­sted its­elf of two smal­ler pro­per­ties in Ber­ne and Die­ti­kon in Decem­ber.

The Ser­vices seg­ment, with Win­ca­sa, Ter­tia­num, Jel­mo­li – the House of Brands and Swiss Prime Site Solu­ti­ons, com­pri­ses real estate-rela­ted ser­vices. Over­all, the seg­ment also per­for­med well in the 2018 finan­ci­al year. Win­ca­sa is con­ti­nuing to for­ge ahead with its trans­for­ma­ti­on stra­te­gy. With its purcha­se of «stream­now», the Com­pa­ny com­ple­ted an important step for the fur­ther deve­lop­ment and digi­ta­li­sa­ti­on of the busi­ness model. Mean­while, Ter­tia­num intro­du­ced a new resour­ce plan­ning system and a care docu­men­ta­ti­on system in Ger­man-speaking Switz­er­land and in Tici­no. This allo­wed inter­nal pro­ce­du­res to be opti­mi­sed and custo­mer ser­vice to be signi­fi­cant­ly upgraded. Jel­mo­li cele­bra­ted its 185th anni­ver­s­a­ry in 2018. The oldest pre­mi­um depart­ment store in Switz­er­land held its ground well in a chal­len­ging envi­ron­ment. The streng­t­he­ning of the busi­ness model by expan­ding the e-com­mer­ce offe­ring and the ope­ning of a second foot­hold at Zurich air­port are pro­gres­sing well. The manage­ment team at Swiss Prime Site Solu­ti­ons was bol­ste­red fol­lo­wing the ear­ly exten­si­on of the man­da­te with Swiss Prime Invest­ment Foun­da­ti­on, and the ser­vices port­fo­lio was fur­ther refi­ned.

Ope­ra­ting inco­me

in CHF m 01.01. – 31.12.2017 01.01. – 31.12.2018 Chan­ge
in %
Real Estate seg­ment 478.4 509.2 6.4
Ren­tal inco­me from pro­per­ties 424.4 434.4 2.4
Inco­me from real estate deve­lop­ments 51.7 72.8 40.6
Other ope­ra­ting inco­me 2.3 2.0 -11.0
Ser­vices seg­ment 754.6 790.7 4.8
Ren­tal inco­me from pro­per­ties 100.7 101.5 0.8
Inco­me from real estate ser­vices 142.2 144.4 1.5
Inco­me from retail 136.2 131.3 -3.6
Inco­me from assi­sted living 360.1 396.9 10.2
Inco­me from asset manage­ment 9.9 8.5 -14.4
Other ope­ra­ting inco­me 5.6 8.2 45.1
Eli­mi­na­ti­ons  -78.2 -85.7 9.6
Total group 1154.8 1214.1 5.1

The Swiss Prime Site Group increa­sed its ope­ra­ting inco­me by 5.1% to CHF 1214.1 mil­li­on in 2018. Both the Real Estate seg­ment and the Ser­vices seg­ment con­tri­but­ed to this plea­sing growth. Real estate, the core busi­ness of Swiss Prime Site, con­ti­nued to deve­lop at a dyna­mic pace. The seg­ment rea­li­sed ope­ra­ting inco­me of CHF 509.2 mil­li­on. The increa­se of 6.4% or CHF 30.8 mil­li­on can main­ly be attri­but­ed to the increa­se in ren­tal inco­me and the deve­lop­ment of pro­per­ties and pro­jects. Active vacan­cy rate manage­ment, acqui­si­ti­ons in the cur­rent and pre­vious year, and suc­cess­ful new lea­sing and lea­sing rene­wal activi­ties in par­ti­cu­lar con­tri­but­ed to the increa­se. At CHF 11.2 bil­li­on, the mar­ket value of the 190 pro­per­ties [188 as at the end of 2017] rose by 5.4% or CHF 571.3 mil­li­on. The pro­fi­ta­bi­li­ty of the port­fo­lio, with a net yield of 3.6%, remains at an attrac­tive level. The vacan­cy rate, as a yard­stick for the attrac­tiveness of the buil­ding stock, stood at 4.8% and impro­ved by 0.4 per­cen­ta­ge points.

The inco­me of the Ser­vices seg­ment grew in the reporting peri­od by 4.8% year-on-year, rea­li­sing CHF 790.7 mil­li­on [CHF 754.6 mil­li­on]. The inco­me from real estate ser­vices amoun­ted to CHF 144.4 mil­li­on [CHF 142.2 mil­li­on]. Switzerland’s lea­ding real estate ser­vices pro­vi­der was able to increa­se inco­me slight­ly, thanks to the intro­duc­tion of various ser­vices (e.g. con­struc­tion manage­ment). The new mixed-use site manage­ment ser­vice intro­du­ced in 2017 is beco­m­ing estab­lished in the mar­ket and is alrea­dy bea­ring fruit. Mul­ti-use deve­lop­ment sites requi­re inte­gra­ted ser­vices tailo­red to their spe­ci­fic needs. Win­ca­sa reco­gnis­ed this mar­ket requi­re­ment ear­ly on. In addi­ti­on to Zurich, it also ope­ned a branch for the­se spe­ci­fic ser­vices in Western Switz­er­land (Gene­va). In August 2018, ahead of sche­du­le, the real estate ser­vice pro­vi­der was able to extend a manage­ment con­tract with one of its most important custo­mers for a fur­ther five years. The con­tract inclu­des over 1 000 fac­to­ry and office buil­dings with an area of appro­xi­mate­ly 1.4 mil­li­on m2. The mar­ket value of the port­fo­lio mana­ged by Win­ca­sa amounts to around CHF 68 bil­li­on. Ter­tia­num is imple­men­ting its growth stra­te­gy and now has 77 loca­ti­ons across Switz­er­land. Invest­ment in pro­ces­ses and IT should increa­se the attrac­tiveness of Tertianum’s net­work of loca­ti­ons even fur­ther. Inco­me from assi­sted living of CHF 396.9 mil­li­on (+10.2%) was rea­li­sed. Jel­mo­li – The House of Brands rea­li­sed inco­me from retail of CHF 131.3 mil­li­on [CHF 136.2 mil­li­on]. Despi­te a chal­len­ging year, with tra­ding reve­nue fal­ling across Switz­er­land, the pre­mi­um depart­ment store is hol­ding its own. The com­pa­ny inve­sted in pro­duct lines, retail for­mats and the buil­ding in order to meet its custo­mers’ expec­ta­ti­ons. It also tack­led the expan­si­on of its online stra­te­gy. Swiss Prime Site Solu­ti­ons gene­ra­ted ear­nings of CHF 8.5 mil­li­on [CHF 9.9 mil­li­on]. The new manage­ment inve­sted in expan­ding the custo­mer base and ser­vices, as well as in employees and infra­st­ruc­tu­re. The real estate assets of Swiss Prime Invest­ment Foun­da­ti­on mana­ged by Swiss Prime Site Solu­ti­ons amount to around CHF 1.6 bil­li­on.

Ope­ra­ting result (EBIT)

in CHF m 01.01. – 31.12.2017 01.01. – 31.12.2018 Chan­ge in %
Real Estate seg­ment 422 431.1 2.1
Ser­vices seg­ment 48.6 47.6 -2.1
Total group 470.6 478.6 1.7

In 2018, Swiss Prime Site achie­ved an ope­ra­ting result (EBIT) of CHF 478.6 mil­li­on [CHF 470.6 mil­li­on]. The EBIT figu­re exclu­ding reva­lua­ti­on gains was CHF 411.1 mil­li­on [CHF 404.8 mil­li­on]. The core real estate busi­ness (+2.1%) con­ti­nued to con­tri­bu­te the lion’s sha­re to the result. This favoura­ble result inclu­des reva­lua­ti­on gains of CHF 68.3 mil­li­on [CHF 65.9 mil­li­on]. The weight­ed average real dis­count rate was 3.22% as at the end of 2018, which was 13 basis points under the pre­vious year. The core real estate busi­ness once again demon­stra­ted its ope­ra­tio­nal strength with this impres­si­ve result, which was achie­ved thanks to increa­sing ren­tal inco­me and the suc­cess­ful divest­ment of pro­jects. The part-sale of the «Espace Tour­bil­lon» pro­ject in Gene­va, the sale of the «Welt­post Park» pro­ject in Ber­ne, two invest­ment pro­per­ties and one earn-out gene­ra­ted pre-tax gains total­ling CHF 33.9 mil­li­on. At CHF 165.1  mil­li­on, the ope­ra­ting expen­ses of the Real Estate seg­ment increa­sed by CHF 40.5 mil­li­on. This was main­ly attri­bu­ta­ble to expen­ses from the real estate deve­lop­ments sold.

The Ser­vices seg­ment gene­ra­ted EBIT of CHF 47.6 mil­li­on [CHF 48.6 mil­li­on]. Despi­te sub­stan­ti­al invest­ments in the future, the result was main­tai­ned at an almost sta­ble level. Real estate ser­vice pro­vi­der Win­ca­sa inten­si­fied efforts to for­ge ahead with the digi­ta­li­sa­ti­on of the busi­ness model, in par­ti­cu­lar. The expan­si­on of the net­work and opti­mi­sa­ti­ons of admi­ni­stra­ti­ve pro­ces­ses con­tri­but­ed to impro­ved results at Ter­tia­num as plan­ned. Jel­mo­li inve­sted in the for­ward-loo­king pro­jects men­tio­ned above and is con­fi­dent of mee­ting its medi­um-term busi­ness plan. An increa­se in ope­ra­ting expen­ses in the Ser­vices seg­ment of CHF 742.6 mil­li­on [CHF 705.7 mil­li­on] was pri­ma­ri­ly due to rising per­son­nel costs and depre­cia­ti­on. Swiss Prime Site Group employ­ed a work­force total­ling 6295 per­sons [5910] on the balan­ce sheet date.


In 2018, Swiss Prime Site gene­ra­ted a pro­fit of CHF 310.9 mil­li­on [CHF 305.5 mil­li­on], or CHF 287.8 mil­li­on [CHF 307.4 mil­li­on] exclu­ding reva­lua­ti­ons and defer­red taxes. Ope­ra­tio­nal impro­ve­ments in the group com­pa­nies and recur­ring pro­fits achie­ved from the sale of real estate deve­lop­ments and pro­per­ties off­set increa­sed invest­ment well. Once again, finan­ci­al expen­ses fell slight­ly year-on-year due to attrac­tive refi­nan­cing. Ear­nings per sha­re (EPS), both inclu­ding and exclu­ding reva­lua­ti­ons and defer­red taxes, exce­ed the fore­cast divi­dend dis­tri­bu­ti­on. In the 2018 finan­ci­al year, EPS were CHF 4.27 [CHF 4.27]. EPS exclu­ding reva­lua­ti­ons and defer­red taxes were CHF 3.95 [CHF 4.30].

in CHF m 01.01. – 31.12.2017 01.01. – 31.12.2018 Chan­ge in %
Ope­ra­ting result (EBIT) 470.6 478.6 1.7
Finan­ci­al expen­ses -77.8 -75.8 -2.7
Finan­ci­al inco­me 2 1.2 -42.8
Inco­me tax expen­ses -89.3 -93.1 4.2
Pro­fit 305.5 310.9 1.8
Pro­fit exclu­ding reva­lua­ti­ons and defer­red taxes 307.4 287.8 -6.4

Balan­ce sheet figu­res

In Janu­a­ry 2018, Swiss Prime Site pla­ced a seven-year con­ver­ti­ble bond valued at CHF 300 mil­li­on with a cou­pon of 0.325% on the mar­ket. In addi­ti­on, CHF 190 mil­li­on was bor­ro­wed in the third quar­ter by means of a six-year 1% strai­ght bond. Swiss Prime Site also car­ri­ed out a sha­re capi­tal increa­se at the end of Sep­tem­ber 2018. Share­hol­ders’ equi­ty was increa­sed by around CHF 323 mil­li­on through the issue of 4 467 432 ful­ly paid up regi­ste­red sha­res. The capi­tal rai­sed is being used to finan­ce the deve­lop­ment pipe­line and mar­ket oppor­tu­nities. The weight­ed average inte­rest rate on finan­ci­al lia­bi­li­ties is 1.4% [1.5%] and once again fell year-on-year. At the same time, the weight­ed resi­du­al term to matu­ri­ty of inte­rest-bea­ring finan­ci­al lia­bi­li­ties redu­ced slight­ly to 4.3 years [4.7 years]. Com­pa­red with the net yield of 3.6% rea­li­sed on the pro­per­ty port­fo­lio, this results in an attrac­tive inte­rest rate spread of 2.2% [2.2%].

in 01.01. – 31.12.2017 01.01. – 31.12.2018 Chan­ge in %
Equi­ty ratio % 43.1 43.9 1.9
Return on equi­ty (ROE) % 6.4 6.4
Net pro­per­ty yield % 3.7 3.6 -2.7
Weight­ed average inte­rest rate on finan­ci­al lia­bi­li­ties % 1.5 1.4 -6.7
Weight­ed average resi­du­al term to matu­ri­ty of inte­rest-bea­ring finan­ci­al lia­bi­li­ties years 4.7 4.3 -8.5
Loan-to-value ratio of pro­per­ty port­fo­lio (LTV) % 45.6 45.3 -0.7
NAV befo­re defer­red taxes per sha­re1 CHF 82.87 83.4 0.6
NAV after defer­red taxes per sha­re1 CHF 66.85 67.74 1.3

1 Ser­vices seg­ment (real estate-rela­ted busi­ness fields) inclu­ded at book values only

Swiss Prime Site exhi­bits sound finan­ci­al strength. The equi­ty ratio amounts to 43.9% as at year-end 2018. The loan-to-value ratio of the pro­per­ty port­fo­lio stands at 45.3% [45.6%]. NAV after defer­red taxes rose to CHF 67.74 per sha­re, exce­e­ding the pre­vious year’s figu­re by 1.3%. Swiss Prime Site’s return on equi­ty is 6.4%, pla­cing it wit­hin the long-term tar­get ran­ge.


Swiss Prime Site anti­ci­pa­tes that eco­no­mic and poli­ti­cal con­di­ti­ons will remain simi­lar to 2018 and that this will the­re­fo­re pro­vi­de oppor­tu­nities for the Com­pa­ny and the sec­tor. Deve­lop­ment pro­jects in par­ti­cu­lar will have a posi­ti­ve effect on the ear­nings and pro­fit of Swiss Prime Site over the medi­um term. For 2019, the Com­pa­ny expects sta­ble results both at the ear­nings and pro­fit level. Active asset, port­fo­lio and vacan­cy manage­ment, recur­ring inco­me from real estate deve­lop­ment pro­jects and the imple­men­ta­ti­on of the pro­ject pipe­line will all con­tri­bu­te to the­se results. The pro­per­ties con­struc­ted will pro­vi­de signi­fi­cant growth impe­tus for ren­tal inco­me and thus results, star­ting from the end of 2019. Swiss Prime Site anti­ci­pa­tes con­tri­bu­ti­ons from the real estate-rela­ted Ser­vices seg­ment as fore­cast. The Com­pa­ny will main­tain an attrac­tive poli­cy on divi­dend dis­tri­bu­ti­on to share­hol­ders.