SF Urban Properties AG – Stable financial year 2019

SF Urban Properties AG can look back on a stable financial year in 2019. Although the operating result fell slightly, higher revaluations and lower taxes resulted in a significantly higher profit than the previous year. The Board of Directors is proposing an unchanged cash distribution of CHF 3.60 in the form of a par value reduction per listed ordinary share with a nominal value of CHF 12.60. This gives a dividend yield of 3.65% based on the share price on 31 December 2019.

Annual results 2019

SF Urban Properties AG (SIX Swiss Exchange: SFPN) ended the 2019 financial year with a slight decline in operating profit. Net profit excluding revaluation effects/deferred tax was down by CHF 463,000 (-3.6%) year on year at CHF 12.4 million, due mainly to increased maintenance expenses and a more defensive accounting for the investments made in the portfolio. Revaluations accounted for a positive CHF 9.4 million contribution to the result. Earnings before interest and tax (EBIT) rose from CHF 21.9 million to CHF 27 million, and net profit including revaluations increased from CHF 13.4 million to CHF 18.5 million (+38.4%). Earnings per share excluding revaluation effects amounted to CHF 3.70 (previous year CHF 3.83), equity capital (NAV) per listed share as at 31 December 2019 CHF 95.22 (previous year CHF 95.65) and the EPRA NAV CHF 114.92 (previous year CHF 111.35).

Real estate portfolio

The strategy of focusing on good locations in Zurich and Basel was continued in the 2019 financial year. The property at Schaffhauserstr. 6 in Zurich was acquired and that at Klusstr. 38 notarised. The Sandreuterweg development project in Riehen was also added to the portfolio. Overall, the value of the portfolio (incl. development properties) rose by CHF 20.6 million (3.2%) to CHF 670.4 million in total as at 31 December 2019. The vacancy rate as at 31 December 2019 fell to a very low 1.66% (previous year 3.84%).

Current projects

In the 2019 financial year, the main focus was on expanding lettable spaces at Walzwerk Münchenstein and planning the Riehen development project. Added to this was the development of a building project for Klusstr. 38, for which the planning application was already submitted in 4Q 2019. After approval by the Cityscape Committee, planning application for the promotion project at Elsässerstr. 1+3 in Basel was also submitted in 4Q 2019.

Solid financing

The company is robustly financed with an equity ratio of 46.5% (previous year 47.2%). The average interest rate including swaps on interest-bearing loans was 1.52% (previous year 1.86%). The average fixed interest period rose substantially to 9.20 years (previous year 7.93 years).

Outlook for 2020

Given the low level of interest rates, institutional demand for investment properties will continue to be strong. The focus of acquisitions is still on the dynamic economic areas of Zurich and Basel. In view of the promising ongoing development projects, the Board of Directors and management are again expecting a convincing result for 2020 that secures the current attractive and stable dividend policy. Due to the current uncertainties, the focus remains on letting. The goal is to keep the vacancy rate below 3% for 2020.

Proposals to the Annual General Meeting on 7 April 2020

The Board of Directors is proposing a distribution of CHF 3.60 in the form of a par value reduction per registered share of nominal value CHF 12.60 and of CHF 0.72 per registered share of nominal value CHF 2.52. This gives a dividend yield of 3.65% for the registered shares of nominal value CHF 12.60 listed on SIX Swiss Exchange based on the share price as at 31 December 2019.

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