The past year has shown just how well we can use our potential. With the further focussing of our portfolio and the acquisition of Fundamenta, we have undertaken important strategic steps to complement our two-pillar strategy – and achieved good results.

 «We can make use of more potential in our own portfolio,
design and market spaces more intelligently,
and plan and implement projects more ambitiously.»

A year of growth

In the 2024 financial year we achieved record rental income of CHF 464 million, which equates to an increase of 6% compared with the previous year. This success was due to our consistent focus on our core competency: the development and letting of real estate creating stakeholder value. Through new developments and sales, we have concentrated our portfolio on the major economic hubs and focused our company  consistently on real estate. This has made Swiss Prime Site more agile and had a positive effect on our results. We can make use of more potential in our own portfolio, design and market spaces more intelligently, plan and implement projects more ambitiously and, overall, deploy our valuable resources – personnel and capital – even more effectively. This meant that Swiss Prime Site achieved a significant increase in its operating result per share – measured against the key figure typical for the sector, funds from operations (FFO) – from CHF 4.05 in the previous year to CHF 4.22. This increase is even more impressive considering that we also carried out sales for around CHF 345 million and interest expenses increased markedly through refinancing after the negative interest rate environment – as they did for all real estate companies. Our strong financial position means we can propose a higher dividend of CHF 3.45 at the Annual General Meeting on 13 March 2025 (CHF 3.40 in the previous year).

Positive macroeconomic environment

The environment for real estate in Switzerland has improved considerably over recent months. We enjoy very stable political conditions, the multi-faceted economy is growing constantly at around 1% measured using GDP, and we continue to see immigration by highly qualified specialists who contribute to growth in a wide variety of sectors. Moreover, financing conditions are also improving thanks to the base rate reductions by the Swiss National Bank. At the same, lower returns from alternative asset classes mean that investment in real estate is once again becoming considerably more attractive to our investors and customers – the institutional investors. These are all factors from which Swiss Prime Site can profit as a real estate company. There is a particular increase in demand for commercial spaces in the metropolitan regions – and especially the centres – and for modern, resource-efficient buildings. In other words, in precisely those areas in which we have focused our portfolio. On top of that, people need places to live, which is the clear investment focus of our Asset Management segment.

Asset Management: complementary residential profile

The platform character of our two-pillar strategy – our own portfolio for commercial properties, and Asset Management which is oriented to residential properties – becomes evident in this economic environment. We are able to apply our expertise broadly, and that includes advising additional investors who wish to invest fresh capital. In 2024 we were able to raise over CHF 600 million in new capital, and we are investing this in attractive real estate acquisitions and project developments for our customers. In this context the acquisition of specialist asset manager Fundamenta in the first half of the year proved especially valuable, with investor interest currently higher than it has been for many years. At Swiss Prime Site we are now responsible for over CHF 26 billion in real estate assets – CHF 13.1 billion in our own portfolio and CHF 13.3 billion in Asset Management – making us the largest independent real estate company in Switzerland.

«We are able to apply our expertise broadly, and that includes
advising additional investors who wish to invest fresh capital.»

Strategic and operational milestones

In 2024 we achieved further key milestones. For example, the Jelmoli department store bid a dignified farewell to its customers under the motto «Merry Memories». The long lead time meant that, with very few exceptions, all employees have found new career paths. In parallel with this, we secured a tenant with a long-term orientation, Manor, which will continue to operate a department store at this historic site. With the building permit in hand, we can start redeveloping the iconic building in spring, so the people of Zurich will be able to enjoy an institution fit for the future. In the field of sustainable development, we are constantly setting standards for energy efficiency in operations and for resource use in new-build projects. Our CO₂ reduction pathway continues to outperform the trajectory toward our net zero target for 2040. For the «JED Campus» new build in Zurich-Schlieren, which is targeted at the life sciences sector, we have reduced the use of primary raw materials by 75% and employed a new architectural concept that dispenses with heating and cooling systems. It is regarded as a showcase project for the circular economy.

We have maintained our conservative financing strategy with a high equity base, and have both financed our investments and reduced debt with our profitable sales totalling CHF 345 million. At the end of the year, our loan-to-value ratio (LTV) stood at 38.3%. This is well below our internal guideline, which allows us strategic flexibility for the future.

In the area of corporate governance, we have succeeded in continually strengthening the Board of Directors with new expertise in the areas of sustainability and international management, giving the Board an even broader foundation. The strategic transformation of Swiss Prime Site has shown how important an agile, well-balanced and independent Board of Directors is to the fulfilment of our shareholders’ mandate.

The Company was founded in 1999, and we were privileged to celebrate our 25-year anniversary last year in the presence of numerous partners and investors. Working for such an innovative and dynamic business with an expert, motivated team fills me with great pride. On behalf of the entire Board of Directors, I would like to thank you, our stakeholders, for your trust and collaboration. Together with our tenants, customers, employees and partners, we aim to continue creating sustainable value for stakeholders – with living spaces that meet the expectations of a modern society.

Swiss Prime Site can look back on an extremely successful 2024 financial year. With significant growth in rental income, we achieved a marked increase in earnings despite higher financing costs. Success in letting our new developments and marked rental increases for renewed leases were the main drivers. In addition, we achieved efficiency gains in the property portfolio and further portfolio streamlining through the sale of properties. This enabled us to significantly reduce the expense ratio and further improve the portfolio. In Asset Management, we also profited directly from the marked increase in institutional investors’ appetite for real estate, with a range of capital increases together totalling around CHF 600 million. This segment is already generating almost 10% of consolidated EBITDA – and it is trending strongly upwards.

Over the past financial year 2024, our key priority was implementing our strategy of consistent focus on our core competency in real estate. We achieved a significant increase in the operating result (measured in FFO I – funds from operations) of 4.2% to CHF 4.22 per share [previous year: 4.05]. This was primarily driven by a significant increase in rental income of 6% in our own property portfolio and the marked increase in income in the Asset Management segment. The acquisition of the Fundamenta Group with its managed property portfolio of around CHF 4 billion increased the entire assets under management (AuM) of our group to over CHF 26 billion [previous year: CHF 21.5 billion]. This makes us the largest independent real estate asset manager in Switzerland by a considerable margin, with investment vehicles that cover targeted strategies in both the commercial and residential segments.

Attractive portfolio with revaluation through higher net revenues

At the end of 2024, our portfolio boasted a stable value of CHF 13.1 billion at fair value [13.1 in the previous year]; the share of development properties was CHF 0.2 billion [0.9]. At the end of the financial year, the building stock numbered 139 properties [159] and had maintained its highly diverse tenant profile with around 2 000 tenants. At the end of the reporting year, we recorded revaluations in our portfolio of CHF +113.7 million [-250.5], of which CHF +15.9 million was attributable to the development properties. This positive trend reflects the optimised portfolio quality coupled with a turnaround in the Swiss real estate market, where we saw significantly more transactions and stronger interest in real estate investments in 2024. As the average discount rate applied by the independent property valuer Wüest Partner remained unchanged, this change is purely due to operational improvements: higher rates for new rental contracts, lower vacancies, and reductions in property costs. We will continue to streamline the portfolio, consistently focusing on new, centrally situated, sustainable properties in prime locations. Last year, we once again closed a number of sales to finance our development projects (capital recycling). Over the course of the year, and particularly in the second half, we sold 23 properties with a fair value of CHF 345 million, making a profit of 3% above the latest appraisal values. We consistently pursued portfolio optimisation here, with an average size of approx. CHF 17 million and the primary use being retail – meaning a focus on larger properties and a trend towards fewer retail spaces. We only made one small acquisition for our own portfolio last year due to a lack of attractive prospects among the properties available on the market.

Asset Management: growth through new capital raises and Fundamenta acquisition 

Last year proved positive for Asset Management on two counts. First, our acquisition of specialist asset manager Fundamenta considerably increased our assets under management (AuM), and second, we achieved strong organic growth with various new capital raises. With an asset base of CHF 4.2 billion transferred in the Fundamenta acquisition, Swiss Prime Site Solutions has advanced to become the largest independent real estate asset manager in Switzerland; managed assets increased to CHF 13.3 billion as at the end of 2024 [8.4 as at the end of 2023]. In the reporting year, we were able to grow organically by around CHF 1 billion through acquisitions. The return to a positive market environment for capital raises, with higher investor appetite after a number of interest rate cuts by the Swiss National Bank, was a decisive turning point in the development of new money. This was particularly evident in the case of new client money and contributions in kind for our projects, specifically the Akara Swiss Diversity Property Fund PK, the Swiss Prime Investment Foundation and the Fundamenta Group Investment Foundation. In fact we were able to carry out two capital increases for each of these three products.

In total, the capital increases amounted to over CHF 600 million, which also resulted in a significant growth in revenues. As at the end of 2024, revenues were CHF 70.8 million [49.7]. The proportion of recurring income, at 75% [77%], was somewhat lower than in the previous year, as there was more transaction-related income in 2024.

Significant economies of scale saw a disproportionate rise in EBITDA of 47% to CHF 42.0 million [28.6], which yielded an EBITDA margin of 59%. Initial synergy effects from the Fundamenta acquisition bore fruit in the second half of the year; we succeeded in reducing operational costs by merging two existing locations in Zug, through natural fluctuation in the workforce and by centralising overarching functions such as finance, IT and communication. 

Operating profit and FFO I increase significantly

The consolidated operating result before depreciation and amortisation (EBITDA) was CHF 415.1 million [389.7 in the prior-year period]; this was excluding revaluations and sales and based on IFRS 5 (i.e. without taking into account the pro rata result of Wincasa, which was sold in the previous year). This operating result includes a loss of CHF –6.9 million [+1.5] by the retail business of Jelmoli. In its final year of operation, Jelmoli worked with successively higher discount campaigns and achieved a lower contribution margin, which was not wholly offset by lower salary and material costs. With the above-mentioned efficiency gains in the Real Estate segment and the lower operating costs at Jelmoli, consolidated operating expenses amounted to CHF 257.0 million [269.4] which – despite the integration of Fundamenta – was lower than at the 2023 year-end.

Total net financial expenses increased to CHF 86.6 million [76.3] due to higher refinancing costs compared with expiring financing. Due to a significantly higher year-end share trading price, this figure includes non-cash fair value adjustments of our convertible bonds of CHF 13.2 million, which increased expenses in the reporting period. Actual interest expenses were correspondingly lower.

The cash-effective result per share (FFO I, funds from operations) rose by 4.2% to CHF 4.22 [4.05] – in a combination of significantly improved operating profit contribution and higher financing costs. The intrinsic value (EPRA NTA) per share was CHF 99.27 [99.68]. Based on the higher result, the Board of Directors will propose an increase of the dividend to CHF 3.45 per share to the Annual General Meeting on 13 March 2025; this equates to 82% of FFO I. This would make the resulting dividend yield 3.5% as at year-end.

Green refinancing with board access

In 2024, we once again maintained our conservative financing strategy with a strong equity base. Interest-bearing financial liabilities excluding leasing amounted to CHF 5.3 billion as at the balance sheet date [5.4 as at the end of 2023], once again drawn from a variety of sources in the banking and capital market. The average term to maturity decreased slightly, to 4.3 years [4.6]. The average interest rate as at the balance sheet date rate fell to 1.1% [1.2%]. Of our financing volume, 87% was based on fixed interest rates [87%]. The quota of our unencumbered assets rose slightly to 87.4% [86.1%], as we repaid expiring mortgages with liquidity and did not refinance. As at the end of 2024, we had unused, contractually secured credit facilities available in the amount of CHF 1.1 billion, which together with the unencumbered assets gives us very high operational and financial flexibility. In the reporting year, we succeeded in extending these credit facilities totalling CHF 2.6 billion at national and international banks by a further year at unchanged terms, which underscores our exceptionally good access to the banking market. Over the past year, we profited from a highly receptive capital market and successfully placed a total of CHF 435 million in bonds with a sustainability focus as part of our Green Finance Framework. In March we issued a green bond in the amount of CHF 250 million at 1.8%, which matures in 2030, and an additional green bond in the amount of CHF 185 million at 1.65% with a five-year term to maturity. By year-end, a marked reduction in the loan-to-value ratio (LTV) of the property portfolio was achieved, down to 38.3% [39.8%], due in particular to profitable property sales. As forecast in the first half of the year, this brought us in well below the target value of 40%, which gives us additional room for manoeuvre in the coming years. 

Optimistic outlook for 2025

We are optimistic about 2025: the Swiss real estate market is currently experiencing singular momentum. This is underpinned both by stronger investor appetite based on the significant interest rate cuts of recent months and by continued positive economic growth. With our two business areas – «Real Estate» focussing on prime commercial properties and «Asset Management» focussing on residential properties – we can draw the utmost in balanced benefits from this impetus. 

In the Real Estate segment, rental income in 2025 will be temporarily impacted by the elimination of the Jelmoli rent of around CHF 20 million net (EBITDA basis), taking into account intercompany rent offsetting and operating losses. By contrast, sustained rent increases and newly let properties should have a positive influence on the result. For 2025, we expect higher rental income in particular from the JED new builds in Schlieren and the Bern 131 building, as well as further letting of Alto Pont-Rouge in Geneva. Overall, we anticipate a further reduction in the vacancy rate to under 3.8% in 2025. Nevertheless, additional rents cannot completely offset the absence of Jelmoli. However, we will lay the foundations for further long-term rental growth in 2025 with the Zurich construction projects in the Jelmoli building and «YOND Campus». Consequently, we are maintaining our medium-term rental income target of CHF 500 million from 2028 onwards (i.e., after the reopening of the Jelmoli building). Given the increased momentum in the transaction market, we anticipate more opportunities for our own portfolio once again in 2025. As ever, we will review these opportunities selectively where we sense a fit with our portfolio strategy and the prospect of earnings accretion.

In the «Asset Management» area, we will further expand our leading position as an independent real estate specialist with the addition of the Fundamenta brand. Our range  of funds and services allows us to comprehensively cover almost all investor and property types. In 2025 we expect a continuation of the increased investor interest we have seen since late 2024, which should bring further significant growth with new capital increases and transactions. This will augment our strong base with recurring income from fees for management, construction and development. We anticipate assets under management of over CHF 14 billion by the end of 2025 – an increase of around 
CHF 1 billion. 

At the group level, we will keep the LTV under 39%. We expect to largely offset the lack of Jelmoli letting and anticipate an FFO I per share of between CHF 4.10 and 4.15. In the medium term – and in particular following the reopening of the Jelmoli building at the end of 2027 – we see significant potential of over 10% in the FFO.