Swiss Prime Site AG (SPSN) Earnings Call Transcript

[Audio Gap] Prime Site Capital Markets Day 2026. [Operator Instructions] I will now hand over to your host, Marcel Kucher, CEO of Swiss Prime Site. Thank you.

A very warm welcome. On this fantastic day. If you look outside here in Zurich, for those of you who are on the screen, with a fantastic turnout. It's very impressive to look at this. And I believe we have some fantastic sites as well for you today. So we're going to have a very full day to day, and this is what we're planning to do. We start here with a short management presentation followed by Q&A. We can do this both from the web as well as here obviously, in the crowd. We will then have a visited of Munster post. This is the location where we are. Will talk a little bit about it in a minute on where we are and what this building makes it so special. And then we'll have a short walk over to Flex Office, where we show off our managed office services as we provide them now as part of the group. We'll also have lunch there. It's going to be a fantastic flying lunch afterwards in the afternoon, we'll visit the Jelmoli construction site. It's really impressive to see how deep we go in terms of the structural work there and what this all entails. We will then continue to and campus and finally come together here at Paradeplat with a special tram that will transport us at around 5 p.m. For those of you who will join us through the end. The presentation we'll be giving Anastasios, Martina and myself will be structured as follows. So we'll start very briefly about SPS as a glance. And to no surprise for you, this is who we are. Swiss Prime Site, 1 integrated platform, 2 complementary pillars and it's all real estate. As you know, we've combined roughly CHF 30 billion in assets under management. pretty much evenly split between our own real estate business with some CHF 14 billion and close to CHF 15 billion. Asset Management business. The big distinction is that the real estate portfolio focuses on prime commercial real estate exclusively, while in the asset management, we focus on residential and the commercial part that typically yield enhancers speaking of -- in the secondary locations and smaller buildings what we have. Another big differentiator is the difference between cattle heavy, which provides the stability and the core foundation of our business in the Real Estate division with about 5% return on equity and the capital light business, where we invest very little to no money with them roughly 25% plus return on equity. And all that is based on the very resilient Swiss economy, and I'll be talking about that in just a minute. As you know, we've come a long way over the last 5 years in terms of our portfolio. We have been really focusing on this pure-play real estate for the last in transformation. And I'm very pleased to say that the first half of 2026 was the first year where we only had real estate revenues, about 15% then from the asset management and about 85% hence from our own portfolio. And we'll talk about how that will continue in the future. One thing I want to spend a little bit of time on to start with is the Swiss economy. And I must say when we did this chart with the respective graphs, I was really impressed again on how well Switzerland is doing. And I think this is really something you can't reiterate enough the stability of the Swiss economy. We have here 4 key indicators, but you can do that in many more. The first 1 being here, the employment growth. And it's always Switzerland is the dark one, EU as a comparison is a light one. And you see a significantly higher employment growth, which, of course, helps us as a large office provider, but also as a residential provider if you compare that to the EU. Even more impressive is you see here, if you base it to 2000, we end up roughly at 135% of that. But if you look at the GDP growth, again, we base it for 2000 at 100, we are more than 165% currently. Speaking of that, we not only increase our GDP by increasing population. But in addition to that, on a per capita basis, we also increased our GDP. And again, look at how EU is performing compared to that. And the final one, and of course, very important for real estate is inflation. And as a consequence of that, policy rates, the prime yields that you can see here on the last 2 graphs, Inflation in Switzerland is just peaking and I really have to do that in Anfinsonat 1%. If you look at the forecast of the Swiss National Bank, it will come back come back down a little bit towards year-end and then stabilize at around 0.8% for the next 2 years. If you compare that to EU, where we're currently at 3.8%, expecting at 3.6% maybe year-end and then pretty much on a flat basis going forward. And that, of course, has important implications for real estate and for the policy rates. We're in Switzerland here at 0% and you all know what has been happening in the EU with respective retics over the last couple of years. And this basis, this resilient basis of our Swiss economy is translating itself into a continued demand for real estate in our country. That shows across the 4 important dimensions. The first 1 being transactions, we really see a very good year. We're probably going to have a record year in terms of transactions in Switzerland. Very strong investor demand, obviously driven by the spread that the real estate industry can generate and kind of the prime yields that you would get from a government bond or for alternative investments. Primarily been driven by residential. But given that yields are really low here, you see some spillover effect into the commercial space as well. Hence, you see further yield compression pretty much throughout the band, and there is no sign of that slowing down at least we don't see it in our data that we get. Second is lettings. The positive going of our economy, the still growing population also has a very positive in the letting. I'll give you updated guidance for the end of the year, but maybe that in advance, we see a lower and probably the lowest vacancy rate to its prime side forever since 25 years that we are in business, and that is pretty much a result of this flight to quality and the demand, in particular, in these prime locations that we are focusing on. An additional element in just a minute is we see this convenience as a big trend. You see it probably in your daily life in terms of how you eat, in terms of how you do vacation, in terms of how you go shopping, but we also see it in real estate. And this convenience element has an important effect because we see more and more demand from our large tenants to a convenient office location as well and the convenient office in particular. Convenient office, I mean, they want to have a fully serviced office more -- you see it in London, where the trend started, but you see it also swapping into Switzerland which is hence why we today announced the acquisition of Flex office. We'll talk about that in a minute. And the third element that we see in here is a stronger and stronger demand on the health side. This, again, is a real megatrend, we believe, longevity and all the elements, and we see that here in terms of the demand for space as well. Financing. We talked about that briefly in terms of that we are still at Obviously, that provides very attractive in financing position. Those of you who are in the bond market in Switzerland. I've seen that this year, we've had a record year in terms of new emissions. We've seen large American companies coming into Switzerland, taking part of that attractive market. And yet, it's not the crowding out of us. We also have been the opportunity, and we see that continuously with other real estate companies as well, where you get that very attractive spreads between 60 and 90 bps depending a little bit on the length and on the security that you provide. Policy rates still at 0%, as I mentioned before. We do see in the swaps an expectation that there might be a hike maybe even 2 going forward. But relative to what we see in the world, I think that is still with very limited upward pressure given also our inflation rates. And finally, fund flows, Andstasis will talk more about that. very strong flows still by institutional investors that allocate a significant part of their money into real estate and a very stable one. We'll talk about that in a second. So on this backdrop and on a very good Q3 of this year. We feel very comfortable now to raise the guidance that we gave for the remaining of the 2026 year. We do that by arising it by CHF 0.05 on the FFO 1 per share, now being between CHF 4.30 and CHF 4.35, and honestly, my gut feeling would say would be on the middle part, maybe even a little bit on the higher part of that if we continue the fourth quarter like we did in the third quarter. We're confirming our LTV below 39%. As I mentioned before, we now see an extremely good letting situation where we expect vacancy rate of 3.5% previously from 3.7% for the remaining of the year. And also on the AUMs, we'll talk about the money inflows and Nostaciol will give more details we are raising here the guidance from CHF 1 billion to CHF 1.2 billion for the end of the year. So that will be roughly CHF 15.5 billion AUMs for the asset management business for the remainder of the year. So far in the past, so let's focus on the future because the rest of the Capital Markets Day is going to be on the future. Where do we want to go with Swiss Prime Site over the next 5 years. First of all, we are building on the strong foundation that we have on our 2 pillars, with the priority of generating resilient growth going forward. In real estate, this will mostly focus on a continued capital up cycling in order to make sure that we further prime our already very prime portfolio and in particular, help us to capture reversionary potential that we see in the market and in our portfolio. On the development side, we are laser-focused on delivering our construction works that is going ongoing, plus we will announce [Technical Difficulty] today, 3 more developments or rather refurbishments. And I think an important element for us going forward this year, we are aiming at the 1% to 1.5% yield spread. Yield spread, I mean, in the sense of compared to what we could get doing an acquisition of a standing building. That should compensate for the slightly higher risk and make it very attractive in terms of our overall yield that our portfolio provides. And finally, we have a number of elements where we want to capture new demand trends. I talked a little bit about the megatrends just before. In particular, this will center for us around managed offices and health and the focus of it is to generate an accelerated like-for-like rental growth going forward. On the asset management side, our 3 priorities are capturing the 50% market share of pension fund of new pension fund allocations. So it's new allocations of the pension funds, leverage the outsourcing trend. We have been very lucky to win a number of new pension funds in our discretionary mandate solutions, and we'll continue to focus on that going forward. And then we also want to selectively launch new products and strengthen our platform in Germany, where we do see attractive opportunities going forward. All this is based on our platform leverage. And when I say platform leverage, I mean 3 things. First of all, our economies of scale. As I mentioned before, we are now combined about CHF 30 billion in assets under management. Then given the size we have and the scale and the different products that we offer, we do believe we have access to the best people in the industry. So obviously, we want to leverage those and benefit from these great workforce of ours. And finally, and we'll talk about that in the last section of today. We have a couple of interesting things that we can share on data, proprietary data and AI, which we believe will help us grow going forward. Translating those into the ambitions for 2030. Sorry, means the following. On the financial targets on the group, we want to grow our FFO per share by 15% compared to the now raised guidance. on the LTV side, we want to maintain our A3 rating. This is very important to us. And hence, we want to maintain our LTV below 39% or even more important, I do believe it's an ICR, it's an interest coverage ratio of well above 6x. On the operational targets, we are targeting CHF 530 million on the rental income side from our standing portfolio at around 3% vacancy rate as we are further priming. We also see an opportunity to further reduce the vacancy rate. And hence, our ambition will be to bring that roughly down to 3%. Much lower is probably difficult given that you have some fluctuations, but that's a clear ambition of ours. On the asset management side, we want to aim a CHF 130 million top line, of which 70% is recurring. The 70% is important to us because it underscores the stability of this asset management as well. And then that is on the base of CHF 23 billion assets under management. I think with this ambition, we set a long-term strategy, and we want to go into the details now a little bit on how we want to achieve it. Let me first begin with the portfolio strategy and development update of our own portfolio. So basically, the 3 elements that I mentioned before. I think I can go above that relatively quickly. It repeats our ambition. It impedes the strategic priority. And obviously, we're building on our key strengths of having the prime portfolio in Switzerland. And let me talk a little bit about this prime portfolio in Switzerland because when I talk to investors and many of you, then I think a lot of the discussion when we talk about our change in our portfolio over the last couple of years was focused on what I showed before. So closure of Jelmoli, sale of Incas, Teria, et cetera. I think probably the even larger transformation of our portfolio happened to our real estate portfolio. And I want to show you a couple of figures now going forward. What we have done and why we believe we can continue to do that in the future. First is a split of where we are in terms of locations. We focus on Zurich, Geneva, Basel and a little bit of burn. This is our core locations. This is the strong locations in Switzerland. This is where the economy is happening. In terms of the portfolio split by use, it's about 50% is office, followed by retail and then followed by a number of smaller elements, in particular, infrastructure as we call it, logistics and then also our hotel business as we mentioned before, close to 0, residential. These are only maybe if you have of a housekeeper kind of an apartment on the rooftop. And in terms of tenants, we have our top tenants, top-tier tenants, and you see a number of them, in particular, those that we have recently gone into new contracts or extended our contracts among them, JPMorgan, Lonza, Homburger, EY, et cetera. But now into this portfolio transformation. We've shown this chart before, but I still believe it is impressive and shows what we have been doing over the last couple of years. When I started about 5 years ago, we had close to 190 properties across Switzerland. You see those on the left-hand side of the picture above here. Today, we're standing at roughly 125. So we have a significant reduction in the number of properties and we only have them in the top locations. You see this here. This is a major we usually get from our valuators partner, and you see it here for June 2026, where we are 99% of our portfolio is now in the top location, 99% of our portfolio is in a top location. I want to show you pretty much the same picture, but it gives an even better view on how we transformed our portfolio over the last couple of years on the next page. This is proximity to the next intercity train station. You see it here in 2020 you see it in 2026. And I think just looking at it, you don't have to kind of fully understand the picture, but just looking at you see 2 things. The first 1 is you see significantly less of the small dots. What we have been doing is we mostly sold buildings below a bit below CHF 20 million. So the really small ones, where we are certainly not the best owner. The second thing is that you see is now this is much closer to the center. Overall, over these years from 2020 to '26, we have increased with the same methodology, the proximity by almost 20%. And we want to continue on that path because -- and this leads me to the next one, it's really yielding the expected results. And I want to show you results on 4 elements. The first 1 being here on the left-hand side, like-for-like rental growth, which over the in the last 5 years increased from 0.8%, and you see it pretty much on a steady increase to expected 1.6% this year. This is real like-for-like, so excluding indexation and excluding kind of vacancy reduction. This is really the underlying like-for-like growth, not benefiting from inflation or something like that. This is what our portfolio generates, and I think it's a very impressive number, having been pretty much double this over the last 5 years. And even better, we didn't do it at the expense of increasing our vacancy, but we at the same time also decreased our vacancy by more than 1/3, which is now at, as we said, a record low of 3.5%. You also see it, if you look at the average contracted rent per square meter, where we grew it in the office by about 13% and on the retail side by pretty much double that 26%. Why is that the case? We've mostly sold small retail assets a large part of those small below CHF 20 million assets for retail assets and we focused here, our retail portfolio also more on the prime retail. That's what we see dramatically here in the numbers where we grew that by more than a quarter. And finally, what it also does focusing on larger assets, more centrally located asset, it reduces your cost. And you see here, we reduced our costs by more than 20% over the last couple of years. So that's why we say we will continue with our asset upcycling or capital upcycling because it yields really the respective results and builds the basis for our like-for-like growth going forward. Second element is delivering on our developments. We have here the developments that are currently under construction. Let me just very briefly go through them because we will visit most of them going forward. But obviously, if you're here in fainter past, as you can see, we are just finishing up investing about CHF 30 million, mostly in the fit out and technology here. So we will have a clean heating system using lake water going forward, should be done roughly January of this 2027 when we hand over to the tenants. The building is going to be 100% AI building, which I think is very cool because you have this fantastic combination of a building that was built somewhere in the 1800s with the most modern technology that you can have. Unfortunately, we're not allowed to talk about the concrete names of our tenants. But as you all know them, these are among the major players in that field. ALPS I wasn't on the list so far. This is the acquisition that met from SES. We eventually got the building permit from the city of Geneva. So we are now building. It's not going to be a huge investment. It's about CHF 15 million, in particular, to make it multi-tenant. Even though we don't need it anymore by now, we have signed rental agreements and an LOI for 100% of the building. It's going to be, on the 1 hand, a managed office part and the larger part is in the professional service area. What I really like about this is the 7% return on the investment. And when we talk about return on investment here, we mean incremental yield on incremental investments. So incremental rental income that we did not have before, we took the CapEx measure and that relative to the CapEx. And I think that 7% is a really good number. And are we going to see -- so I'm not going to talk too much about it. And Jelmoli will bring a separate site -- so we'll talk about that as well. But you see for all of them, if you compare to, say, market yields, if you were to buy in that location, a new building, a standing building that is rented. We are roughly 1.5% plus higher in terms of the incremental yield. Here's our pipeline going forward. So we want to continue on that. As you can see from here, we will probably slightly more focus on refurbishments, larger refurbishments and actually new developments. This will help us also to achieve this target of 1% to 1.5% incremental yield. The next ones that we're going to start is going to be in Stucki Park in Basel, where those of you who have been in the shopping center lately, know that the upper floor is pretty much empty since 20 years. We now have a tenant. We will convert it into an office space, and that will be pure incremental space than pure incremental top line that we have, 85% is signed the LOI. And Mark, we informed independently already half year, no update on that. We are working on the planning. So 100% with the University of Zurich, and then we are working on 2 interesting elements. One is in Geneva, Santa Carouge, where we'll -- we are currently developing a mixed-use extension and refurbishment of the building, investing roughly CHF 60 million to CHF 80 million. And the same is true in Zurich Elicon here, Zurich 11, where we're also developing a mixed-use refurbishment of the building investing about CHF 50 million roughly going forward, and that should start somewhere in '29. So this gives you a little bit more perspective on how much capital we will allocate going forward. As soon as planning is a little bit more advanced, we can give you then, of course, the respective yields on this. One word on Jelmoli. For those of you who will be here in Zurich in the afternoon, we're obviously going to visit the construction site. You'll see it's heavy construction site. This is not like here. We are doing heavy structural work here. This is also the reason why we see an additional time here an increased cost base, but that's it, we believe, from now. We have now 95% contracted in terms of the value of the work that we do. Excluding here is fit out, which we haven't done. So once we go on the construction side in the afternoon, see that we do much more of the structural work than we anticipated in the beginning. And unfortunately, this is a very expensive work. We'll talk more about that in the afternoon. Having said this, we are still having on the same basis, as I mentioned before, incremental yield on incremental cost, a 3.3% yield on the investment, which is in the building. I look at our valuator here in the center of Zurich probably currently yielding 2%. And still roughly in this space that I mentioned before, 1% to 1.5% higher than what you would get for an acquisition in such a great location as it is. Last element here is the structural demand that we are seeing. And what we see here in Zurich increasingly is the convenience element that I mentioned before that companies choose in particular, say, for about 50 people, employees here and so they don't want to deal with the heating. They don't want to deal with the cooling. They don't want to deal with a reception or the waste water or water in general, electricity or Internet, et cetera, they want to plug and play office. And we're talking here not about small startups, et cetera, but we're talking about the large global firms, we'll see a few of them when we have lunch here at Flex office in Zurich. This is a trend that has been ongoing for a significant in London and is now coming here to the continent. You see here a number of figures for London 582% growth over the last 5 years of this managed office segment. It's about 8% of overall stock in London now, and that is overall on the city of London in this flexible part and the majority of that is managed office. So it's not individual small tenants, et cetera. It's not best caring these type of things. It's really large corporates that want to have everything managed. For Zurich, the estimates are about 1% to 2% of the market currently, so we can control that. However, the vast majority focuses on the CBD. So in the CBD, it's probably 5%. This is our own estimate. Over the city of Zurich, this is an estimate we partner did, it's about 1% to 2%. And the market is growing quickly. We see currently about 15% growth per year, and we believe this will accelerate if we see the increase that we get from our different tenants. So the demand is prime location, minimal upfront CapEx, turnkey solutions. I don't want to deal about anything experience. And this doesn't need to be fully flexible, but instead of the 10 years, I might have 5-year contracts. So it provides a little bit of a higher flexibility than it otherwise would. And this is the reason based on this structural demand change, which we see that we also have announced this morning the acquisition of the remaining outstanding share of Flex Office. Flex Office is the #2 in this market with about expected CHF 20 million in top line last year, has 11 locations in Switzerland, a little bit more than 20 employees that they do this with, and they will become part of Swiss Prime side going forward. We will not report it separately. It will be part of our real estate division, and we will report it as such. The offering and the reason why we believe this is really adding value to our tenants is the highlighted part, the managed offices. So we are not focusing on the fully flexed. We already have the classic lease. This is the managed office part where we provide with the same tenants that we have in our own classic leases, and we provide a fully manage them. And we believe it's going to be both interesting because we can reach significantly higher yields there, but as well because it's going to be a pipeline for us. For example, the tenant that takes about half of the building here is currently a tenant that flex office in a managed service solution or an alternative example is when Action, the retail chain entered Switzerland, they started with a managed office solution in Mesetome in Basel. Today, they occupy own offices, again in Mesetome as a classic lease. So it's not only a provision for companies that want it, but it's also an entry point for some of the larger tenants, which we believe makes this really super attractive. We signed last week. We will close it probably on the 1st of November. There's still a number of closing conditions pending, but it should be done by about November 1. The last element that I want to quickly mention is the Health segment. I mentioned that before, it's one of the megatrends wherever you go, those of you, I see a number of familiar faces who have been to Montre so the Swiss real estate days. The vast majority was around demographics. So this is all about the demographics because it has increased focus on longevity, on the well-being, mental health, all of those elements, and we see a significant demand for that. No worries, we're not going to hospitals. This is typically a type of use that you do in office buildings. So nothing special in terms of the building, maybe a little bit more water, but nothing that really has any significant CapEx as a result. It's more a question on how you focus in terms of the sales of the marketing and these elements. And we've been quite successful over the last couple of months already. We currently, and we'll show that as of going forward, have about 7% in the health segment. Of this is about 4.5% is Tertianum. The other 2.5% are kind of other uses in the health one. I'm going to show you an example of that. The interesting thing is it's not only a megatrend and the huge demand that we see with some special requirements that you need to focus, some special approaches and ways on how to approach it. But we also see a higher willingness to pay up to 20% as we put it here on the chart. And in line of that, just 2 examples on what we already did. The first one is we signed an interesting lease in Slerren, general practitioner clinic, 700 square meters of existing office space at a very attractive lease. You see here kind of -- this is from another practice of the same provider. It's going to be a very high-class fit-out that they will put in there. It's going to be a general practitioner, as I mentioned before, in a previous office space, very attractive terms for both of us. And the second thing is we also last week acquired a new building in Basel, close to Echenpllats. -- about 40% of that building is health related. The rest is an office space. And I think that does both 2 things. First of all, it adds to our Ashion Plats cluster here right in the center of Basel in the core locations. It's fully let and it adds to this attractive health cluster. Very interesting yields as we see here, significantly above 4% net yield that we could do. It's a fully off-market transaction, and it's expected to close on December 1 of this year. This was it in terms of our own portfolio. So I will hand over to Anastasios in terms of a quick update on asset management.

Thank you, Marcel. Dear ladies and gentlemen, a warm welcome from my side. The next few minutes, I have broken -- I'm going to give you an overview of Swiss Prime Site Solutions. I have broken down this presentation in 3 points. First point is about the market position of Swiss Prime Site Solutions. The second point about our 3 subpillars and the last point is about the opportunities for the future. Let me start with the market position of Swiss Prime Site Solutions. As Marcel Kucher mentioned before, we have 2 strong pillars in our group. The first pillar is the Swiss Prime Site Immobilien and the second pillar is the Swiss Prime Site Solutions for real estate asset management. Swiss Prime Site Solutions is the leading independent real estate asset manager in Switzerland with around about CHF 14.8 billion assets under management. Our target to 2030 is to have CHF 23 billion assets under management with around about 70% recurring fees. More than 2,600 clients are invested in our 7 products. 650 clients are pension funds. This is around about 50% of all pension funds in Switzerland. The main investment focus of Swiss Prime Site Solutions is residential with around about 60% -- now let me go through to our 3 sub-pillars. On the left-hand side, you see the subpillar fund management with around about CHF 4.6 billion assets under management. In this sub-pillar, for example, we have the product Akara Diversity PK or the investment fund commercial. We raised CHF 280 million in new equity and increased our assets under management by CHF 200 million in the first 9 months 2026. The second subpillar in the middle of this chart is the wealth management with around about CHF 7.5 billion assets under management. For example, the Foundation Swiss Prime or the foundation Fundamental. We raised in this section CHF 200 million new equity and assets under management by CHF 200 million in the first 9 months 2026. What I would outline here, we extend the contract with the Foundation Swiss Prime on 5 years to 2031. And finally, on the right-hand side, the third -- the mandate pillar -- sorry for that, CHF 2.7 billion assets under management, for example, ASCA or BASF. In this sector, we have gained a new mandate about CHF 400 million. So you can see on all 3 subpillars, we grew the last 9 months. So it is a strong subpillars of the Swiss Prime Site Solutions section. In the first 9 months 2026, we grew from CHF 14.3 billion to CHF 14.8 billion assets under management. only banks and insurance companies with their own equity portfolio larger than us. We raised approximately CHF 1 billion in new equity. This is a record for our company with future capital raise of around about CHF 300 million expected by the year-end. The transaction volume has reached approximately CHF 1 billion to date. This is a market share from around about 10%. You can see it on the right side on this page. Now let me explain how the pension fund system works in Switzerland. Around about 4.8 million active employees and employers pay into the system every year. This is not optional. It is a requirement. Around about 900,000 people are retired in Switzerland. The pension fund must therefore invest net contribution of CHF 70 billion new equity per year, but they can pay the pensioners' pension. The real estate sector is a safe and long-term investment for the pension fund. From the yearly net contribution, CHF 70 billion, pension funds invest approximately 23% or CHF 4 billion to CHF 5 billion on average in the real estate market. Our opportunity for the future and what I mentioned before, our target is to raise around about 15% of this CHF 70 billion net contribution, CHF 4 million to CHF 5 million. So that's around about CHF 700 million. Should be our market share of new equity from the pension fund market every year. With the leverage effect by 30%, we will grow around about CHF 1 billion per year in this sector. As the pension funds increasingly outsource professional portfolio management, significant opportunities can emerge for our mandates division. That was the third pillar on the right side. We're very confident that we will be able to bring mandates on board in 2027 and the years after. We see some potential in the French part of Switzerland and new products, maybe new club deals. But we also see some opportunities to expand our already profitable asset management business in Germany. summary, Swiss Prime Site Solutions is a strong and stable business case. We have more than 70% recurring fees. That means asset management fees or construction fees. Only 30% are not recurring. That means the transaction fees. The EBITDA margin is higher than 65%, and we will grow around about CHF 1.5 billion assets under management every year to reach our target in 2030 with CHF 23 billion assets under management with 70% recurring fees. Thank you for your attention. And now I hand over to Martina Moosmann.

Thank you, Anastasius. It's my pleasure to be here today. A warm welcome also from my side. One platform, 2 distinct businesses, all real estate. That's what we are. Before I translate the strategic priorities that Marcel and Anastasis have just elaborated, let me briefly summarize. In the Real Estate segment, our focus remains on capturing on capital upcycling and capturing rent reversion, Delivering on our ongoing and planned developments, I assume this is the highlight why many of you made it here today to see the construction sites behind all those numbers. And then this morning's announcement of the acquisition of flex office underpins our drive to capture new demand trends. On the asset management side, we aim to grow with the Swiss market aiming a 15% market share in equity raisings. We continue to put a strong focus on further expanding our bespoke mandates from pension funds capturing the outsourcing trend. And further, we selectively complement our offering with new products, as well as growing our profitable yet small German franchise. Size matters. The SPS platform with 200 ambitious colleagues is boosted by tailor-made AI capabilities enabling us to flexibly scale and quickly adjust. Closest to my heart in this context is finding the sweet spot between our prudent balance sheet management and establishing profitable growth. more on that in just a few moments. In the years ahead, our focus will be strategy execution. We will do it the proven SPS way. Let me walk you now through how the 2030 ambition translates into numbers. For full year '26, we expect the FFO of CHF 4.30 to CHF 4.35, likely towards the mid or upper end of that range and an LTV below 39%. And Operationally, vacancy should come in around 3.5%, and AUMs will grow by about CHF 1.2 billion, a significant increase across multiple products and laying the strong foundation for the years ahead. Before we turn to the longer-term ambition, a few words on planning assumptions. We very diligently follow economic developments and prevailing market conditions in Switzerland, but also in the rest of the world out there. Our ambition reflects a prudent balance sheet approach that means that currently, we foresee the possibility of interest rate hikes in the next 2 years. And also, we're not banking on further valuation uplift. Under those premises, our FFO 1, which is our leading KPI is expected to grow 15-plus percent with 2026 guidance as a baseline, meaning we should be able to reach close to 5 handle by 2030. Even with our model possibility of an interest rate step in '27 and potentially in '28, our interest coverage ratio would still be above 6x and we will manage LTV below 39%. The operating targets for our 2 pillars are CHF 530-plus million in rental income with a vacancy of around 3% in the real estate segment. And for asset management, we target CHF 23 billion with fees of CHF 130 million total thereof roughly 70% recurring. Now the 30% nonrecurring fees in asset management are transactional driven. In other words, the materialization of those fees is somewhat binary. Let me now walk you through the main P&L drivers, starting with costs. One platform, 2 distinct businesses, Scale is a key driver for both segments as is our focus on costs and efficiency. The downward trending lines in both our businesses over the past years visualized is better than I could do inverts. In our Real Estate segment, the capital recycling towards bigger objects and campuses contributes to the decline as does the shift to less cost-intensive assets with our undeterred operational focus. In the Asset Management segment, as with any asset management business, the marginal cost per billion AUM goes down. As we would see in just a few minutes, the smart usage of data and AI allows us to amplify the work of our real estate professionals across the entire platform. Both pillars share resources and align processes wherever it makes sense for us. examples of finance, including the funding and the tax function, IT, HR, while we keep a dedicated team catering to the needs of our Bispoke client needs. Our client groups, I'm sorry for that. So on the next slide, I'm going to show you a bit more detail on the real estate segment, starting left to right. like-for-like growth, that's our daily business, optimizing the potential of our existing buildings through a bundle of levers with rent reversion being a key component -- we shared some of the examples at our half year results. And of course, there's also some indexation. The combination will add around CHF 30 million annual income over the planning horizon. For transactions, we base our ambition on a slightly negative balance between acquisitions and sales. There are attractive opportunities out there. like the 1 in Basel that Marcel just shared that we signed last week. But the transaction market is highly competitive and we will be very selective on opportunities to follow, definitely not compromising on the return. On a net basis, we expect CHF 35 million from developments, ones that Marcel showed and the biggest ones you're going to see over the course of today, you heard a gross number of CHF 50 million from Marcell. I show you a CHF 35 million number. The difference is being some buildings going temporarily off-line because of refurbishments. The stage completion of Jelmoli and, including the tenant fit-outs and subsequent move-ins takes time with the full rental cash flow kicking in 2030. Last but definitely not least, we aspire to add at least CHF 15 million from our new products, managed office with the acquisition of flex office being the most significant 1 there. Now let's look at the work for Asset Management. We will further build on our proven track record managing real estate assets for pension funds. Aspiring a 15% market share, this will translate to fee income of about CHF 25 million additional fee income of about CHF 25 million by 2030. Then growing our successful mandates business will be supported by the absorbed trend from pension funds to outsource the management of their real estate portfolio to dedicated experts, which is typically not their core business, but it's ours. Remember, we're all real estate. And the third pillar of fee growth will come from selective expansion of products in Switzerland as well as growing our profitable but currently still small franchise in Germany. How will we fund all that growth amid potentially rising interest rates and a strong commitment to keep our balance sheet prudent. Our liability portfolio is well diversified with complementary funding sources across long-term mortgages, syndicated bank loans, bank facilities and multiple pockets of capital market funding. Our guiding principle is an LTV below 39%. Even with the model possibility of interest rate steps in '27 and '28, our ICR will still be above 6x. I said that before, but I can't say it often enough. Assuming interest rates don't move, and I would be happy to be proven wrong here, the ICR multiple would, of course, stay in the 8x region that we are today. Annual's credit lines of CHF 700 million allow us to approach the refinancing of our 27 maturities, roughly CHF 450 million without time pressure. That's a good position to be in. We diligently follow the economic developments. And therefore, our plan A is to return to the euro market after our inaugural issuance 12 months ago. But we have several options available for us. We will manage our balance sheet to maintain the LTV levels commensurate with our A3 rating and are well prepared to maneuver the volatile market environment. Allow me at this point to introduce Christian Hap to you, our new Head of Corporate Finance, Treasury and Investor Relations. And together with him, -- he joined on October 1. So in a steep learning curve together with him, will fine-tune the market approach in the coming weeks and months. And with this, I would like to wrap up the financial part of our ambition, our earnings power, measured by funds from operations is expected to grow 15% by 2030. So from the CHF 4.30 to CHF 4.35 today. We aspire to get to a CHF 5 number. Our ambition accommodates the potential of 2 interest rate steps. The growth in both our segments along the discussed strategic priorities, combined with our focus on efficiency across the platform. and increased leverage from data and AI provides a resilient foundation for that. With about 5% contribution to FFO to FFO growth from our asset management business -- the share of asset management is expected to further grow from around 15% currently. We also confirm our stated dividend payout guidance from 80% to 90% of FFO 1. And with this, I conclude the CFO comments on our strategic ambition 2030. But I got 2 more points I quickly want to make. As of 2027, we will report our income statement following IFRS 18. We will provide you the pro formas for '26 in February. That should give you enough time to adjust your models. And then -- as always, we're among the first ones to report full year numbers, February 5 is full year, but already, please mark July 22 for the half year since we're also going to accelerate the reporting of our half year numbers. With that, back to Marcel.

Thank you so much. So that pretty much completes the strategic update and the aspirations, but we have 1 more thing. And that 1 more thing is very close to my heart and total uses hard and to Martina is hard. We really believe we are in a fantastic position, and this is not just cheap talk. We will show you what we did over the last couple of years in order to benefit from data and AI. And why is this important? First of all, we are in an outstanding position to use this. As you can see here, we have CHF 28 billion in assets currently. We'll grow that over the next couple of years, so probably close to CHF 40 billion. So that gives us very large view on what's happening in Switzerland, a major view. We see 2,500 transactions a year. The all locum all in the same database with all the data that we can have to it, including location, the price that we got that happened and the expected yields. We have an extensive tenant base, 10,000 tenants plus across all the segments and across all Switzerland. And we have deep real estate experience. And all of this, we have live, real-time. You see every minute, every transaction that's happening, you see every minute, every new contract that we signed in any of our divisions. What we worked over the last 2 years, we started with this exactly 2 years ago. We built what we call a One Lake where all of this data flows together. Currently, what we have in our data lake and you can see it here, is an integrated cloud native and what is most important governed data base. Government means everyone only sees within our group sees what he's allowed to see what he would see anyway otherwise without the AI. And we are putting in their information from all the transactions, as I mentioned before. We have 1 database for all of our divisions. They are all separated in terms of what they see. But in terms of how we can actually look at it and extract the data, it's all integrated. From a transaction valuations tenant interactions, property and sustainability reporting, including live energy data we have from most of our buildings. All of our ERP data, all of our accounting data, HR data, everything in 1 database that we can use. And we have an AI-enabled workforce. Since about 9 months, we're doing regular trainings and updates. We have user groups on AI and all those elements. And what it creates is life market insights. We have a differentiated client experience. We'll talk about this. So we aim to provide the best client experience that you can have, including new products and will show off 1 of them in just a minute. Additional value add for our products and, in particular, of course, for our investors. This centers across 3 elements. The first one, and always the most important 1 is customer. So AI for us is not cost reduction. Not at all. AI for us is enhanced tenant experience. We will launch the first products on that early next year. And investor value add, and I'll show you what is in the pilot currently and that some investors are already using. Second 1 is decision quality and speed. We'll show you a quick demo on how this works currently. But that is the most important element probably in it. We are much faster. We can look at much more transactions, and we are much better in terms of taking the decision, putting the right price and identifying potential risks et cetera. And then of course, what follows from that is best-in-class, best-in-class productivity. As I mentioned before, this is not in the center. And we do this on the back of that we have been working on this for a very long time. Since 2023, we canceled all the contracts where we provide data to third-party providers. That includes MCI, that includes any consolidator of data. That includes even our valuators where we have in the contract, a rule that they're not allowed to use our data for anything else. That includes our property managers with the same contract. So we have been protecting our data since about 3 years now. Then we worked on the data lake, as I mentioned before, and business-led innovations. Since August of this year, we have more agents in our group than we have employees. And that is not, as I mentioned before, not to reduce the number of employees, but to provide better decisions, better services to our tenant. And we have now a dedicated AI factory with 10 employees, data engineers, AI specialists, et cetera, that provide really, really cool elements. I want to show off 2 of them of what we do. The first 1 is -- as I mentioned before, we do a transaction in Switzerland about every second day as a group, a sale or an acquisition. In order to do that, we do an enormous amount of due diligence work. As I mentioned before, we see about 2,500 transactions a year. So far or up to a couple of years. You did the due diligent paper base. Of course, that's long ago. It took you 40 hours. Now mostly what people do is we do it obviously searchable, you get an electronic data room still a day of work and now we do it automated 4 hours, human validation. It's 10x faster, much better decision and it's scalable across all of our products. And I want to show you quickly how that looks. We wanted to do a real-time demo, but then given that we are on the construction site and that all of these things, we did the video, but it's exactly what it is. This is our asset workspace. As you can see, this is life. This is not something we have some crazy ideas about. This is not a mockup. This is live. And we have 3 super agents here. So super agent Carla, super agent Dennis and super Heiner, they all do different things. What we're going to show off today is Carla, which is acquisitions. So basically, what you do here is you take the data room that you get and you have Carla analyze it, and then you work with Carla in order to come to a decision on whether you see any potential problems with that. Dennis is on the portfolio side, helps you with portfolio optimization helps you with ideas on where you can work on the cost, where you can work on the top line, all including of our BaaS own database. And Avera is working on reporting and analytics. Working again with our data to show you where compared to the data that we have from the same region, we see options, we see possibilities. We improve see improvement potential. But here comes Carlile. That works. So this is not cut. This is Carla. So we do a Ratleduediligence Here, we show off here only the tenant database, otherwise, it's too complex. It takes you roughly 60 seconds for our portfolio to analyze. So it's not that -- and what you see here is it goes through all the current contracts. These are all fake contracts. -- that you go here. You see kind of the different contracts that they looked at. You see here the different colors and where you see potential issues. This is German, unfortunately, but it was -- basically says it tells you kind of the type of problems that you might have and the risk and obviously, everything is super detailed. So it jumps directly to the part in the contract where they identified that issue. You can, of course, then once you work with that, you can ask Carla to summarize this in terms of, okay, now what are my biggest risk potentially here? And you see here, Carla is working on that. So these are the 3 contracts that you have or you see a major issue here with the 30 days notice if the CHF 9.5 million fit out loan is not compensated or any potential other elements. You can also work with external data here. So what probably a lot of people do that acquire assets, they quickly check what is in the market, go on Homegate, go on any of those contracts. So we just say here, compare that to any offers that you currently see in the market. Carla quickly working on that, and you see what it does or she does. When it summarizes here, you see kind of -- it is in the line of what you have. If you go further down, we see kind of the offers at the analyzed from ImmoScout, from Homegate, from fat, from flat Fox, and you saw how long it took, not even 30-second, 20 seconds that you can do that. And this is a small part of what Carla does in order to help us to come to the best solution, and we are the only 1 that can do that because we have CHF 30 billion in assets, and we have all the data in 1 database. I want to show you another example because this is our internal element. You will never see that. But the other one, you might. And the other 1 is, when we talk about reporting, and Martina just talked about being faster and providing you kind of our financial information earlier. But so far, this is still the same than it was 20 or 30 years ago. No, it's no longer printed, but it's electronic, but you get a long report, and you have to work through this and then you have to do your analysis, et cetera. And what we try to do here is an AI-powered real estate interaction that is personalized with your portfolio that you invest in us. So it's life insights, it's interactive and it provides a super cool experience. And let me quickly show you how that works. [Presentation]

This is live with 5 pilot investors so far, the feedback is flagasting. It's tremendously good. This gives you, for the first time, an opportunity to work with our data to interactively have ideas, tech it with others, have it simulate elements whatever you want, and that on the proven back of the real numbers that we can provide from Swiss franc -- we will start with the asset management with this. Eventually, we'll bring it to all of our investors, and these are just 2 of the elements that we currently work on in our AI factory. So that leaves me with a summary. Yes, a little bit too long. But Here's our strategy on what we're going to do going forward. We continue on our capital upcycling,making our rates portfolio even greater going forward, all in the sense of capturing the version are potential that we have. We're working on our developments and refurbishments with an aim to gaining a yield spread of 1% to 1.5%. And finally, I think we've proven today that we are fast in capturing up with potential demand trends, including kind of the trend to convenience and outsourcing with managed offices. And on the asset management side, we have a clear goal to capture 15% market share of kind of the new allocations of Swiss pension funds. We want to leverage on the outsourcing trends where we gain new mandates with our large pension fund system, and we will selectively launch new products. You will see that over the last time and strengthened our German platform, all built on our great platform and an enabled platform. And these are the ambitions for next year. and 2030. FFO 1, CHF 0.05 up from CHF 4.30 to CHF 4.35. LTV sorry, and 15% over the next 5 years through 2030. LTV remains at below 39%. And for the year and about 8x ICR including potential increases in the rates, we will still stay at a comfortable 6x up and hence, comfortably in the A3 rating. On the operational targets by 2030, CHF 530 million in the rental income, around 3% vacancy with an updated target for 2026 of 3.5%. And on the asset management side, CHF 130 million fee income, of which 70% is recurring, underscoring kind of the stability of the business with an AUM of CHF 23 billion, building on the updated again here guidance for 2026 of CHF 15.5 billion. And this is with Prime Site.So what we're going to do now is we can do Q&A because we, at least the majority, I hope, will spend the rest of the day with us. We thought we will start online if there are any questions. And hence, I don't know how that works, but I hope we can have potentially online questions now to start with.

[Operator Instructions] Currently, there are no virtual questions. So I'll hand back to Marcelo for questions in the room.

I thought so. There might be some questions here in the room. Let's start here in the front that might be near.

Ones Kaland from Morgan Stanley. So my first question is on your 3% vacancy guidance. I think at the moment, you have like operational vacancy of just above 3% with have a point of strategic vacancy. Is the guidance kind of comprising both of them, and therefore, you're assuming that your operational vacancy will go towards below 3%? And is this kind of a new paradigm for Swiss real estate? Or this is just a result of your portfolio becoming more prime and therefore, that vacancy going lower just due to a change in the mix?

Thank you for the question. It's probably a combination of the element. The first 1 is by even becoming more primary, I think that will help because we see this clear flight to quality in terms of our tenants, and we expect this to continue going forward. On the other hand, we also see that our overall development volume will probably come slightly down going forward. You've seen the developments that we announced, if they compare them with the ones that are under construction at this point. So this is slightly lower, hence, that also means we'll probably have a slightly lower okay, structural vacancy due to our strategic vacancy due to construction work. But yes, we do believe this is an overall vacancy number, so including everything, and we do believe that this is manageable going forward, yes.

Then another question on your funding. As you said, you are now releasing a little bit the developments, but still you have certain CapEx requirements going on. Could you quantify them a little bit, maybe the guidance of CapEx per annum and how you're going to fund that and whether that 39% LTV guidance, what kind of valuation or revaluation assumptions are underlying in that guidance.

So on the CapEx, of course, on a portfolio of CHF 14 billion, naturally, you have CapEx. I mean we've shown you, call it, the out of the ordinary CapEx type range for the remainder of the portfolio, assuming somewhere in low triple digit, just below triple digit per annum, if you compare that with a CHF 14 billion that probably gives you a good assumption on what we do just on maintenance with refurbishments shown separately, as you've shown on the larger one, as you saw on the slides.

So altogether, will probably stay in the CHF 200 million over the next 3 to 4 years until the larger ones are gone, and then that will come down maybe by CHF 50 million or something like that. going forward. And the funding is the continued capital upcycling, as we mentioned before, that's why Martina said, on the whole acquisition and sales base, it's probably going to have a slightly negative impact. on the top line, which is why we sell to invest both in our development, most in forefront because they have super attractive yields. And anything that we can -- that we don't invest in our an look on the market opportunistically, as Martina mentioned before.

And then my last question is on Germany. You're saying that you'd like to grow your platform there. I understand that means that you'd like to raise more capital, raise more funds and expand your asset management platform there. Does that mean also that you are looking to increase your investment in Germany or in German residential and how you assess the current kind of risk that is starting in Berlin and it could potentially expand to the rest of the market. .

Look, I mean, as everywhere in our asset management, we don't invest our own money. This is a pure service business. We have not a single Swiss franc neither in our Swiss funds nor in our foreign funds or Germany. And we're not going to change on that. So that is an element. And when we say we see opportunities in Germany, we mean currently, -- the market is certainly not on a peak and that provides on the other hand, opportunities to invest. We see attractive investment opportunities for our clients. We also see some demand on that. Obviously, overall, this is not super high, but there is demand in Germany, plus you would also not exclude maybe to do an M&A transaction. That is part of it. And then obviously, for M&A transaction, given the current market environment, it is, in fact, quite attractive. But this is going to be small. So don't expect here a multimillion element that we do, it's going to be small, if any, if anything, at all, but we're looking both at organic and inorganic elements here.

The first question, when will the pickup in new assets under management happen? Is it front-end or back-end loaded? Currently, I was assuming a more than CHF 1 billion increase per annum driven also by the currently very strong market environment. What interest rate environment are you assuming until 2030? And what is the associated risk. The 23% real estate allocation of pension funds could, in my opinion, change in a rising interest rate environment and seeing the limited target operating leverage utilization into the future. Do you need M&A growth abroad to reach these targets? And now I think you answered the second -- the last part of the question partially. You said you will only take a small M&A at most, right?

Yes. This is not M&A driven. If anything, M&A might have a small part into that. But this is all organically driven. And what Anders Alsius quickly mentioned before is that we see this continued growth of CHF 1 billion to CHF 1.2 billion organically. This is what we're going to do. This is what we're going to do this year. In addition to that, we see a significantly stronger focus more than ever of pension funds in outsourcing. They're kind of real estate management. Then we won a large contract that will come into effect next year. That is not part of this CHF 1 billion. This CHF 1 billion is normal organic part, as Anastasios showed part of the allocations that you have in the pension funds. And look, going forward, who knows what the interest rate is going to do. Martina explained the basis for this is VC2 hikes.

Potentially.

Potentially. Then this will still work out if you do 2 hikes, if that were to happen, then you still have an attractive spread between real estate and say, government bonds of 2% to 2.5% still. And hence, in our view, there's no reason why pension funds shouldn't continue to invest in real estate.

So basically, you assume an unchanged interest rate environment, correct?

This is based on the current environment, including the possibility of 2 rate hikes and anything that we believe could follow that. Anything else, given the interest rate forecast of the National Bank, the inflation forecast of the National Bank, et cetera, would according to us not make sense currently.

My second question, does the target yield spread of more than 1% to 1.5% mean we will see a massive value uplift with the completion of the Jelmoli building. And what would happen if your yield spread with your yield spread target if market discount rates would change into the future.

Well, we'll see. We have to ask our valuators on whether we see a value uplift. But in general, obviously, if you are 1% to 1.5% above market yields, then it should result in an uplift once you've done your development. But I think what it more does, it's a guidance for us on what type of developments we do, where we invest our money and how to make sure that our capital allocation is value-adding to our products. And since Carin took over, we have already changed a number of our developments. We've shown now kind of the next phase that's going online. Where this was a clear element in deciding which ones to go push forward so that we at least half is 1% to 1.5%.

And maybe an easy 1 at the end. What could be the impact of the tough changes around the currently discussed changes around Lexol for your 2 businesses? And the easy one.

Thank you, Ken. Well, you've been to Monte or I've been on the stage there. Look, I've been talking to many politicians lately, including Bondinitzerland. I'm still very positive. But in the end, the rational arguments will prevail. This is not helping the shortage on apartments. And not at all, given the small part that is only affected by any potential change on the other hand, it might have significant negative impacts that I think nobody wants. So in that respect, yes, this politics. We are actively engaged. But eventually in Switzerland, reason prevails, and I'm very convinced that this will be the case here as well.

Matti Linda on top. I've got a question on the asset management business. You talked a lot about in the past about the EBITDA contribution of CHF 75 million. from the asset management by 2027, no word on this today. Do you have any message on this?

Let me take that as the CFO. I think when you look across the world, asset management businesses, are driven by assets under management. So our guidance is on top line, the fee derived by the assets under management. We will, of course, report but will not outside of the reporting dates, give targets or guidance on EBITDA. And as mentioned that the margin of 65-plus percent will remain intact, and I think we'll leave the guidance there.

One thing to add there. We will no longer guide on EBITDA of the individual divisions. We quickly talked about that before. We have now an integrated business model with the 2 divisions. And hence, our focus is on driving the CHF 4.30 to close to CHF 5. But we'll continue to report all the details -- and this doesn't mean that we're not reaching it. that we are no longer reporting on it in the guidance. We will report, of course, unchanged in terms of the segment reporting, but we're no longer guiding on it.

It's Tom. Desio -- it's Thomas from Deutsche Bank. Just 1 question on the Swiss residential market. Maybe you can provide some update here because is rather relevant for your asset management growth ambitious basically. We hear that the market seems like rather peakish. I think there are also some initiatives to -- for more regulation. Any update would be useful here.

Yes, we have great immigration. So the last 5 or 10 years, I think it would be also in the future. So the demand would be high. And the asset management part, it's not only the residential part. So we have also 40% in office or logistics or other parts. So but I think for us, we have foundations like Swiss pram or Foundation fundamental. Also we have farms. So we can play both sides. So is there more regulation, maybe it could be better for the asset management side, maybe of the foundation side. Maybe it's a little bit not so good for the foundation and for the fund. But yes, I think with these 3 sub pillars, we are really good in the market. We have a really good standing in the market. And also, it's more regulation, maybe we can get more mandates in the future from the tenants directly. So I think our market position residential, office, logistic, we are very confident for the future.

And maybe on the residential part, look, most of these regulations in Switzerland are a cantonal level on the state level. And we have 2 states that are city states. This is Geneva and Basel. Both of them have introduced regulations. The rest are not same states. And we had a vote in Zurich in summer of this year. Pretty much to do something similar, even a little less regulated than in Basel as well to down by 60% plus. So in that respect, we're confident that in terms of the regulation, this is probably about it because for the remainder, you need a can on that is not only a city which obviously are rather on the left side typically as everywhere. And hence, we don't necessarily see that. And maybe the last thing more regulation doesn't mean lower yields on the contrary, typically. So obviously, if you have capital and you want to allocate it and you want to allocate it to a location where you have maybe a little bit more regulatory complexity, let's put it on typically capital requires a higher yield for that. And that's pretty much what we are seeing. That's why we're also still investing in Geneva Basel is more complicated because the regulation is newer. But in CEVA, you have an established regulation as a commercial company, you can you can deal with those as long as you know what the environment are, and as I mentioned before, yields are typically not lower.