The Swiss Prime Site Group is pursuing its vision of creating sustainable living spaces for society as a whole and for its customers. With its first-class property portfolio worth CHF 12.3 billion and a comprehensive range of services along the real estate life cycle, the company is uniquely positioned to turn this vision into reality, thereby meeting the needs of its customers and society in the long term.

Swiss Prime Site’s business model is based on the vision of creat­ing innovative and sustainable living spaces. It covers the entire value chain along the real estate life cycle. This includes successfully investing in or acquiring a property or site, project development and project realisation, portfolio and asset management, property management and, if necessary or beneficial, divesting properties, sites or parts thereof. Swiss Prime Site works to the highest quality standards and systematically focuses on current and future market needs. Its goal is to ensure long-term, multi- dimensional value generation.

Swiss Prime Site Immobilien is a real estate investment company focusing on Swiss property. As at the end of 2020, the portfolio had a total value of CHF 12.3 billion. It consists of prime properties, mainly occupied by commercial tenants.

Business model

Swiss Prime Site Immobilien initiates the group’s value-generation process by acquiring commercial properties, sites or real estate. Swiss Prime Site Immobilien’s primary business focus is portfolio and asset management. Developing and realising real estate projects and converting and modernising entire sites are also very important ways of creating value. The prime property portfolio is strategically optimised on a continuous basis.

Property portfolio

Swiss Prime Site’s property portfolio contains high-quality property and locations. The portfolio as a whole also has a good sustainability balance sheet. To optimise this further, targeted measures are being taken and investments made as part of Swiss Prime Site’s CO₂ reduction pathway. The aim is to continuously improve resource consumption and achieve climate neutrality in the property portfolio by 2040 (see CO₂ reduction pathway).

As at the end of 2020, the portfolio comprised 185 properties in total. Total floor space increased to 1 673 005 m², while the vacancy rate was kept at 5.1% through proactive management despite the difficult environment.

Geographic allocation

According to Wüest Partner, roughly 80% of the group’s properties rank in the quadrants with the highest quality based on the overall market. The majority of properties (76%) are located in German-speaking Switzerland. In this context, the canton of Zurich and particularly Zurich City account for the main share in this region with 44%. Another important region is the Lake Geneva basin with a share of 22%.

Utilisation

Swiss Prime Site has mainly geared its portfolio to the needs of commercial and services businesses. Currently 44% is let as offices and 26% as retail units. The property portfolio’s maturity profile is long-term and thus attractive. Roughly 21% of net rental income is generated with rental agreements with a term of ten years or more. Another 34% of the portfolio is due for renewed leasing at terms of between four and nine years.

Highlights from the reporting year

In 2020, Swiss Prime Site Immobilien continued with the targeted growth of its portfolio. Major milestones were reached at Stücki Park in Basel, where the company is expanding floor area by more than 70 000 m² (laboratories and offices) by 2023. Tenants have moved into the first units. The multiplex cinema, which was completed in autumn 2020, did not open its doors until 2021 because of the pandemic. The «West-Log» project in Zurich-Altstetten and JED (existing building) in Schlieren are close to completion in early 2021. Elektro-Material moved into the «West-Log» logistics building as an anchor tenant. The two anchor tenants in JED, Halter and Zühlke, also moved into their rental space. As the buildings are flexible and can be used for a wide variety of office and commercial purposes, the new and future tenants will be able to structure the space perfectly for their activities. The Schönburg project in Berne and the YOND project in Zurich were awarded international architectural prizes in the reporting year.

As part of the further development of its portfolio, Swiss Prime Site Immobilien placed great emphasis in the reporting year on reducing heat and electricity consumption. To increase its own production of renewable electricity, it identified 18 properties in which additional photovoltaic systems could be installed. Of these, four facilities with a total installed capacity of around 380 kWp were put into operation in the reporting year. More projects will be completed in 2021. More information on reducing the ecological footprint can be found in the CO₂ reduction pathway.

Project pipeline

One of Swiss Prime Site Immobilien’s strengths is its ability to develop its own projects. This means the company can operate with a high degree of autonomy from market cycles while at the same time improving the level of sustainability within the portfolio.

Development projects are based on the group’s strategic targets of boosting organic growth and increasing corporate profitability and renewing the portfolio through sustainable building materials and structures. Earnings from completed projects accrue in the form of revaluation gains, rising rental income and sales proceeds. New projects developed by Swiss Prime Site Immobilien generally exhibit above-average net yields compared to both the market and the existing portfolio and the highest sustainability standards.

The investment volume of Swiss Prime Site Immobilien’s project pipeline amounted to around CHF 2 billion as at the end of 2020.

Projects under construction

The construction projects have an investment volume (including land) of around CHF 1 080 million. With a volume of CHF 300 million, the largest single project is Alto Pont-Rouge in Lancy. The project plays a significant role for the Geneva region due to its character and location, since another transportation juncture and economic hub will be created for the city as a result. Shortly after construction began in the second half of 2017, two of the five properties to be built at the large Espace Tourbillon development in Plan-les-Ouates were sold. Two other buildings are in the process of being sold, one of them in condominium owership. The fifth building (CHF 85 million investment) will be added to the existing portfolio. Projects under construction exhibit an average net yield that exceeds the current portfolio average.

Projects in planning

At the end of 2020, projects in the planning phase had an estimated investment volume (including land) of around CHF 640 million. With a volume of CHF 222 million, the largest single project is Müllerstrasse in Zurich. This involves the large-scale modernisation of the existing office building. Four projects for the construction of new residential and geriatric care centres (Monthey, Olten and Richterswil) and a residence (Paradiso) for Tertianum are currently also in the planning stage or already under construction. In addition, Swiss Prime Site Immobilien has land reserves and considerable reserves of usable floor space in its stock.

Highlights from the reporting year

Swiss Prime Site also believes in the importance of having development projects that are sustainable. Since 2019, the company has been guided by the Swiss Sustainable Building Standards (SNBS) criteria and is also moving into new territory with regard to the topic of the circular economy. In what is a first, the Company is using circular concrete produced by the company Eberhard for the new JED building in Schlieren. This means it can massively reduce the primary resources of sand and grit and also store CO₂ in the granulate of the secondary building material over a long period.

With its group companies Swiss Prime Site Solutions, Wincasa and Jelmoli, the company has strong providers of services that are in high demand within the environment of its real estate core business, the group as well as third-party customers and that strengthen its business model.

Swiss Prime Site Solutions provides comprehensive services at portfolio and asset management level throughout the full real estate life cycle. The services offered in portfolio and asset management, capital procurement, development & construction and acquisition & sales include preparing acquisitions and sales strategies, potential analyses within the existing portfolio, managing and monitoring real estate developments, carrying out capital increases and developing customer-specific strategies to increase efficiency and market penetration. From 2021, Swiss Prime Site Solutions will expand its value creation with services in the area of fund products. This will significantly increase the growth of assets under management and the profits from the group company.

Wincasa’s business model is based on the two central value-added pillars of property management and centre & mixed-use site management and construction & facility management. The services offered to corporate customers range from management, owner representation and construction management through to revitalisation and re-letting of properties and strategic consulting.

Jelmoli offers customers an innovative gastronomy and event experience in addition to a varied brand mix. By letting floorspace to third parties, Jelmoli has also been able to further optimise its value chain. To that end, Jelmoli also uses a first-class property from Swiss Prime Site Immobilien, located directly on Bahnhofstrasse in the centre of Zurich.

Sustainability is an integral element of Swiss Prime Site’s corporate strategy. As part of their business activities, the Company is committed to the transformation into an economy and society that builds on the partnerships between different stakeholders and in which commercial success, human well-being and a careful use of natural resources go hand in hand.

Long-term alignment with the Sustainable Development Goals (SDGs)

Swiss Prime Site sets itself long-term goals based on the Swiss government’s Energy Strategy 2050, the Paris Climate Accord and the Sustainable Development Goals (SDGs) of the United Nations. Swiss Prime Site uses the 17 SDGs as a system of reference in which to embed their engagement in the context of global sustainable development. The focus is on seven key objectives to which Swiss Prime Site can contribute by fulfilling its responsibilities in the core business: SDG 4 (Quality Education), SDG 8 (Decent Work and Economic Growth), SDG 9 (Industry, Innovation and Infrastructure), SDG 11 (Sustainable Cities and Communities), SDG 12 (Responsible Consumption and Production), SDG 13 (Climate Action), SDG 17 (Partnerships for the Goals).

The relevant Sustainable Development Goals are also reflected in the material issues defined by Swiss Prime Site that form the basis for the integrated management of financial and non-financial aspects as well as integrated reporting.

Assuming responsibility for safe, resilient and sustainable cities and settlements

Swiss Prime Site considers SDG 11 (Sustainable Cities and Communities) as an appropriate guiding principle for their commercial responsibilities and is committed to safe, resilient and sustainable cities and settlements. This reflects the corporate vision of creating sustainable living spaces, as well as integrating several trends that have a significant impact on the core business. Among others, these include urbanisation, intergenerationality and climate-adapted design of living spaces.

Swiss Prime Site appreciates that a meaningful contribution to SDG 11 can only be made if the Company builds on its strengths. This includes having a clear focus on clients’ needs, supporting employees, encouraging an innovative work culture and making investments that increase energy efficiency and reduce CO₂ emissions. Based on these pillars, Swiss Prime Site has developed group-wide, strategic objectives that will be further operationalised within the group companies, leading the way to a successful, sustainable future.

In 2019, as part of a comprehensive materiality analysis, Swiss Prime Site determined for the second time since 2017 which issues are particularly important for the further development of integrated management. This enabled the Company to create the basis for the integration of important financial and non-financial issues into the management of the group and defined the strategic focus of integrated reporting (GRI 102-49).

Process for determining the material issues

In the materiality analysis, the aim was to assess how important the particular issue is to the different stakeholders, and to the business success of Swiss Prime Site, and also how important the issue is with regard to the Company’s impact on sustainable development. Assessing business relevance as the third dimension ensures that the material issues are closely related to the core business and can be integrated into strategic management.

Swiss Prime Site arranged the issues in order of materiality according to the six capitals of the International Integrated Reporting Council (IIRC). Adopting the capital-based approach reflects the Company’s wide-ranging aspiration to create sustainable value for the various stakeholder groups from a wide range of resources.

Integration of internal and external stakeholders

In particular, Swiss Prime Site used the materiality analysis to enter into an ongoing dialogue with different internal and external stakeholders. In addition to management representatives, business partners and clients were also consulted about their priorities. Swiss Prime Site also took into account the findings of the 2019 Stakeholder Panel. The next materiality review is scheduled for 2021 (GRI 102-46).

Inclusion of material issues in goal-setting

The materiality analysis serves as a starting point for Swiss Prime Site to make further improvements to the integrated manage- ment of financial and non-financial aspects. In the reporting year, the Company – drawing on the material issues amongst others – defined overall corporate goals, from which they derived measures for the group companies (see Strategy/Sustainability goals). The materiality analysis also defines the focus of this integrated reporting.

Swiss Prime Site sets targets that are phased in over time and focused on different levels. These targets and measures are based on the question of how the company can create value for different stakeholders. Moreover, which issues are particularly important for them and for the short, medium and long-term business success. Using materiality analysis, the financial and non-financial topics that will have a significant impact on general economic, social and environmental developments are evaluated and defined. On this basis, the goals are developed and put down into a roadmap – structured according to the capitals of the «integrated reporting» approach. This procedure reflects a sustainable business management and provides the basis for the integrated reporting.

Our achievements in 2020

In addition to the corporate objectives communicated in last year’s Annual Report, other objectives were added during the year due to COVID-19.

The Swiss Prime Site Immobilien asset management team received more than 500 tenant requests; these needed to be processed and concluded before the end of the year. More than 2 000 additional tenant requests were processed and concluded by Wincasa on behalf of third-party customers.

Despite the challenging year, it is important not to lose sight of the objectives set out in the 2019 Integrated Report. The first GRESB submission for the existing and development properties portfolio and the launch of the first green bond in accordance with the criteria of the framework drawn up for that purpose enabled two key milestones to be reached in environmental terms.

Despite all efforts, only the objectives relating to the fluctuation of employees, particular in the group companies Wincasa and Jelmoli, with high numbers of employees, were once again missed by a clear margin. It is therefore imperative that there is renewed intensification of measures in this area.

Group objectives in more detail

Under the supervision of the Sustainability Board, set up in 2019, Swiss Prime Site enhanced its long-term, strategic sustainability objectives in the reporting year. Leadership ambitions for targets and action programmes are based on three areas which are key for the whole Swiss Prime Site Group, derived from the vision and mission, material issues and the six capitals: customers, employees and environment. Innovative development of the business model, the provision of infrastructure that is fit for the future and sustainable financial success are part of the integrated range of objectives.

While the formulation of objectives regarding climate neutrality and the related CO₂ reduction pathway are already well established and embedded in the strategy, objectives and measures relating to customers and employees need to be further specified for the group companies in question.

Implementation in the group companies

As part of the business plan and budgeting processes, the group objectives need to be broken down to the individual group companies. The group companies can then define additional objectives and measures and assign them to the relevant capitals. It is important that at least one objective per capital contributes to the achievement of the overall group objectives.

This will help to streamline the group companies’ roadmaps, which to date have been created bottom-up. In addition, the KPIs, which are set top-down, will further improve the measurability of progress toward the objectives across the group.

Swiss Prime Site is aware of its responsibility when it comes to climate protection and has been committed for some time to contributing towards the 2-degree goal of the Paris Climate Accord and the Swiss Federal Council’s climate neutrality goal. Taking both these targets into account, in 2019 the Company developed a CO₂ reduction pathway for the whole property portfolio. Swiss Prime Site plans to invest around CHF 650 million by 2050 to ensure that the group can also reach the long-term objective of climate neutrality.

More information on group-wide procedures can be found in the Environmental Policy.

Property portfolio focus

The focus of the CO₂ reduction pathway lies on the energy consumption of the property portfolio. By comparison, the CO₂ emissions from the Services segment are negligible (8.8% of total emissions in the reporting year). As Swiss Prime Site’s property portfolio is comparatively young and technologically advanced, energy consumption and CO₂ emissions are already relatively low.

In the reporting year, Swiss Prime Site’s Sustainability Board further tightened the reduction target for the property portfolio. The aim is now to achieve climate neutrality in the operation of the portfolio by 2040. The current CO₂ reduction pathway (plan as at 31.12.2020) factors in Scope 1, 2 and 3 emissions and is based on investment costs of around CHF 610 million for cladding renovations and CHF 40 million for heating replacement measures. As the illustration below shows, Swiss Prime Site is thus significantly exceeding sector-specific reduction scenarios and is making a significant contribution to achieving the goals of the Paris Climate Accord. However, the reduction pathway shows that the climate neutrality target will require further measures. The efforts intensified in the reporting year form the basis on which to move the plan further in the direction of climate neutrality. The plan will be regularly updated and published as part of annual reporting.

The standards for development projects and full renovations of existing properties necessary to achieve the current CO₂ pathway have applied since the reporting year and are set out in detail in the Integrated Report 2019. Detailed information on the calculation methodology can be found in the CO₂ accounting concept.

Measures in the reporting year

In order to plan the measures covering the three action areas – energy, heat and cladding renovation – holistically and co-ordinate them with each other, in the reporting year Swiss Prime Site integrated the requirements of the CO₂ reduction pathway into the property strategies for each individual property in the portfolio. This puts the evaluation of the measures required for the reduction in the context of other key aspects of the property strategy (e.g. market potential, structural condition, renovation cycle) and ensures a holistic perspective on the further development and optimisation of the portfolio. This enables Swiss Prime Site to plan upcoming investments with a long-term focus and in a targeted manner. However, this means that the requirements in all affected business areas have to be taken into account and all those involved along the process chain – from acquisition to development and construction and through to portfolio and asset management – need to be made aware of them. Accordingly, in the reporting year the employees of Swiss Prime Site Immobilien and representatives of Wincasa received training informing them about the relevant process requirements.

In addition to the major strategic CO₂ reduction pathway project, the other group companies are also endeavouring to reduce their own ecological footprint.

More information on this can be found in the GRI Report.

The success of the Swiss Prime Site Group is founded on highly competent and committed employees. They contribute their knowledge and ability to develop sustainable living spaces and render high-quality services. Swiss Prime Site entrusts them with important responsibilities and offers an attractive working environment characterised by flexible working-time models and comprehensive training and development opportunities. In doing so, Swiss Prime Site hopes to strengthen employee loyalty and ensure a strong customer focus across all processes.

More information on group-wide procedures can be found in the Code of Conduct for employees.

Leadership programme

The leadership programme is an important pillar of the group-wide roadmap to achieve these objectives. The programme has been running since 2017 for all employees in management roles in the Swiss Prime Site Group. It gives talent in all group companies and roles the opportunity to develop into leaders or to develop further as leaders. The programme establishes a common understanding of leadership and encourages mutual dialogue beyond the boundaries of the individual group companies. The Company also uses cross-group events, job rotations and interdisciplinary collaboration to strengthen knowledge transfer, networking, team-building and an understanding of changing customer requirements. In the future, Swiss Prime Site will strive to gather customer feedback more systematically and use it to develop training and development packages.

Real Passion 4 Real Estate

In addition to supporting employees with high potential, Swiss Prime Site prioritises helping young talent to enter the real estate business. As part of the traineeship programme «Real Passion 4 Real Estate», every year four graduates gain a detailed insight into the exciting world of real estate. Over 18 months at Swiss Prime Site, they learn about the different facets throughout the whole real estate life cycle. The aim is for the participants to gain experience, enhance their skills and establish the foundation for a successful professional or leadership career in the real estate industry. The programme enables Swiss Prime Site to obtain direct access to new young talent.

In addition to the group-wide programme, the group companies of the Swiss Prime Site Group are continuously investing to improve employee development and retention.

More information can be found in the GRI Report.