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Operator: Welcome to the Swiss Prime Site Half Year 2026 Earnings Conference. The presentation will be followed by a Q&A session. [Operator Instructions]. I will now hand over to your host, Marcel Kucher, CEO of Swiss Prime Site.
Marcel Kucher: A very warm welcome here from the 35th floor on Prime Tower. Very warm welcome in the name of Anastasius Tschopp who is here with me Martina Moosmann, and we also have Karin Voigt here, our CIO for our own portfolio. What we're going to do today is we'll have a short presentation on our half year results through 2026, followed then by Q&A. And then afterwards, we let you go into a beautiful day here in Zurich. To start with the key messages. Overall, we had a successful first year 2026 with a very strong operating performance, and we continue to see attractive growth momentum. We see that in our own portfolio with a strong leasing momentum. Most importantly, Alto Pont-Rouge is now fully leased with a strong demand at Fraumünsterpost, we are still finishing up the renovation driven by AI companies and major lease extensions here at the Prime Tower and other campuses across our portfolio. Second element here, we achieved very important development milestones. The first one here for sure is the Maag halls in Zurich, but also Otelfingen, and I'll talk more about that later on. Further, the portfolio quality enhanced through the disposals of CHF 167 million of smaller, mostly retail assets. Those were 5 assets, which we already sold last year, but they closed now in the first half of 2026. Despite those sales, our rental income was up 2.2%. Including the sales, it would have been more or less double it, 4.5%, driven in particular by prior year acquisitions from our capital increase, the positive lease reversion and developments that are going online. Like-for-like growth stood on a real basis, roughly unchanged at 1.3%, including inflation, it was at 1.4%, showing kind of the low impact the current low inflation environment has on our rents. And finally, portfolio value exceeded for the first time in our history, CHF 14 billion. That's up 0.6%, and that is despite the disposals that I just mentioned before. CHF 148 million of revaluation gains driven mostly by the rental growth I mentioned, by cost discipline and 2 bps lower discount rates, CHF 148 million represent roughly a 1.1% revaluation on last year's final results. On the asset management side, very positive momentum that we see here with a record new money of almost CHF 1 billion, CHF 950 million to be precise, lifting up our AUMs to CHF 14.8 billion. And as I mentioned, this demonstrating the continued strong growth momentum. Those CHF 1 billion in net new money was composed by 3 elements. The first one was CHF 0.3 billion in total capital increases from our product of Akara and IFC, CHF 0.2 billion of drawdowns of commitments from Fundamenta product as well as then an acquisition of a new mandate, major Swiss pension fund of CHF 0.4 billion and somewhat reduced by the disposal of CHF 0.3 billion, CHF 300 million of promotions, which were finished and hence, left the AUM of our asset management business. Together with the underlying kind of income that drove revenues up 5.2% with a higher AUM and the sustained transaction activities. We'll talk more about that in a minute. And given the further cost discipline with, in particular, efficiency gains that we could reach EBITDA margin slightly increased to 65%. And the last element on the Swiss Prime Site Group, we refinanced our outstanding convertible bond at a 0% interest rate for 6 years and a very attractive initial conversion price of almost CHF 180, helping to reduce our average cost of debt to roughly 83 bps for the half year. Then you'll see here in a minute in more detail, Martina Moosmann joined us as new Group CFO and hence, completing our Executive Board meeting as of April 15. And the last one, not the least, but the very important one, we are now among the top 10 most sustainable real estate firms worldwide with a rating upgrade of ISS stocks ESG ratio to B- from C+ last year, making us very proud to be among the top 10 property firms worldwide. Some elements on the numbers. Operating leverage drives our profitability. I mentioned most of them here. Rental income is up 2.2%, 1.4% on a like-for-like basis despite the sales that I mentioned. Fee income, 5.2% up to CHF 40 million, and that leaves us with an EBITDA contribution, which is up almost 5% to CHF 209 million roughly and the net profit of CHF 165.7 million, up 6%. More importantly, even FFO I per share, up 2.4% to CHF 2.15, a record level in our history and EPS per share also up roughly 5% at CHF 2.07. Having said that, we confirm our guidance for all the 4 elements that we said. On the FFO I, we do expect that we end up at the upper range of the CHF 4.25 to CHF 4.30 range that we guided already in February. Before we dive into the details on the finances, let me give you a little bit of background on the environment that we're operating here in Switzerland. I want to do that along 4 dimensions. First one, transactions. The Swiss market in general is a very supportive and constructive market given the very robust economy that we have in Switzerland, there's still available growth that we can provide here in the GDP as well as obviously, our low interest and inflation environment that continues to support the real estate market. We see, hence, a large number of transactions, which is a positive element. On the other hand, we also see further yield compression here. So finding the right real estate at attractive rates is continuing to be a challenge. Hence, for us, the conclusion is we need to be disciplined going forward in such a strong market. And obviously, given our size and the continued growth that we have through our portfolio, we can also do that. On the letting side, we see strong momentum. I mentioned a number of the elements in Geneva, but also here in Zurich already. We see, in particular, of course, the demand for office space on the high-quality, very centrally located locations that is thriving. And we also see that supported by some structural trends supported by AI, which we believe will reinforce this shift. Rent levels also remain where we planned them to be. And in some cases, we could even get higher rents than also our valuator expected. That is the part that you see reflected then in the valuations. That brings me to the third element, the valuation. We also have here, obviously, the positive and constructive environment with a low inflation rate and the low interest, fostering a good environment within Switzerland. Both the nominal and the real discount rate, you see compressed in Switzerland, not only for our own portfolio, but we also, as I mentioned before, see that in the transactions. And you also see it in the disposal gains that we had with about 4.2% gain versus the book value at the end of the year, hence, confirming the attractive investment environment in Switzerland. And last but not least, fund flows. I mentioned the record inflow of almost CHF 1 billion before. That is also driven by the attractive environment that we have given our interest rates, but also by the pressure of, in particular, pension funds to invest their money inflows into stable yielding assets. And hence, we see an elevated allocation to real estate, in particular, residential real estate, which benefits our asset management business here. So here, again, continued focus on growing our asset management franchise as we have done in the first half year. With those introductory remarks, I will hand over to Martina to provide you with more details on the first half year from a financial perspective.
Martina Moosmann: Thank you, Marcel. It's my great pleasure to be here and to present Swiss Prime Site's first half 2026 numbers to you, in particular, since they're really strong. Our dual strategy continues to translate to sustainable numbers. In our real estate portfolio, we focus on investing in commercial buildings in prime locations. In our second leg, the Asset Management segment, we invest predominantly in residential properties for institutional investors. In the first half 2026, we grew revenues in both businesses and coupled with our cost discipline across the platform, we landed a higher operating profit. Let's dive in. On Slide 8, we break down we break down the revenues, the top line for you. Rental income from our properties, our dominant source of income came in at CHF 231 million, a nice 2.2% growth compared to the first half last year. The drivers were successful renewals with existing tenants, first-time lettings of completed developments as well as acquisitions from last year, somewhat offset by the sale of 5 properties as part of our continued capital recycling strategy execution. Let me give you a few examples for lease extensions. Here in the Prime Tower building, we were able to extend leases with significant existing tenants like Homburger after 15 years for another 15 years. This not only underpins the quality of our buildings, but also our focus on the positive experience working on Swiss Prime Site campuses. In Geneva, Marcel already mentioned that we fully let Alto Pont-Rouge building and with JPMorgan, we were able to attract a sizable new tenant for the group. On the Asset Management business, we grew 5.2% to CHF 40 million. This reflects the sustained demand from institutional investors. The earnings composition is a healthy balance of recurring fees and increased asset under management and transaction-based commissions. On a comparable basis, the operating income for the group increased by 3.4% and stands at CHF 270 million as of June 30. Comparable in this context means excluding the effects of the discontinued retail operation as well as other Jelmoli-related income that was still included in the first half of 2025. Our operating expenses on a comparable basis contracted by 3.4% and stood at CHF 64 million. This illustrates our focus on costs and the effect of efficiency gains throughout our scalable platform. When we turn to Slide 10, where we wrap up. We have already looked at operating income and expenses. This leaves revaluations as the remaining building block for our earnings. On an IFRS basis, the appraisal by Wüest Partner arrived at an increase of CHF 148 million. As Marcel already mentioned, this is 1.1%. No surprises on the drivers, rental growth, low operating costs as well as a 2 basis point lower discount rate. Adding the higher top line, lower costs and the revaluation gain, we were able to grow EBIT by a remarkable 20%. Our EBITDA of rounded CHF 208 million represents an increase of 4.4% over the same period last year. This is excluding revaluations and sales, a strong demonstration of our resilient business model and operating power. Wrapping up the group numbers on Slide 11. FFO I, our main KPI for operating performance increased by 2.4% to CHF 2.15 per share. This reflects our operating leverage, higher earnings as well as lower financing costs. The issuance of the 0% convertible in combination with the early redemption of the deep in the money convertible supports our guidance for the full year at the upper end of the communicated range of CHF 4.25 to CHF 4.30 per share. Now let's dive a bit deeper into the segments, starting with the rent walk, our dominant source of income, which we show on Slide 12. Compared to last year, I start left to right. Compared to last year, we sold 13 properties with a corresponding rental income of CHF 4.5 million. A similar number of buildings, including Jelmoli, are undergoing redevelopment and are temporarily offline. In the same period, we added CHF 6.4 million from the acquisitions last year, 4 buildings in total and successfully let new buildings yielding CHF 3.8 million. Organically, we achieved additional CHF 2.4 million from existing properties through rent reversion, thereof only a small contribution from indexations. Marcel already talked quite a bit about the like-for-like where we currently, without indexation stand at 1.3 -- sorry, without inflation stand at 1.3%. Now we move on from our real estate to the second pillar, the asset management business. Driven by continued strong capital inflows, almost CHF 1 billion in the first half, our overall asset management fees increased to CHF 40 million, a 5.2% growth, which is more than double what we're seeing on the real estate business side, confirming Swiss Prime Site Solutions positions as the group's growth engine. Management and transaction fees were up 9% and 8%, respectively, with 71% thereof recurring income. Again, the resilience of our earnings base remained high despite the elevated transaction activity that we see, and we expect more to come in the second half. At the same time, our focus on costs and efficiency gains allowed us to benefit from further economies of scale across the whole platform for the group. Personnel costs in the Asset Management segment were down 16% and real estate costs lower by 6%. As a result, the EBITDA is up 9% to CHF 26 million for the first half, and the EBITDA margin stands at 65%, which is a 2.1 percentage point increase compared to last year. Moving to the balance sheet on Slide 14, where we walk the balance sheet numbers. Since year-end, we sold 5 properties for a fair value of rounded CHF 167 million. Those were mostly in secondary cities and are part of our portfolio consolidation and quality improvement, optimizing size and location of our assets, 127 altogether at June 30. Marcel will give you more tangible insights in some of the buildings in just a minute. We invested close to CHF 100 million in our ongoing development projects, mainly Jelmoli, Fraumünsterpost and Yond. The work on those is progressing in line with plan. On a personal note, and for those of you who will join us at the Capital Markets Day, for me, it's always a highlight to visit one of the buildings and the construction site and have the smell of concrete and wood, and I trust you'll enjoy that with us. Our appraisers, Wüest Partner, derived a valuation result of CHF 152 million for the first half, where the building blocks are a significantly lower property management costs due to a new master agreement that we closed, higher signed rental agreements and of course, the 2 basis point decline in average discount rate also helped us with the valuation. For the first time, the aggregate portfolio value hit CHF 14 billion, which is an increase of 0.6% since year-end. I will conclude my comments with the liability portfolio, which is one of my focus areas in my role here. Swiss Prime Site -- how do I go back? Okay. Swiss Prime Site diversified financing base continues to be well positioned to support our growth ambition in line with the Moody's A3 parameters, something that's important to us. We managed to lower our average interest rate to 83 basis points, which is year-on-year an 11 basis point decline. And we also were able to slightly extend the average maturity to 4 years. Based on my almost 3 decades of perspective on funding markets, I label this very attractive. Mainly due to the dividend payment in March, LTV of 39.9% is slightly elevated above guidance. We're confident to be back below the 39% by year-end. Please also note that last year's LTV included the not yet deployed capital increase we did in the first half. Our funding pockets are diversified with sizable committed syndicated loan facilities, a growing debt capital markets franchise across Swiss franc, euro and convertible markets, complemented by efficient short-term programs. The temporarily increased utilization of our unsecured loan facilities that you see in the numbers here includes partial funding of bond maturities as well as dividend funding. As of June 30, we have dry powder in excess of CHF 700 million from our committed credit lines. Within our well-established Swiss franc bond market franchise, we issued 2 green bonds in the first half, CHF 130 million with a 6-year tenor and CHF 100 million with 7 years to maturity, extending our maturity profile at attractive spread levels. In March, we issued a CHF 350 million 0 coupon convertible and concurrently redeemed the deep in the money CHF 275 million convertible. The transaction locked in significantly lower interest costs. We spoke about that already. And we also set the redemption in cash, thereby avoiding dilution. The 0 coupon saw strong investor appetite, was heavily oversubscribed and multiple investors from the old convertible flipped into the new one, which illustrates the continued capital market support for Swiss Prime Site. As of July 14, the old convertible is completely redeemed. So that is history. And with this, I stop and hand back to Marcel.
Marcel Kucher: Thank you so much. For the last remaining couple of pages before we turn to Q&A, I would love to deep dive a little bit into the business and give you some more updates on our properties and our portfolio. Let's start with an overview page on our locations, the composition of our portfolio as well as the quality of our buildings. As you can see, we are continuing to focus on the core Swiss cities with close to 60% now invested in Zurich, roughly 20% in the Lake Geneva area with a large proportion, obviously, in Geneva itself and the remaining in Lausanne, then Basel and followed by Bern. The sale of the properties that we have already mentioned now before, the 5 properties further kind of focused us on these 4 prime Swiss locations. The sale also changed slightly the portfolio composition. You see we have a slight increase of roughly 1% in the office focus, as we mentioned before, sold mostly in the secondary location retail. And hence, that comes at an expense of the retail allocation, which is now slightly below the 20%. And finally, and we're very proud on that, our quality of our buildings, we are now 100% pretty much rounded at least in the best locations of Switzerland, given the last 5 sales that we did, 88% are in the top quadrant, so best quality of the building and best quality of the location. And for 12%, we can still work on the quality of the building, and that's what our development focus is focusing on. I mentioned the lease momentum already before and the improved vacancy. We are on an operational perspective, currently at a vacancy level of 3.2%. We have roughly 0.5% of our portfolio that we leave empty because those are earmarked for further developments going forward, giving us an overall 3.7% vacancy rate with a guidance that we will end up slightly lower at the year-end. We mentioned some of the new tenants already, in particular, in Alto Pont-Rouge, in Fraumünsterpost, where we see very strong demand, in particular, from global leading AI companies. 50% of the office space is already let here. And for the rest, we have very strong demands, including some LOIs, again, as I mentioned, mostly from technology companies with a strong AI focus, showing that we can also benefit from that trend here, in particular, in Zurich, where a lot of the global AI companies are building up further capacity and expertise. And finally, an interesting one. You might have seen that in the newspaper is for the remaining part of the Stücki Park, we are planning to reposition that part into a mixed-use office/operational element and signed a respective contract with the Swiss customs. So the Swiss Eidgenossenschaft, that would then fill up the remaining of Stücki Park and complete kind of the redevelopment that we did over the last couple of years. We also talked at the contract extensions. Most importantly, here, Homburger, one of the first tenants for Prime Tower will stay another 15 years in the Prime Tower, which we're very proud of to host such a reputable law company here. And as Martina mentioned before, underscoring kind of the attractiveness of our campuses in Zurich and beyond. We're also proud that we have Medartis extend its rent in Stücki Park in Basel and also with Swisscom, we could extend several of the leases and are in discussion for several others going forward. That drives the average WAULT to a record high for us, 5.7 years, showing kind of the long-term approach that we're taking and our tenants are taking. Some words on our developments, and I will only focus here on these 2 as we will show the remainder during our Capital Markets Day in live and color. The first one is here, the Maag site. We communicated a couple of weeks ago that we signed an LOI with the University of Zurich with the goal of having here a very large and interesting cultural destination at the Prime Tower area with the Museum of Natural History taking the place as of 2032, 2033 roughly time frame. We are working hard currently on doing all the preparatory work so that we can start with the building permit. We do expect investments of roughly CHF 60 million that should start somewhere in the end of 2029. And as I said, hand over then to the university should be end of 2031 and leaving the university another 1.5 to 2 years to do their fit-outs in order to really complete this into Museum. We do believe this is going to be a major milestone not only for the Maag site here and the entire Prime Tower campus, but also for Zurich -- it's one of the museums that attracts most people, currently more than 0.5 million. And given that the potential here for the university is to more than double its space, we expect to have even more people spread around the day, really making this whole campus even more lively than it already is. A second one that we're very proud of is we were able to attract Hitachi Energy, one of the leading technology companies in Switzerland to choose the Otelfingen site as their future base for the production in Switzerland, where they will consolidate several locations by 2030. In the full kind of extension, we expect roughly 1,200 employees there, and they will use more than 70,000 of usable floor space, including the heritage protected building. You see that here, the large middle building here that used to be the former distribution center of Jelmoli when Jelmoli was still a large Swiss group. You also see some new builds in the back. So that includes also some space that is available on the site still to build really specific buildings for Hitachi Energy and their construction needs. And given the specificity of those buildings, we felt we are no longer the optimal owner for the building. And hence, 2 days ago, signed a sale contract with Hitachi Energy. We'll hand over the building roughly at the end of '27, subject to the building permit so that Hitachi can then immediately start working on the new builds before they move in. This is a major milestone because it does provide this site a new life for the next 50 years, and we're very proud to be able to work together with Hitachi Energy to achieve that. As I mentioned, going back to maybe one step, the others are progressing on plan. That is, in particular, of course, Jelmoli, but also Fraumünsterpost, which is slated to open beginning of next year as well as the Yond construction where we expect to close kind of the core construction end of the year and then starting the internal kind of fit-outs as of next year, being able to open that roughly in 2028, beginning of 2028. We will show all of these sites during our Capital Markets Day live and in color, as I mentioned, so we will provide some more details on that and where we stand in terms of timing and cost in October. Two pages on our Solutions business. This is the page that you know where we basically see the 3 pillars within solutions, so the Discretionary Management, Fiduciary Management as well as Bespoke Client Solutions that we offer. As you can see, we grew in all 3 of them. roughly at the same rate, CHF 0.2 billion on the discretionary side, in particular, with new acquisitions for Akara fund, for IFC fund. CHF 0.2 billion on the fiduciary side, in particular, with new investments on SPA and the Fundamenta foundations. And finally, as I mentioned before, we won a new mandate of a large Swiss pension fund in the advisory business, adding roughly CHF 400 million to our AUM and that more than offset kind of the promotions that left our AUMs given that they were finalized and handed over to the new owners. We mentioned that before, but you see kind of the growth rate that we can deliver organically of roughly CHF 1 billion per year. We are well on track to deliver that also in 2026 with roughly CHF 0.5 billion for the first half year 2026. Part of the capital increase and part of the capital inflow that we have is not yet invested. That's why there is a difference between the CHF 1 billion and CHF 500 million that you see here. So we have enough firepower for the remainder of the year and expect hence to reach the CHF 1 billion in growth by the end of 2026. On the right-hand side, you see the capital increases and inflows. So here again, we're talking about the new money, the CHF 500 million roughly in addition to the CHF 400 million that we gained from mandates, this new pension fund. Several new capital increases are in the pipeline or are already ongoing, so that we expect this year to end with probably more than CHF 1.3 billion, CHF 1.4 billion in net new money by the end of 2026. Again, not everything will be invested by that. Some of the elements we will leave us with firepower for the next year. Last page on the asset management side. We continue to see very stable fees that we can charge that you see the roughly 16 bps on the recurring, on the nonrecurring parts. So these are mostly transaction elements in here and capital increases and you see the roughly 40 bps on the recurring part. You see a slight decrease. This is not because we see pricing pressure in the market, but rather we did some larger transactions and had some cliff pricing models where we share part of the increased efficiencies with our clients, which we believe is the right way to do. And you see the cost efficiency gains that we had on the right side with our cost ratio coming to an overall and record low of 35%, underpinning here, again, the significant economies of scale that we see in the business and we can also reap. That leaves us only with the outlook before we turn to Q&A. As we mentioned before, we will -- we confirm all of our targets. So from right to left, we will increase our AUM by more than CHF 1 billion for 2026 in the Asset Management business. We will end up at less than 3.7% in vacancies in our own real estate. The LTV, as Martina mentioned before, will end up as last year below 39%. And on the FFO guidance, most important element, of course, also then as a basis for the dividend for next year. We are very confident that we will end up at the upper range of the guidance that we gave in February. So closer to the CHF 4.30 than the CHF 4.25 lower range. That leaves us with a final page. We are the leading real estate platform in Switzerland built to deliver through the cycle. We do that through a resilient platform with the 2 pillars, very consistent delivery where we can benefit from the economies of scale. We see the operating momentum with a visible upside, 5% on the asset management side, 2.2% without the sales, 4.5% with our own real estate and we have a clear path to future value creation. We'll provide more details on that, including visits of the 3 sites that I mentioned before on our Capital Markets Day live here in Zurich in person on October 26 in Fraumünsterpost, which will provide you with a very good view of this fantastic building and where we currently stand in terms of the construction. With that, I would close and hand over for any questions that you might have, which we're very happy to answer, as I mentioned before, we also have Anastasius Tschopp here on the asset management side, and we have Karin, which you don't see in the picture here for any more detailed questions on our own real estate portfolio.
Operator: [Operator Instructions] Our first question will come from Ken Kagerer with ZKB.
Ken Kagerer: I would have 4 questions. The first one is regarding the lease expiry profile. Do you have any larger contracts becoming due in 2027? And what would that mean for vacancies? Could you remain on those levels? Or do you expect even a further decrease? Or could you give some light on that topic, please?
Marcel Kucher: No major lease expiries coming up, and we expect to be on the lower level that we guided also for the next year.
Ken Kagerer: Okay. The second one is with regards to the outlook for the external asset manager. Especially as it becomes more and more difficult to find assets to invest in, do you think you need to go and grow abroad more actively? Or do you think you can still continue to find enough assets to ensure further growth of the platform?
Marcel Kucher: We will provide an update with kind of longer-term view during our Capital Markets Day. But our guidance that we gave in terms of growing CHF 1 billion in assets focused on Switzerland, of course, I think, continues to hold. In terms of how to find assets in this difficult market, I maybe hand over quickly to Anastasius, who can shed some light on that. Is that so difficult? Do you still find assets?
Anastasius Tschopp: Yes, I will do that. Thank you, Ken, for this question. We are very positive. Our pipes are full in each product. So -- we closed some deals the last weeks, and we will close the next couple of months, a lot of deals. So we are really positive for each product.
Marcel Kucher: Just to give you some light on that, we did transactions of CHF 850 million in the first half. As you know, second half is typically significantly stronger. And hence, we are positive to also be able to find those right assets. How many of them do you do off-market currently? And how many go through brokers?
Anastasius Tschopp: Currently, 30% of this is off-market deals with our great network here in Switzerland.
Marcel Kucher: Yes, roughly 30%. Okay.
Ken Kagerer: This brings me to the third question, debt maturity profile. I've seen in '29 and '30, you have CHF 1 billion and CHF 1.6 billion due. Could you just tell us what your strategy is with regards to those rather large amounts?
Martina Moosmann: Those are related to our syndicated loan facilities with a broad syndicate of banks. And as you see when you turn to Slide 16, you have the CHF 700 million dry powder I mentioned earlier is essentially the unused part, the currently unused part of those credit facilities. So we will take a very close look and are already taking a close look how much do we want to refinance in which market to have that rolling of the syndicated loan facilities in an optimized way for the group.
Marcel Kucher: So far, maybe adding to that, we have no indications that the banks would not be interested in rolling those. On the contrary, from the majority of the banks, we understand they would be interested in doing more. Hence, yes, this is something we need to actively approach, obviously, but nothing that puts any worries on us at this point.
Ken Kagerer: Excellent. Thank you very much. And this brings me to the last question, which is also referring to financing. Could you outline how much the total cost of the convertible was, i.e., the delta of the initial face value and the final redemption amount of the convertible bond?
Martina Moosmann: We have -- when you look at our financial statements on Page 35, we lay out the detailed table of the financing expenses included in our first half numbers. And there are several line items where the convertible bond hit the P&L. The largest one is CHF 73 million -- CHF 73 million, which includes the bond floor and the embedded derivative in the convertible, which upon the redemption, we realized. And the second part, making up the CHF 84 million that we mentioned in the financial review is future financing expenses for the years '27 and onwards that, of course, by redeeming a bond, we had to release.
Ken Kagerer: I've seen that. I mean I've read this in the annual report. myself. The question was more what is the delta between what you received and what you had to pay back for the convertible in total, i.e., adding up all the half year results up to now.
Marcel Kucher: It's roughly CHF 180 million.
Operator: Our next question comes from Ana Escalante with Morgan Stanley.
Ana Taborga: Can you hear me?
Marcel Kucher: Absolutely wonderful. Good morning, Ana.
Ana Taborga: Great. So my question is on disposals because I think that in February, you mentioned that you intended to reduce the planned disposals of around CHF 130 million per annum, and yet you signed CHF 170 million approximately in the first half. Was this more kind of opportunistic? Or did you receive some unsolicited approaches? What drove the amount of disposals that you signed year-to-date?
Marcel Kucher: Yes. All of those deals that we did now, we signed last year. So part of it that we disposed now was the asset swap, which we did, where we swapped the building on Bahnhofstrasse, so this very prime building against 2 buildings in secondary locations, which now were actually executed. So that was the large part. It was roughly CHF 120 million. The remaining part were 2 smaller shopping centers, which we also signed last year, but which only closed now in the first half. We did not sign any additional sales in the first half year. And we are -- with one object we are in the market currently. This is something we mentioned also a couple of times. It's a fantastic former Swisscom building in Geneva, where we were able to get a building permit to convert it into residential apartments. And as we don't do apartments and residential, this is hence going to leave our portfolio, does currently not have any top line. It's empty by now for a new investor, it's ready to start construction, but we're not planning to do that, but leave that kind of to the new investor. That might come for the remaining of the year, depending a little bit on the timing and of the right of first refusal that in Geneva, the Canton has, so the city.
Ana Taborga: Super clear -- and maybe if I can follow up a bit on that. As you mentioned, what you sold was mainly retail assets that I assume were sold at a higher yield than the average for your portfolio. And I appreciate that you will provide more details on capital allocation at your CMD, but how are you currently thinking about redeploying the proceeds from disposals to fund, partly fund the acquisitions from last year, pending CapEx in the pipeline, a mix of both? Or are you seeing any other opportunities in the market?
Marcel Kucher: Yes. Again, for the large part, it's a switch. So it's an asset swap. So for reasons, again, that had to do with first right of refusals of some cities here in Switzerland. We couldn't do it at the same time. So we closed kind of the receiving end. We got the building here at Bahnhofstrasse, in Zurich, we got it already last year. Now we kind of closed the loop and sold the 2 buildings. But that was part of the asset swap, hence, also no cash flow here because we swapped the 2 assets. For the smaller part of the transaction, hence, the retail, the 2 small shopping centers. Yes, we did receive that, but we mostly invested in the current environment into our own construction. Martina mentioned that before, we invested roughly CHF 100 million in our own development pipeline. And this is certainly something that will continue, but we will use the fund flows from kind of the disposals for our own pipeline, where we see attractive yields that are higher than what we could get on the market. Nevertheless, we are obviously always keep an eye open on the market. For those elements that are in competition, so where you have JLL or CBRE, et cetera, leading a process, we had to realize that this is not at yield levels that will be attractive to us. There were quite some buildings in the market, but at compressed yields where we passed. However, there are from now and then, as we did last year, off-market transactions, and we do certainly have an open eye on that in terms of how we can redeploy that capital.
Operator: Our next question comes from John Vuong with Van Lanschot Kempen. We're having trouble getting audio from John. So I'm going to move to the next question. We'll come back to you. Our next question is from Paul May with Barclays.
Paul May: Well, actually 4 questions, but hope they should be relatively quick. Just on the like-for-like rental growth, obviously been slowing from the half year to the full year then to the first half this year, which I think mainly due to indexation coming down. I think you've highlighted for the first time, apologies if it's not the first time, the 10% reversion in the portfolio. Just wondered over what time period do you plan to capture that 10%? And if you can give some color on how that reversion has changed over the last, say, full year and since the year-end -- sorry, over the last year and since the year-end would be great.
Marcel Kucher: Thank you so much. Look, we have a WAULT, an average WAULT. That's what I usually try to kind of put the expectations. We have a WAULT currently of close to 6 years, 5.7 years. You have an implicit WAULT, which is a little bit longer because some of our tenants still have options where they can extend their rent at the prevailing rate. So together, I'd say roughly 7 years of an implicit WAULT, including those options. Now if you divide the 10% reversionary potential that we have, and it's not going to be fully even, of course, distributed, but say, roughly even distributed. you can expect divided by 7%, roughly 1.4% in real kind of reversion that we can capture every year. Might be some fluctuations depending on which contract and when. But on average, that should roughly pan out. And if you look back, this is pretty much what we got over the last 2 years, 3 years in terms of real reversion. On top of that, obviously, is indexation. That's a little bit out of our hands and comes with some benefits as well, obviously, on the refinancing side and on the revaluation side. But on top of that is obviously the indexation that came down significantly, as you pointed out, given that we are basically in a -- at least for the first half year, 0 inflation environment in Switzerland, came up a little bit now following the war in Iran. So currently probably at 0.5%, 0.6%. So you can expect some of that we will be able to capture for the second half and maybe a little bit more than in the next year.
Paul May: Just on how that reversion has changed over the last year or half year?
Marcel Kucher: I think it's been relatively stable, but always mentioning that we always capture every year, but it still remains at 10%. So we can pretty much -- whatever we capture, we see that we can add that to the reversionary potential. So keeping that relatively stable at those 10%.
Paul May: Perfect. Second one is just wondering why you don't disclose net debt to EBITDA. And apologies if you do, and I've missed it my first time paging through the accounts, but I just wonder why you don't disclose them.
Marcel Kucher: We disclose it in the details. But I know this is a number that many analysts use, obviously, to compare also across Europe. The problem with this measure for us is we are operating in a very low interest environment and hence, in a low yield environment. And this is one of the numbers that is very much driven by the environment that you're operating in. And hence, we see that with Moody's, for example, we see that with others. you have to kind of put that into perspective in relation to our yields that we get here in Switzerland, given our yield environment so that this is a number that we do not push. It's in the 11x range roughly. But again, you have to put that in relation to the level where we are in terms of our yields here that we can get in Switzerland.
Paul May: Then similarly leveraged question, but not necessarily net debt to EBIDTA. Just within the asset management business, what level of leverage is typically used within those funds?
Marcel Kucher: Anastasius, do you want to?
Anastasius Tschopp: Mostly 30% in the funds related. So we couldn't do 40% or 50%. It's only 30%.
Marcel Kucher: The investors here, and this might be different from other asset management businesses, the investors here are pension funds and the investment horizon is long. I always say they are looking for 30 years investment horizon. And the main goal of our investors here, which are predominantly 90% investment foundations, investment pension funds is to deploy the capital. Hence, they don't want too high leverage. This is not a private equity business where you want them 10, 15, whatever 20x IRR -- of percent IRR. This is a long-term investment business that we do for our pension funds. Hence it is regulated by the Swiss authorities that we cannot exceed 1/3, 33%. But we actually see from the pension funds, they want it to be even lower because their aim is to deploy capital and not for us to kind of leverage this up. Hence, within those constraints, we typically operate between 25% and 30% for the majority of the product.
Anastasius Tschopp: The average, yes.
Paul May: And just on the pension fund goal, is it generally recurring cash flow that they're looking for as well rather than necessarily lots of capital appreciation if they're looking over that really long-term.
Marcel Kucher: 100%. And that's why you see also the focus on residential because obviously, with this residential focus, you have atomized counterparty risk, you have in Switzerland, 0-point-something vacancy rate. So for them, this provides the security that this is recurring cash flow, and that's what they're interested in, not so much the capital appreciation. We have some smaller products, the promotions that we mentioned before. This is typically where we do new builds and sell it as individual condominiums. Here, it's different, but that is a very small part of our overall portfolio.
Paul May: Perfect. And sorry, the last one, the asset focus probably explains a lot of it, but I just wondered in terms of managing any conflicts of interest between your own portfolio and the asset management business, how is that typically managed? And if there was -- if you both want an asset, how does it get decided as to where that asset end up falling?
Marcel Kucher: Excellent question. The first answer you already gave yourself, we typically do not want the same asset. We focus on the 4 cities that I mentioned before, 5, if you separate Geneva and Lausanne. And within those cities on the best locations, best buildings, core locations, hence, having relatively low yields, of course, given the quality of the assets and the quality of the location. The pension fund -- the asset management business with the pension fund focus, they focus on residential, 70% roughly is residential of the assets, so 0 potential conflict of interest here. The remaining one, I usually use the term is a yield enhancer, what they do in commercial. So if you have a 3% yielding real estate portfolio with residential focus, you don't want to add kind of another 3% yield on the commercial side, but they're looking then for secondary locations, secondary buildings that enhances a little bit the relatively low yields that they get from the residential side. Hence, no conflict here. Now in addition to that, I think this is the strategy part and the focus part in terms of our portfolio should not happen any conflict of interest. In addition to that, you have an organizational element. And that not only applies to the 2 divisions, our own portfolio and the asset management, but it also applies within the asset management. We do have separate teams for every type of investor that are doing our sales and acquisitions. So we have a separate team here that do transactions, acquisition and sales for our own portfolio. And we have 2 or 3 separate teams that do acquisition and sales on the asset management side. Why do we do that? We do believe and that is what our customers tell us, our clients tell us that it is very important that you have somebody that really cares about your portfolio and only focuses on your portfolio. Hence, we have not done what many of the banks do where you have a centralized acquisition team and then they kind of rotate it internally, but we have separate teams. They have Chinese walls. They don't talk to each other. And if in the very low likelihood that we would be interested in 2 of the products in the same property, we will put in 2 offers. And then whoever had a better idea will win.
Operator: Our next question comes from Matteo Lindauer with Vontobel. All right. Looks like we're having some audio issues from Matteo. I'll go ahead and move on to John Vuong with Van Lanschot Kempen.
John Vuong: I was just looking at the FFO 1 outlook. So I was looking at the run rate for H1 and also expected growth in H2 for AUM and then taking into consideration the full effect of the convertible refi. The outlook still screens to provide a margin of safety. So I was just wondering whether that's for H2 anything weighing on the top line or whether there's any exceptional costs that you're expecting?
Martina Moosmann: John, I would say nothing exceptional that we're expecting, but we want to keep providing details to our Capital Markets Day in 2 months. We will then also extend the guidance, which currently ends at '28 to 2030, and we want to do that in one go. Hence, we're very confident to reach the upper end with an update to follow in 2 months.
John Vuong: Okay. That's clear. And then just on the asset management costs. Looking at the other operating expenses, it grew almost as much as the declines in personnel costs. Could you provide a bit more color on this? There has been a shift in classification of costs? Or are there one-offs in other operating costs?
Marcel Kucher: No, they're not one-off, but we provide development and construction services for a significant part of the asset management business now out of a service unit. And hence, it shifted from the direct personnel costs into kind of intercompany charges. That helps us to provide kind of the best services to all of our properties and buildings. And you see that reflected now in the P&L by the shift from personnel costs into inter-company-related costs, so to speak. If you go into the segment reporting, you see it because we show it here as intercompany. And you see here the more details, but that is the factual basis for that, why that happened.
Operator: Our next question is from Matteo Lindauer. We're not getting any audio from Matteo. So I will move on to Alexander Totomanov with Green Street.
Alexander Totomanov: Two for me today. In your like-for-like NOI growth breakdown, Geneva is a standout at 7.2%. You mentioned the JPM lease at Alto Pont-Rouge. But by my estimates, that should take it -- that should make about 2/3 of the total. I was of the impression that the Globus leases were re-signed at current rental level. I assume that's not the driver. What's driving the residual growth?
Marcel Kucher: No, it's not the driver. Part of it is that we started to really one step back. Before we signed kind of the new Globus rents, the idea was that we would renovate the Globus building. We mentioned that during our last Capital Markets Day in Geneva, where we looked at still 2 options. Now with the extension of the Globus lease, we decided to push that back by roughly 10 years and started to re-lease some of the floor space that we already emptied before. So part of that is this. And the second part, you mentioned already is is the JPMorgan lease, which started in April, I think.
Alexander Totomanov: And 1 more follow-up question relating to growth. Earlier this week, your peer reported strong performance on the same metric in Zurich. I think like-for-like growth was, what, 2%. You reported 0.7%. I was just wondering if that's a function of your expiring and negotiated leases for the first half or something else?
Marcel Kucher: Not sure I got this fully. I mean, again, our like-for-like growth, and this is what I can comment on, is in line with our long-term kind of expectations where we have this 10% reversionary potential divided by the 7 years I explained before. So on a real basis, roughly 1.3%, 1.4% On a year, adding, of course, to that, any indexation, et cetera, or lower vacancies that might add to that. The rest of the question, I'm not 100% sure I fully understood.
Martina Moosmann: Me neither. Can you repeat, Alex?
Alexander Totomanov: Yes, I was just trying to compare the performance that was reported earlier this week by PSP Swiss Property in Zurich, which was slightly higher than what you reported. I was just wondering whether the reason was potentially fewer expiring leases in Zurich? But I assume that's it.
Marcel Kucher: I can't really comment on PSP's numbers, but we see strong momentum with our own portfolio. Any other questions gentlemen. If you're being shy of course, you can also do that in German, no question -- no problem here. We would -- of course, any questions can be asked in German. [Foreign Language].
Operator: Ladies and gentlemen, that was the last question. I'll now hand back to Marcel for any closing remarks.
Marcel Kucher: So thank you very much for your time and interest in Swiss Prime Site, the leading real estate platform in Switzerland. with the 2 pillars that provide stability, coupled with growth. And we're looking very much forward to seeing hopefully all of you during our Capital Markets Day on October 26 in the beautifully renovated Fraumünsterpost on the shore of River Limmat here in the center of Zurich. Thank you so much. Have a wonderful day, and we'll see you in October.
Operator: Thanks. Ladies and gentlemen, the conference is now over. You may leave the call.