Ladies and gentlemen, welcome to the EPIC Suisse AG 2024 full-year results conference call. I'm Sandra, the call operator. I would like to remind you that all participants are in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Roni Greenbaum, chairman. Please go ahead, sir.
Thank you, Operator, and good morning, everyone. A big welcome to all of you for joining EPIC Suisse conference call on the Annual Report Result 2024. My name is Roni Greenbaum. I'm the chairman of the board of EPIC Suisse AG. Joining the call this morning are our CEO, Arik Parizer, our CFO, Valérie Scholtes, and our Portfolio Director, Philipp Küchler. You should all receive by now the press release this morning, and you can find on our website, epics.ch, an English section of the Media and Investor Annual Report 2024 as well as our presentation to our call.
We're very pleased to report robust results in line with our expectation for the fiscal year 2024, and we are delighted that our development project, PULSE and Campus Léman Building C, are running according to our plans and will be completed by the end of H1 2021. For the next 30 minutes or so, Arik and Valérie will take you through the slides in the presentation, after which all of us, all the four of us, will be available for a Q&A. Arik, over to you.
Thank you, Roni, and good morning, everyone. I would like to join Roni's comments and to also welcome you all to EPIC Suisse full-year 2024 results conference call. It is a great pleasure for me to share with you all today our record results, but before I do so, I would like to thank all our business partners, our employees, and all our other stakeholders for the trust and commitment, which were all crucial in delivering, once again, our strong results and performance. Let me start with a quick overview of the economy. As you can see on slide number three of the presentation, inflation in Switzerland has cooled off from its peak in December 2022 at 2.8% to 1.1% in December 2024, and according to the Swiss National Bank, it is expected to continue to go down to 0.3% in 2025 and 0.8% in 2026.
GDP growth has come down since December 2021 at 5.1% to 1.2% in December 2023 and 0.9% in December 2024. Expectations are that GDP will increase again during 2025 and 2026 to a modest growth of 1.5% and 1.7%, respectively. Consumer sentiment remains negative and stands at -29 after a sharp decline since mid-2021, indicating continued uncertainty from the consumer side. In this economically and politically challenging environment, our company continued to develop well, and the market value of our real estate portfolio grew to slightly over CHF 1.6 billion, as you can see on slide number five. The real estate portfolio, as of 31 December 2024, was split according to market values as follows: 52% in the Lake Geneva region, 35% in the Zürich economic area, and 13% in other locations, notably in cantons of St. Gallen, Bern, and Glarus.
The change, compared to last year of about one percentage point increase in the Lake Geneva region, was mainly due to our ongoing development projects in this part of Switzerland. The portfolio remained well diversified by sectors, with market values per sector as follows: 42% offices, 36% retail, 13% logistics and light industrial, 9% developments, having increased from 6% in December 2023, reflecting the progress that we've made in our development properties. We have 25 properties and operations with almost 325,000 square meters of lettable area. The net rental income yield on properties and operations was 4.5%, and the portfolio continued to have a long WAULT of 8.2 years. On slide number seven , you can see the main highlights of our 2024 business year.
We managed to successfully consolidate the significant growth from 2023, and 2024 rental income grew by a further 1.3% to CHF 66.2 million compared to CHF 65.3 million in 2023. Reported vacancy came down to 4.2% during 2024 from 4.6% in 2023. We are particularly pleased about this because this is the third successive year-on-year reduction in vacancy rate, which was 5.8% during 2022 and 7.6% during 2021, reflecting the team's hard work and the attractivity of our properties. We managed to extend again our WAULT, which now stands at 8.2 years at 31 December 2024 compared to 8.1 years at 31 December 2023, despite it being one year later. Also, EBITDA, excluding revaluation of properties, increased during 2024, amounting to CHF 53.1 million compared to CHF 52.4 million during 2023. We continue to have solid equity ratios with 49.9% as at 31 December 2024.
Finally, our board of directors will propose to the shareholders to pay an increased dividend of CHF 3.15 per registered share compared to CHF 3.1 per share last year. Slide nine summarizes our portfolio key figures. We have 25 properties and operations and 3 properties under development: Nexus Brunnpark in Roggwil, Campus Léman Building C and D in Morges, and PULSE in Cheseaux-sur-Lausanne. More details on these three developments will follow later in the presentation. Our total portfolio value increased to CHF 1.61 billion, out of which CHF 1.46 billion are properties and operations and CHF 149 million are properties under development constructions. Like we mentioned, the reported vacancy rate was reduced to 4.2% in 2024 compared to 4.6% in 2023, 5.8% in 2022, or 7.6% in 2021.
It is particularly pleasing that in H2 2024, we managed to decrease the vacancy rate quite substantially. I already commented on the WAULT, which we consider at 8.2 years to be very attractive. As usual, we do not report individual market value per property, but on slide number 10, you can see the portion top 10 properties in operation out of the total market value of the portfolio and the respective uses. As represent 62% of our total portfolio value, we have two properties in operation with a value in excess of CHF 100 million. The average property value amounted to approximately CHF 58 million, while the smallest property we have in operation carried a value of about CHF 6 million. So overall, we consider our portfolio well balanced also from a risk perspective.
Slide 11 reflects the change in market value of our portfolio with an increase in value of 5.1% in 2024. The increase was mainly driven from CapEx of CHF 54.5 million in total, which was split as follows: CHF 46 million investment in development pipeline mainly PULSE with CHF 39.8 million and Campus Léman Building C with CHF 6.2 million, CHF 8.5 million investments in our properties and operations. The increase was further amplified by the revaluation gain of CHF 23.4 million, which we've had during 2024. On slide 12, you can see the breakdown of the revaluation per sector as of 31 December 2024 compared to 31 December 2023. As in previous year, all our properties were valued by an independent valuer, Wüest Partner, who revalues the properties every six months.
Overall, the revaluation resulted in a net unrealized revaluation gain of CHF 23.4 million. This was split as follows: a gain of CHF 12.4 million in the office sector, a small loss in the retail sector of CHF 0.8 million, a gain of CHF 3.5 million in the logistics sector, and finally, a gain of CHF 8.2 million in properties under development, reflecting the continuous development stage of our projects. The average nominal discount rate for 2024 was 4.67% compared to 4.69% in 2023. The average real discount rate remained almost unchanged at 3.38% in 2024 compared to 3.39% in the previous year. On slide number 13, you can see in the top table the evolution per sector of our vacancy rates from 2023 to 2024, and in the bottom table, the like-for-like growth over the last two years.
You can see in the top table that the vacancy per sector was as follows: offices, vacancy rate of 6.1% in 2024 compared to 6.1% in 2023, retail, vacancy rate of 2.9% in 2024 compared to 4.5% in 2023, logistics and industrial remained more or less unchanged at below 1%. As you can see, the overall vacancy has been reduced from 4.6% in 2023 to 4.2% in 2024, but I want to draw your attention to the note on the right side of the table where you can see that H2 2024 performance was particularly strong. In the office sector, the vacancy in H2 2024 was 5.6% compared to 7.7% in H1 2024. In retail, it was 2.6% in H2 2024 compared to 3.2% in H1 2024, while logistics and light industrial was constant at 0.7%.
Overall, and this is important, the vacancy in H2 2024 was as low as 3.7%, significantly lower than what we have had reported in the previous years and also lower than the full year 2024 vacancy, which is another testimony of the attractivity of our properties and the quality of the work of our team. In the bottom table, you can see the like-for-like growth of 2024 compared to the previous year: office sector's growth of 0.4% in 2024 compared to 5.5% in 2023. Retail growth of 2.3% in 2024 compared to 7.1% in 2023. Logistics and industrial 1% growth compared to 4.5% growth in 2023. Overall, growth of 1.3% as mentioned earlier in the presentation. On slide 14, you can see the list of our top six tenants. The top six groups of tenants are all very solid tenants and represented 52% of our 2024 net rental income.
The contracts with them have a long WAULT of 10.6 years, and the total net rental income in 2024 amounted to CHF 34.3 million from these six tenants alone. The other CHF 31.9 million of net rental income are well spread over more than 160 tenants. As mentioned earlier, the WAULT for our entire portfolio is 8.2 years. It is important to note that as much as 89% of our rental income on a weighted average basis is linked to the Swiss CPI. On slide 15, you can see the expiry profile of our leases.
More than 57% of our leases will expire post December 2030. Out of the 2.9% expiring in 2025, 82% relate to contracts with either no fixed maturity or already renewed or relegged or currently under negotiations, while 18% of the 2.9% expiring in 2025 relate to services that are currently on the market. I would like to pass the word now to Valérie, who will go through the financial numbers in detail.
Thank you, Arik. Good morning, everyone. It's a pleasure for me to report on our third year of annual results, which are in line with our expectations. As always, I will cover three main topics: firstly, our equity and bank debt; secondly, the performance of our portfolio over 2024; and finally, how this performance translates into earnings and dividend per share for our shareholders. For each of the key figures tables, I will highlight the main points, and then I will elaborate on those on the following slides.
I will start my presentation on slide 16 with our balance sheet key figures table. Our equity increased to CHF 820 million as of 31 December 2024 compared to CHF 805 million end of 2023, showing a comfortable equity ratio of close to 50% at 49.9% end of 2024 versus 51% at the end of the previous year. As we keep investing in our ongoing developments, our bank loans increased from CHF 610 million end of 2023 to CHF 662 million end of 2024. Nevertheless, our net loan-to-value ratio remained in the 40% range at 40.6% by the end of 2024 versus 38.9% by the end of 2023 and below our target net loan-to-value ratio of circa 45%. Our 2024 return on equity excluding revaluation effects also stayed stable at 5% in line with the previous year.
So the main driver beyond our equity increase is our 2024 profit of CHF 47.1 million, as you will also be able to observe on the next slide. The second reconciling item of our equity breach relates to the dividend distribution of CHF 32 million, which with a dividend of CHF 3.10 per share translated into a competitive dividend yield of 4.7% based on the year-end 2023 share price. By the end of December 2024, the IFRS NAV stood at CHF 79.38 and reaches CHF 90.92 when we disregard the net deferred taxes. Let's move now to the liability side of our balance sheet on slide 18. As of 31 December 2024, the weighted average cost of debt remained low and unchanged at 1.3% compared to 2023, while the weighted average residual maturity decreased to 3.7 years compared to 4.5 years.
67% of our bank debt was hedged at the end of year-end, and to do so, we used fixed interest rate loans and interest rate swaps to hedge our financing cost, as well as cross-currency swaps to reduce the bank margin. The year-end revaluation of the derivatives led to a net unrealized loss of CHF 5.3 million in 2024 compared to a loss of CHF 20.3 million in 2023, while the foreign exchange revaluation of the related underlying U.S. dollar loans resulted in an unrealized loss of CHF 6.6 million in 2024 compared to an unrealized gain of CHF 5.8 million in 2023. So when those unrealized effects are disregarded, the adjusted financial result corresponds to a net expense of CHF 9.1 million for 2024 versus CHF 8.2 million for 2023.
And the increase of CHF 0.9 million is mostly driven by the higher bank financing cost, mainly due to the higher level of bank debt and the comparatively less favorable terms when certain loans were refinanced because of the fluctuation of the SARON over the two reporting periods. The bottom graph provides you with the bank debt maturity profile over the years broken down by type of financing: fixed, variable, and hedged with swaps. 99% of the amount of loans coming to maturity in 2025 relate to the construction loan of our project PULSE, which will be consolidated into a standard loan after its completion in H1 2025 of this year. So having established that our balance sheet is sound and balanced in terms of equity and debt, I would like now to comment next on the performance of our portfolio during the year on slide 19.
In summary, our business keeps progressing steadily year on year, as shown by the 1.4% progression at the EBITDA excluding revaluation of properties level, as well as demonstrated by our solid profit excluding revaluation effects of CHF 40.6 million. As already explained by Arik, our rental income grew by 1.3% or CHF 4.8 million between the two reporting periods and keeps generating an attractive yield of 4.5% in our properties in operation. The other income line includes elements of a non-recurring nature, and therefore, the 2024 other income was lower by CHF 0.5 million compared to 2022. Net operating income nevertheless increased by CHF 0.5 million compared to the prior year, and this is also supported by the lower direct expenses related to properties.
The year-end appraisal of our portfolio led to an unrealized revaluation gain of CHF 23.4 million for the year 2024 versus an unrealized loss of CHF 9.7 million for 2023, as Arik already explained to us. The EBITDA excluding revaluation of properties amounted to CHF 53.1 million in 2024 compared to CHF 52.4 million in 2023 thanks to the higher NOI and also the lower other operating expenses in aggregate. The 2024 financial result led to a total expense of CHF 21 million for 2024 versus CHF 22.7 million in the previous year. As already mentioned, once the unrealized effects of the revaluation of the derivatives and the related underlying U.S. dollar loans are ignored, the adjusted financial result increased by CHF 0.9 million driven by the higher bank financing cost.
It's important to note that this periodical revaluation of the derivatives at each balance sheet date, as well as the foreign exchange revaluation of the underlying U.S. dollar loans, will unwind over the contract duration and therefore do not impact the group's operation, cash flows, or dividend distribution. Finally, our profit excluding revaluation effects came to CHF 40.6 million in 2024 compared to CHF 40.9 million in 2023, showing a significant decrease of less than 1%. The next two slides will simply and graphically illustrate what I've just said about our 2024 performance. The graph on slide 20 shows visually our main P&L components from the rental income up to the EBITDA excluding property revaluation. The second graph on slide 21 compares the main KPIs between the two reporting periods.
So on slide 21, you can see that in absolute terms, each of the three shown P&L lines, so the net rental income, net operating income, and EBITDA excluding revaluation, did better in 2024 compared to 2023, but also their respective margin, the NOI and EBITDA margin, improved to 90.4% and 78.4% in 2024 respectively compared to 90.1% and 77.7% in 2023. Sorry. So having provided you with an overview of our 2024 performance, the next consideration is how does this translate into a dividend? So the FFO KPI for funds from operation shown in slide 22 indicates our ability to distribute the dividend and amounted to a total of CHF 40.8 million for the year 2024. So the board of directors will therefore propose at the upcoming AGM on 28th March 2025 to increase the dividend per share from CHF 3.10 last year to CHF 3.15 this year.
The total distribution of CHF 32.5 million will be made out of the foreign capital contribution reserves and therefore free of withholding tax. This dividend per share of CHF 3.15 translates into a dividend yield of 3.9% when we take into consideration the year-end closing price of the share in 2024. Now, slide 23 provides you with the summary of our information per share for the two reporting years.
And I would like to point out the pleasing 23.5% appreciation of our share price between the two reporting year-ends. Finally, I would like to conclude that our business is performing well and in accordance with our expectations. And the next meaningful step up in rental income will come with the letting of our two ongoing developments, PULSE and Campus Léman Building C, whose first full year of operation will be in 2026. Now, I would like to pass over to Arik, who will give you an update on those development projects.
Thank you, Valérie. On the following few slides, as Valérie mentioned, I would like to talk about our development projects starting with PULSE on slide number 25. PULSE is located in Cheseaux-sur-Lausanne, is a cutting-edge property designed for life sciences and high-tech companies, and has many very positive features on sustainability. The building offers gross 43,000 square meters of fully modular space with contemporary architecture, high-tech facilities, and customized layout. Located in the heart of Lake Geneva, it provides easy access to major transport links, including an 11-minute connection to Renens train station. The construction will be completed by H1 2025, most likely by May 25. The property will obtain environmental certifications Minergie and Green.
Project cost will amount to a total of about CHF 130 million, and the target annual rental income communicated previously of CHF 7.5 million, which corresponds to a yield of circa 6%. So far, 21% of the target rent is already secured with the following tenants: Thermo Fisher, which is part of the U.S.-based Thermo Fisher Scientific, a listed company on the New York Stock Exchange. Kidélis, a subsidiary of Eldora AG, a restaurant chain with over 300 restaurants across Switzerland. And U.S. Romandie operating a crèche facility under the brand Bubble, mainly for children of the PULSE tenants' employees. The leases with the three of them are over 10 years, excluding early breaks, providing stable cash flows.
I would like to point out that we are having at the moment good discussions with interested parties, which reinforces even further our belief that PULSE is well designed and that it is high quality, is very attractive, and very attractive to tenants. On slide number 26, you can see our other development, which is also in the final stages to completion and is also expected to be completed during H1 2025. Campus Léman in Morges is a modern business hub, only a short walk from Morges train station, and is a host to various companies, with the anchor tenant being Incyte Biosciences, whose European headquarters are located on the site. Building C is the second phase of the development, with the first phase being the construction of buildings A and B completed in 2020. The building is expected to be certified Minergie-P, similar to Building B.
The construction cost of the building is expected to be circa CHF 15 million, with tenant fit-out contribution expected to amount to CHF 1.7 million. Target annual rental income is forecasted to be around CHF 1.2 million, representing an expected yield of above 6% when taking into account the land, the fit-out contribution, in addition to the building's construction cost, of course. Signed so far: Incyte Biosciences, who have committed to three floors out of six; Ensemble Hospitalier de la Côte, having committed to two floors out of six, leaving only the top floor vacant for the moment. Lease durations for the above tenants are 15 years, excluding early breaks. I would like to add that we expect to submit the building permit for Building D, which will be the third and final phase of the site's development by the end of the year.
The other two developments in the pipeline, which I would like to mention, are included on slide 27, namely Nexus Brunnpark and Roggwil in Tolochenaz. We have received a preliminary general building permit for the extension project on Nexus Brunnpark . This permit gives us the official feedback from the authorities on items such as, for example, size and volume of the building, planned redirection of a river running through the site, access road, traffic, etc. The permit received was for a building of a gross area of 30,000 square meters, with a gross volume of around 425,000 cubic meters. Currently, we're in early discussion with our existing tenant and potential other tenant to define the next steps of the development process.
Regarding Tolochenaz, just a reminder that this property is included in our properties in operations, seeing as it is a yielding property for the moment, which is fully let and generating rental income. The municipality of Tolochenaz informed us of the strong wish to complete the master plan in the next 12-18 months. The master plan is expected to improve the flexibility of the building rights. However, substantial building rights are already in place, allowing future development to take place regardless of the outcome of the new master plan. Finally, as most of you already know, the site is classified as a strategic development site by the Canton Vaud. Moving on to ESG, on slide 29, where you can see a picture of our property in Wiggispark.
In the beginning of 2024, Epic has completed about 4,500 square meters of photovoltaic panels on the roof of Wiggispark shopping center in Netstal, generating approximately 990 kW-peak of electricity. On Slide 30, you can see the forecasted decarbonization pathway per energy source. As a reminder, the board of directors approved in 2023 the decarbonization pathway until 2050, and this was updated in accordance with the latest findings. Reductions in emissions of our buildings can be achieved through replacement heating systems, energy carriers, and by moving to district heating. Data for the decarbonization pathway was assessed and validated by actual measurements and surveys and modeled using a building stock model. The pathway assumes regular weather conditions and that the district heating providers use green energy in line with the federal target of net zero carbon emissions.
On slide 31, you can see the forecasted decarbonization pathway per scope from 2023, the base year of our decarbonization pathway to 2050. The forecasted decarbonization pathway is expected to significantly reduce Scope 1, 2, and 3 emission intensity, which in 2024 was 13.3 kilos CO2 per square meter for Scope 1, 2, and 3, which is low compared to the Swiss average. In addition, the decarbonization pathway in December 2024, the board of directors has set a midterm goal of 3.5 kilos CO2 per square meter emission intensity for Scope 1 and 2 by 2035. Please note that Scope 1 and 2 emissions have declined to 7.9 kilos CO2 emission per square meter in 2024 compared to 8.3 kilos CO2 per square meter in 2023. On slide 32, you can see the table of the energy consumption of our portfolio.
I would like to point out that in 2024, already 60% of the consumed energy was from renewable energy sources. This compares to 54% of consumed energy from renewable sources in 2023. Finally, this year, we also expanded our sustainability reporting and, for the first time, report on water consumption too. The water consumption on the portfolio was 0.55 cubic meters per square meter in 2024. For the water consumption, we will use 2024 as the base year when comparing the water results in the upcoming sustainability report over the next years. Let me now take you to our Outlook slide on slide 30 on Outlook on slide 34. Based on the press release of 12 December 2024, the Swiss National Bank forecasts the Swiss economy to grow by about 1%-1.5% in 2025.
EPIC Suisse's prime focus remains the sustainable mid- to long-term growth of its portfolio and consolidation of the lettings of the soon-to-be completed developments. We expect the net rental income from our developments to start showing meaningful impact on the net rental income from 2026 onwards, as 2026 will be the first full year of operations for our existing tenants but also for our future tenants that could commit in 2025 with a start date in 2026. Assuming no materially adverse changes in our operations during the year, the company guidance for this year, net rental income, is an increase of 2%-3% compared to 2024. With this, we end the presentation part of the call, and I would like to now open the line for Q&A.
We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the telephone. You will hear a tone to confirm that you have entered a queue. If you wish to remove yourself from the question queue, you may press star and two. Questions on the phone are requested to disable the loudspeaker mode while asking a question. Anyone with a question may press star and one at this time. Our first question comes from Philipp Züger from Zürcher Kantonalbank . Please go ahead, sir.
Yes. Good morning, everyone. Thank you for the presentation. Actually, I do have three questions so far. I'd like to start with the tenants. So are there any rental areas at risk at the tenant Migros? So that's the first question. And the second one, are there any major contracts expiring in 2026?
I think, in general, there's none of the major ones there is risk. There is all the time a small risk with the small tenant, but nothing in the major one, which is the risk. So this is on 2026, there is obviously there is expiry all the time. But this is part of our ongoing business. We have one major tenant that is this expires by the end of 2026. But this is our main business, to take this one to take the area, and we're starting to work as quick as we can to try to relay them.
Regarding Migros, maybe the second part of the question. So we don't have any contracts with those formats that Migros has announced that they would be selling. The only one we have is a subtenant of Migros, but the contract is with Migros themselves, which is a SportX. But as I said, the direct contract is not SportX to EPIC. It's us to Migros, and then Migros sublets it. And this is a location that they've already announced that Ochsner Sport will be taking over.
So even that will remain in the portfolio.
We don't have any exposure to any of the other formats.
And could you please explain how the revaluation effect of CHF 12 million on the offices came about? Was it by vacancy reduction, or is it property-specific? What impact of CHF 12 million?
One moment. Valérie can just.
Yes. One second. So regarding the gain, we have actually most properties got a revaluation gain and two got a revaluation loss. This was mainly driven by high expected income, be it from market expectation but also some leases that were signed. Then there is also an effect with the discount rate. The main effect was the rental income expectations.
Okay. Then maybe the last question regarding the development market. Are you now becoming more active in this area again? How do you see the market there?
Which one, new project or existing? So in existing, we are trying to push our project as hard as we can. Like mentioned on the call today, the project in Roggwil, which we are pushing, we are pushing also as much as we can. The project in Tolochenaz, so we are trying to bring them all where we need to do the building permits, etc. So we are pushing on them, and we think that the market is for the project that we have on the pipeline. We think that the market is very healthy, very good, and we would like to try to bring them to the development stage as soon as possible.
Regarding new projects, so we are on the market for new acquisition. We cannot buy. We would love to, but we cannot buy an existing project. Most of what we are looking is involve a project which is we see in our D&A, which is development, buying a land, building which needs repositioning, building with shortlists. So we were actively in discussion on a few projects. Some of them, we've been unlucky. There are projects that, at the moment, we are studying and considering whether to put a proposal. So yeah, the answer is yes. We are looking all the time to increase our pipeline.
Can you say in which areas these projects are?
Majority is in the office sector and logistics and industrial sector, yeah.
Okay. Thank you.
For any further question, please press star followed by one. Star, f ollowed by one. Ladies and gentlemen, so far, there are no further questions. Back over to you for any closing remarks.
So thank you, everyone, for participating, joining the call. We are very happy about the 2024 results, and we are looking forward to a successful 2025 and to keep in touch with you during the year. Thank you very much. Bye-bye.
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