Now, these results we can proudly present. Let me open this day on it. Thank you for coming here. Thank you for your interest being here in the audience or following us online from somewhere around the world. With me on the podium, we don't only, in inverted commas, have Marcel Kucher, but also Anastasios Tschopp, our CEO of the solutions company. Why so? Of course, there is a specific reason. It's the takeover of Fundamenta and growth inside the solutions unit in asset management. We thought it would only be appropriate for him to be here as well, and we're going to have a deep dive on asset management along the presentation. And so since we're concluding the first half year, Marcel and I, we're going to have this deep dive in this growing second pillar.
For the question and answer session, we also have Mrs. Karin Voigt, our CPO of the real estate company here, and Mr. Urs Baumann, the CIO of the real estate company. So let's get started. What are the strategic milestones in the first half year of 2024 ? Specifically, there are two of them. I've touched upon the first one, the acquisition of Fundamenta, the Fundamenta Group. What does this bring us? A little more than four billion of additional assets under management, but not only that, there are new products within Fundamenta. There is a listed company, FREN, and in addition to that, there is an investment vehicle and some platform vehicles. That's the one thing. The second thing is, we have additional investors, so we're going to be an interesting platform for real estate in Switzerland.
The third thing is, it rounds off our focus in asset management and our focus on residential in asset management, because most of the use in the Fundamenta Group is residential. This is one of the strategic milestones. The second one, which we've communicated already, is progress of transformation of the Jelmoli building. Planning application, as you know, was submitted mid-December last year. We're expecting construction approval by the end of 2024, and it's always important if you do developments, and we often do developments, and we have internal objectives, we release construction. It costs money when at least 50% of the space has been let. It's a good message to announce that we have achieved the 50% by the rental agreement signed by Manor. Let me add to this.
The question has been asked frequently, why are simply swapping Jelmoli for Manor or Manor for Jelmoli? We closed down Jelmoli, but Manor, first of all, uses 13,000 square meters, not 27,000. We always said there's too much retail for the city of Zurich in Jelmoli, and that's point number one. Point number two is, we were totally on our own with Jelmoli. Manor has its network and can buy in more cheaply, and they can displace or transfer goods between stores. So it's not simply a swap, it's an entirely new situation. And of course, we're going to create office space, and I'll be coming back to this in a minute. Over on the portfolio side, a slightly higher value of 13.1 billion CHF, despite sales. Revaluations are positive.
A positive CHF 30 million, around CHF 30 million, primarily attributable to higher rents that we achieved, either new rents or, renewals. Further highlights, we have three major development projects that are more or less completed. One is Paradiso at Lugano. I'll be coming back to this. The second one is the Four Finger Docks at Stucki Park of Basel. Thirdly, JED, the new JED building at Schlieren, Zurich, apart from the, converted former NZZ printing buildings. Then we have sales. As of today, we sold for CHF 80 million. That CHF 50 million was on the 30th of June. Of course, we aim to sell a lot more in the second half year. Why haven't we done that yet?
Every company sets up its budget, and in the budgeting phase, concluded around November, December last year, we assumed internally that the first step, interest rate step, would only be taken in June by the National Bank. So the National Bank took us by surprise as well with the step they took in March, and that's why we said we're going to shift our sales basically to the second part of 2024, as the interest rate step will have its effect, and we haven't come off that. So we are expecting higher sales volume, clearly higher sales volume in the second half year. Now, on operating performance, one highlight certainly is the increase in rental income by 6%, 3.7% like for like, attributable to new projects that we've taken on in the portfolio, better rental and lower vacancies.
So by mid-year, we're at a record level of CHF 232 million of rental income. Vacancies, I've mentioned already, we have a record low of 3.6%. We are expecting 3.8% by the end of the year. I can tell you as early as now, there's going to be a slight increase towards the end of the year, and with a view to the future, we aim to get down to 3.0% at some point, which ought to be possible for our portfolio. Then major growth in asset management, up to CHF 12.7 billion in assets under management, driven by the purchase of Fundamenta, the acquisition of Fundamenta, and the interest rate steps that show that how important it is.
Capital increases of CHF 270 million as a result, CHF 220 million of that are cash contributions, and CHF 50 million contributions in kind, which adds up to the CHF 270 million of capital increases for the various products. Significant increase here, on the one hand, in asset management income by 22%, but also in EBITDA growth, also 22%. Costs are under control. We're better and better getting them under control. Marcel will give you more details about that, which boils down to FFO I increase, and let me repeat, FFO I is always without sales proceeds. It's the recurring cash that is valued here. It's an increase by 5% to CHF 2.23 per share. For financing, I'll only mention the first point. Marcel will give you more details on the others.
LTV, it's not only our objective to bring it down to below 40% by the end of the year, and we're going to do it also. We will be below 40% by the end of the year, so it's a temporary situation, primarily attributable to the dividend payout, which, as you know, we complete in the first half year. Most important key figures, in summary, I already mentioned most of them. Rental income is the relevant figure for top line, a plus of 6%, 3.7% like-for-like. Assets under management growth up to CHF 2.7 billion. EBITDA, now at CHF 204.7 million before revaluations, and profit at CHF 151.2, which boils down to the FFO of 203.
FFO II would be slightly higher if we had sold more. By the end of the year, it will be higher accordingly, and the only negative figure is EPRA NTA, which does not really reflect the asset management value. It's negative, but we've almost caught up. It's to do with devaluations in the second half of 2023. That's the one factor, and the other is creating additional shares as the price of Fundamenta was covered in part by shares. A brief word about the market. We'll tell you more at the end of the year or beginning of the new year, but let me begin over on the right-hand side. The be-all and end-all here is the interest rates, steps taken by the central bank, which leads to positive valuations.
For valuations, the plus of CHF 30 million that I mentioned before, due to, in particular, higher rents, no lowering of the discount rate. The discount rate remains more or less as it was before, and you're all familiar with the valuation business. The most important figure is... are transactions, completed transactions, and transactions, as the word says, are a thing of the past, are completed. So this goes back six months. What am I trying to say? We were expecting additional thrust for revaluations by the end of the year. The second step taken by the Swiss National Bank at the end of June has not had an impact yet. For transactions, we're seeing that the transactions market is working again. The major institutional investors are reporting back to the market. It's a question that was asked to me a minute ago.
We see that we're selling. We've been selling at good prices, 5% above fair value, which is a positive thing to note. And in addition, what is interesting for asset management, we're seeing the willingness to do contributions in kind increasing. And why is it increasing? Because the real estate business is becoming easier fundamentally, and one of the other pension fund is asking whether they want to retain their own real estate portfolio and manage it with all the risks, or wouldn't it be easier to contribute it to one of the products that Anastasius's job is going to present later on and have an indirect relationship to the former real estate? I think we've had these. I think it's the sixth contribution in kind now, and I think that this will go on along the same lines.
As far as lettings is concerned, just look at our results. We've got very strong performance, letting performance with regard to vacancies at 3.6% and very positively let at higher rents. So the prime locations, the central locations, are very much at stake and very much at a premium. For office space, we continued to have excellent demand. What is certainly helpful is the lack of construction activity, as the offer is not being widened, and if no building applications are made, there will not be any new surfaces, which means that existing surfaces are becoming more appealing. So much on the market, so let's get started now with the real estate portfolio.
I don't think I have to repeat everything I've said before about this slide. So, properties are where they've always been, along the A1 and the A2 in parts. In the Zurich area, we have 54%, and also Zug is also included here, which is also driven by Zurich. There's one dot in Ticino. This is the property of Tertianum, which has now become part of the portfolio. I'll get back to that later in a separate slide. In terms of tenants, there hasn't been much of a change. We still have Tertianum as the main tenant. You can see the top five here on the slide. Maybe we can say a few things about Globus, because I know you're going to ask about it anyway.
Yes, they have always paid their rent without any problems, and their most recent communication, that you have probably read too, are positive. We're expecting that they will make a decision soon, and 100% of operative business will be taken over by Tertianum. Now, after the refurbishment of the Jelmoli business, we are now going to have an increase to almost 40-50%. Retail is going to go down to almost 20%, and that's still the goal, to reduce the retail share to approximately 20%. Now, let's talk about the active portfolio management. The red areas, I don't know if you can see it, those are the quadrants 2 and 5, and those are the properties that are still part of the capital recycling process.
That means they're going to be sold, and that's the CHF 13 billion. So that brings us to CHF 16 million, and they. We're going to sell them for approximately CHF 650. So what's the difference? And what else are we going to sell? Well, there's another project that's going to be sold, and from the fourth quarter, but we mainly sell those developments that are not suitable for the portfolio because they're residential projects. One example is shown here, that is the Buchs property, and that's the difference between the figures that I mentioned earlier, and this is per the end of July 2024. So the vacancy rate is 3.6%. That's a record low. And we have very interesting tenants, either we've been able to renegotiate tenancy contracts or extend contracts.
And so the WALT is 4.9 years, and that is still an excellent situation to be in. So... And this is once again, the capital recycling slide. I would like to go into more detail here. So what do we do here? We sell properties that don't fit into our strategy anymore. We have sold CHF 1.2 billion over the last few years, and recycled that, which means that we spent the money that we took for new developments. Some of them are listed here, to the tune of CHF 0.8 billion. So recycling is really not a very suitable thing because it's actually upcycling. It's upcycling because, of course, that means we change the mix.
So you can see that what we sold from the mix, that's CHF 1.2 billion, a large part of that is retail space. And then there are new developments, and that's the lower circle in the middle, a lot of office space. So that's upcycling. Then also, the locations have improved, and you've seen that in the quadrants. So these are locations in quadrants four or one, and those are the interesting ones. And the buildings are new, which means that they're more sustainable and also easier and better to be marketed. So actually, it's not recycling, but it's upcycling. And so now let's talk about the developments. This is currently we have CHF 740 million under construction, and I will show you more about that in the next few slides.
CHF 670 million have already been invested. Of course, the interesting question is how much will be earned back in terms of rents, and that's approximately CHF 38 million. Large parts of it are still in planning, in various stages of planning, approximately CHF 100.15 billion, with a target return of 4%-5%. Next year, we are going to have two major projects. First of all, the Jelmoli redevelopment, and also the YOND Campus new build. Here, these are projects completed or under construction. The Alto Pont Rouge in Geneva, we don't have the tenancy. The pre-letting rate actually is 80%. I always said that the objective was 90% by the end of the year, so we are on track.
So at the moment that we take over the building, we're usually at approximately 80%, and then the last few spaces are let a little later. So at Stucki, those are the four finger docks and new builds in the Stucki Park. And here we have completed constructions, and now tenants are moving in, mainly laboratories. Three of the four buildings are actually laboratory buildings, and only one is an office building. And the JED in Schlieren is a new build in addition to the refurbishment of the former print building of NZZ. And that's going to be handed over by the middle of the year, and here the pre-letting rate is... Oh, sorry, in Bern is 65%, the BERN 131, and we are also expecting 80% by the time we take it into our portfolio.
So the yield on cost is 4.4 for Bern. That is a little less than for the other buildings because we didn't actually develop this building, but we bought it from Losinger Marazzi. And so if we do our own development, this yield on cost should be a little higher. But we did not have risk. We bought a building that was ready to go, and so that's why this yield on cost is totally acceptable. And now here there is a selection of projects from our pipeline, Jelmoli, of course, and then the YOND Campus is the second property where we're going to start construction in the near future.
This is the second phase of the total construction project, and Grand-Passage, Geneva, where we're going to start construction in 2026 at the earliest. Then there's another project that's going to be sold, that is the Route de Meyrin in Geneva, a building that was used by Swisscom. Now there is one advantage in Geneva. Whenever you refurbish a building into a, and turn it into a residential space, then you don't have any losses. Here you can see that it's quite a deep, you don't have to have any light shaft or anything, when you refurbish it into, and turn it into residential lettings, but it is really suitable for this transformation. Residential buildings are not our core competence, and that is why we are going to sell this project.
And, of course, there's going to be a CapEx, and so we will sell it as soon as we have the construction permit. And we're filing for the construction permit this year, as well as for Steinenvorstadt, Basel, as well. And for Maaglive in Zurich, we have received the building permit, but it's not legally valid yet. Now, a quick snapshot at one of our projects, Destination Jelmoli, Zurich, because this is not just office space, but there's also going to be retail in the basement and the ground floor, and then there are going to be office spaces. We still also have Holmes Place as a tenant for the gastronomy leisure, and we're now working on the roof terrace planning, where there's actually a tender ongoing as we speak.
That's going to be the second part. We're now waiting for planning permission for the refurbishment itself, and then in the second step, the roof top terrace is going to be the place to be for the city of Zurich. As soon as we've received... and it's also going to be part of the building permit. So those of you who remember Jelmoli, this is not where the restaurant is located now, but this is actually a space that has not been used at all, right on top of the building, and that's also going to bring us, of course, additional rental income. Here is an image of Tertianum in Lugano. It's a residence, and this is going to be a high-price residence, of course. This is right on the lakeshore and has an SPA.
And has a spa area as well. SPA is also the abbreviation of Swiss Prime Anlagestiftung, but this is a spa as a wellness area where the residents can enjoy themselves. And so this is certainly a very interesting project, in particular, because... Yeah, I was asked what, who the clients are going to be, and I thought, well, automatically, people from the German-speaking part of Switzerland. But the answer was, North Italians are going to be the residents, probably down to Milan or even Torino. So the largest part of people who are going to be clients here are going to be from Italy. And now, here is the last slide before we go over to the finances on the sustainability strategy. Let me just mention three points.
Our CO2 reduction path is always shown at the end of the year. That's why I haven't got it on this presentation. But we have almost 100% certifiable area now, and we have these the various certification steps. We are doing very well with green leases. Many tenants ask about them now, are interested in them, so we now have 70%. The objective is 100% by the end of 2025. And here we are really in line with the interests of our tenants. Many companies, large companies, have to publish a sustainability report now, and that is why they're very much interested in working with us and getting these green leases. But of course, they also have demands. For example, they want data that we have to supply.
One important one is air quality. There are tenants who want to have an air quality report from inside the building once a day. We can supply that because we have been working on this field for 12 years now. Circular economy is another element of this sustainability strategy, and circular economy is mainly based on using sustainable concrete, particularly for the JED new building, and that has to be the future, so that raw materials that were used once can be used again. We did that very successfully at Müllerstrasse. Here it is still more of a recycling strategy. We took apart the facades, refurbished it, and then reused it for the strips of the facade, but it's still downcycling.
But the material should be reused at the same level because then you don't need additional gray energy, and I think that is the way to go for the building and construction industry. And now over to the details of the finances, to Marcel.
Thank you very much, René, and welcome to the screens, those around the world, and welcome to everyone here at Prime Tower. As René said, I'll take a few minutes to dive into the world of figures in the first half year. This is the first chart. We begin with top line income. As René mentioned, we had growth of rental income up to CHF 232 million, thirteen million in absolute terms, a plus of 6%. And this, despite preceding sales, so it's really organic growth or by commissioning developments of ours, we've grown by CHF 19 million, so almost 9%, and goes to show just how powerful our portfolio is. Like-for-like, 3.7%, plus, and I'll give you more details later on.
In asset management, we've got the major step from around 22% to now 27 million, 22 million to 27 million. I'll show you more details later on. In retail, a decrease. As you can see, this is the Jelmoli business, as René outlined, in its final year of business, around 100 days more until the end of the year, driven by reduced footfall that you see at Bahnhofstrasse in general, probably, and due to higher discounts we had to give in the final business year. And you can see that on the cost side, that we've compensated for it primarily. A total of 3.2% plus of total operating income. Now, moving on to costs, the next chart.
The first thing that will strike you is that the largest block or one-off cost block is real estate cost that we lowered by almost 1%. You will remember 6% higher top line, 1% lower cost. That goes to show two things, I think. On the one hand, that we focus on efficient management of our real estate, and we have taken quite a few measures in the second half year, and that clearly lowered our costs, and it's a result of capital recycling as well, focusing on newer properties and the ones in better locations that can be efficiently managed. Cost of goods sold, Jelmoli more or less reduced along the line of our top line. It reduced slightly lower, but that's why the reduction, we have the reduction of the margin that I mentioned a minute ago in the first half year.
Personnel cost remained stable. Those who look into the financial report will have seen that it has really remained stable down to very small figures. And this is really including integration of Fundamenta, the Fundamenta Group, which was closed mid-April, so about three months of Fundamenta are in that. That's about CHF 2.7 million of additional personnel costs due to operations in Zug and in Germany. So, and you can see in the existing business, we have lowered our personnel costs further and been more efficient. And then other operating expenses, looks like an increase there, but this includes one-off acquisition costs due to Fundamenta, advisory fees for due diligence, and it's about CHF 1 million included here. And if you exclude this one-off effect, you can see around a reduction of around CHF 500,000 in the first half year.
Below the line, this adds up to 3% less cost, more or less 3%. Not surprising, if you have 3% more income and 3% less cost, what remains below the line goes up powerfully. We've summarized it here, the sales proceeds. If we exclude them because they're not recurring, they're one-off, you can see an adjusted EBITDA of around 7.5% plus, which is a strong operating performance, I think, in the first year, first half year. Going further to the FFO per share, it's a small print here. I hope you can read it. The adjusted EBITDA is 7.5%, plus of 7.5%, and the interest rate expenses, that clearly went up by 26% in the first half year based on better operating performance, slightly higher taxes.
And the total, the subtotal, is around plus 4.9% of FFO. And if you break it down to shares, we concluded a small capital increase for the funding of the acquisition of Fundamenta. There is still a nice increase of around 4.6%. I think that's the decisive figure after tax, after interest rate, is the one that we have to pay, and that will be available for dividend payment and further investment. Let me focus on another figure, somewhat lower down in the smaller print. We are now reporting the FFO per segment. As you can see, in both segments, we achieved a clear increase in the first half year. FFO return is the return on equity used, equity employed, which rose to 5% in real estate, up from 4.6%.
Particularly interesting, it rose to 25%, up from 23.9%. Why is this remarkable? Well, we only have one quarter of Fundamenta in there, and as I said before, we performed a capital increase that we attributed fully to the asset management segment. So the acquisition is already accretive in the first half year, which is not even a complete half year, and led to higher FFO return on capital employed. NTA, as René mentioned before, a minus of 1.4% reduction, driven by three things: slightly higher number of shares, which accounts for about 0.6%, and the second thing is the acquisition of Fundamenta. There's no value for asset management in the NTA, but additional liability is reflected here.
And the devaluation in the second half year of 2023, we are positive that we will have a positive number by the end of the year. Let me now briefly show you one chart each for the two segments, giving you a little more detail, beginning with real estate, the real estate segment. These are the details here of the development of rental income, as I mentioned before. For around CHF 6 million, we've sold for around CHF 6 million of rental income in the capital recycling strategies, sales in the second half year of 2023 and the first half year of 2024, having an impact on these figures.
You see the higher rental income from the existing portfolio, and in particular, in this half year, the additional rental income due to the opening of developments, which gave us a total of 6% growth. Over on the right-hand side, we additionally report like-for-like growth and its composition. Compare it to the half year in 2023, we're at 3.4% like-for-like growth. So the like-for-like growth was increased once more, and this, although the inflation rate compared to the previous year, clearly, declined. You can see it in the breakdown here. Indexing accounts for around a third, 1.3%. Not surprising, at an inflation rate of currently around one point three percent and 100% of indexation, more or less, and two-thirds are attributable to operating improvements, especially better rents that we have achieved, 1.8%.
Rents account for 1.8% of the like-for-like growth, which speaks for our operating capabilities and for how close our people are to tenants and for the locations that are, of course, at a premium among our tenants. Then I'll give you a chart on asset management, the asset management segment. For the first time, we are giving more details, and we're going to give them in the future as well, on the composition of return in asset management. Of the CHF 27 million, there were just under half are management fees on AUM basis. Typically, management fees are calculated on AUM basis, and the rest is additional services. The largest share of it certainly is construction and development.
We are managing a portfolio of around CHF 13 billion, and so we have a number of opportunities for developments, for redevelopments, and refurbishments and repositionings of buildings. I think there is great value to be generated for our portfolios and which means certain income for us. And then there is the non-recurring income, such as transaction fees or sales or capital increases that account for a smaller share, as you can see here. On the cost side, we've been very efficient. As I said before, the personnel costs increased primarily due to the integration of Fundamenta, and which added CHF 2.7 million of personnel costs. And for the other operating expenses, they were clearly reduced by about one-third, so below the line.
Compared to the previous year, the EBITDA margin was maintained at around 54%, a clear increase of EBITDA by a good 22%. Now, some more comments on the balance sheet. This is the development of our assets. For the real estate part, we got started at CHF 13.075 billion, proceeded to sales of more than CHF 50 million, as we mentioned before. Then the acquisitions and investments that clearly exceeded that and more than CHF 30 million of valuation results, which adds up now to CHF 13.147 billion of worth of portfolio. A word about revaluation.
What is important is that the discount rate has remained the same, down to two digits behind the decimal point, and revaluation is primarily driven by better higher rates of 1.8% and reduction in vacancies, and also by a reduction of costs. We had self-generated, so it's self-generated. It's not driven by the market. Just a quick comment on financing. See the figures here, they're relatively unchanged compared to the prior year. We are at around 86% unsecured, unencumbered, 14% mortgages. With insurance companies, we like that market, and the insurance companies cannot do anything else for regulatory reasons.
But clearly, more than 80% is unencumbered, of which around 87% is with fixed interest, about 30% are floating, so we can benefit from lowered interest rates, very directly so, not only indirectly, through a new issuance. René mentioned the LTV already, 40.9% for the half year. We, as he said, will have it below 40% by the end of the year, so we're very confident about that. Interest rate, rounded to 1.2%, looks the same. If you go down one step in the figure, it decreased from 1.17% to 1.16%, which might be small, but seems to show that we've achieved the peak, reached the peak.
The average interest rates since the half year, with the swap rates have clearly decreased again. It's likely that, slowly but surely, we have reached the peak. Maybe not reached it to 100% everywhere, but primarily reached the peak there. In conclusion, let me talk about maturities and liquidity. We currently have access to secure credit lines of CHF 840 million. Our liquidity is secured for many years, and you can see the maturities here, most of them being financed this year. The market has very great absorption capacity. On average, our issuance were oversubscribed by more than CHF 100 million.
We went out with a CHF 150 million bond in the spring, one for a CHF 100 million in July, and concluded at a CHF 185 million. So we have great access to the capital market of CHF 435 million that we've placed at continuously improved terms. Now, this is it as far as I'm concerned, but let me hand over to Anastasius for asset management. Thank you.
Thank you, Marcel. Ladies and gentlemen, a warm welcome from me. I'm going to spend a few slides talking to you about facts and figures on Swiss Prime Site Solutions. We have CHF 13 billion assets under management, which makes us the largest real estate asset manager in Switzerland, independent one. And why did we purchase Fundamenta? Well, first of all, we wanted established structures in Germany, 20 people working in Munich on the ground, and two products in the area. We're also able to gain a strong team in Switzerland with 40 staff, and this is a listed product called FREN, Fundamenta Real Estate, and also a residential vehicle. And so, we have now a very wide range.
Currently, we have sent the request to FINMA to integrate Fundamenta, and so we've prepared this well, and it's all looking hopeful. And now, this is the second pillar of Swiss Prime Site, and what's the foundation of that pillar? Well, there are three pillars. On the left-hand side, the funds business, fund management with approximately CHF 4 billion, and the asset management with CHF 6.2 billion, and real estate advisory with CHF 2.5 billion. And all three pillars have grown compared with 2023. And let me also mention that the transaction volume in the first six months was approximately CHF 600 million across the three pillars. And I also mentioned that in the first six months, new funds to CHF 100 million, that was more than we were able to issue in 2023.
And we are optimistic that we are going to have more acquisitions in the second half, and also have a wide range of a wide pipeline with a great distribution of contributions in kind. And here, these are distributed across the two pillars and how we invested into the units. All three pillars show that residential income accounts for 50% or 60%. And of course, size is not all, but it's also about the position and the performance of the products in the market. And this slide shows this very well. On the left-hand side, here, this is the CHF 4 billion of the Swiss Prime Investment Foundation and the CHF 2.8 billion, and both have a cash flow yield of 2% to 2.3%.
Here you can also see our new product on the right-hand side, that we've been offering for more than two years, where we invest in anti-cyclical commercial. This shows that our products perform well in a difficult market, remain stable, and were able to generate new cash. In detail, the Investment Fund Commercial or IFC, which is a product of the left-hand pillar in the funds business, here we do anti-cyclical investments into B locations in Switzerland. The micro-location position is very good, and a cash flow return of 5.5% is excellent, and we have 0.9% vacancies.
And so, when we hear that there is no need for office or retail space, you can see that, despite that, we have the lowest vacancy rate in that sector, as in all other sectors as well, by the way.
And diversity.
Now, here, the Akara Swiss Diversity Property Fund, PK. It also is set for growth. We are now approaching CHF 3 billion with this product, and here, we have a cash flow return of almost 3%, and the half-year results look excellent. We're going to communicate them in the next couple of weeks. The focus is on residential, and 60% is in residential. 65 percent is the maximum that we're allowed, and so here we also have some elements of retail and office space. And then the large last project I would like to talk about, which is also part of the fund pillar, and that means that here we manage it ourselves and decide on capital increases, purchases, et cetera.
Here, so this is, we are here. We acquired Fundamenta Germany, a fund with CHF 700 million assets under management in 7 top cities in Germany, with a focus on metropolitan areas. And that means that we've not only been able to extend our range of products and offer anything to customers that they want, from 100% commercial and 100% to residential. But we also have listed products, foreign products, German products, and so the range of investors is not just institutional, but we also have 2,500 new investors that we've acquired through this acquisition. So thank you very much for your attention, and it's now back over to René Zahnd.
Thank you, Anastasius. I have two more charts for you, but before I talk about them, let's get back to asset management. Oh, it hasn't really been mentioned, but look at page or chart 28. I want to stress that specifically. On chart 28, you can see that we have management fees of CHF 15.2 million. These are recurring, and add to this, the construction and development fees, which we do is each portfolio, every piece has to grow. So it's really recurring things. Does not include all transactions or issues, that's the non-recurring fees. But if you add all this, we're at CHF 21.6 million, and that's fees that simply coming in because the products are there, because the assets are there, and personnel costs and costs for others is CHF 12.2 million. That really makes this business highly interesting.
That's a message for you to take along. This difference, without any single transaction, without collecting any money, on issuance, you have this difference already. It's even more interesting than the relationship between recurring and non-recurring. It's the effective figures, and this really stands out in this segment. Now, as I said, I have two charts on the outlook. Outlook by the end of the year, beginning with the LTV, we mentioned it several times, we'll be landing below 40% by the end of the year. We've got an improved FFO I. Without the sales, there will be more sales in the second half year than in the first half year. FFO I of CHF 4.10-CHF 4.15 in the past, now CHF 4.15-CHF 4.20.
Current objective, vacancy is around 3.8%, and assets under management are currently at CHF 2.7 billion, and we assume that we will approach the CHF 13 billion threshold by the end of 2024. Now, what's the medium-term outlook? We've got a chart for medium-term targets here for the two pillars. Beginning with the real estate portfolio, by the end of 2028. Or let me say at this point, this is organic. These are organic medium-term targets, not including external purchases. So, so again, in real estate portfolio, by the end of 2028, rental income in excess of CHF 500 million and low cost of below 16%. Why end of 2028? Well, it's very simple. Jelmoli is going to reopen 2027, but in 2027, we're not going to have the full rent as it will accrue.
We have set the objective for twenty twenty-eight. Over on the right-hand side, for asset management, we expect in excess of CHF 16 billion of assets under management. Again, this is organic. The 13 billion that we'll have by the end of the year, it's relatively easy. 1 billion of growth per year, that's feasible, and at the level of EBITDA, will be around 75 to 18 million. More than 75 million. This business will be in a range where you can say 20% of the total EBIT, approximately 20%, is generated by asset management. This will then be the moment to do the sum of the parts calculation and attribute to asset management the value it deserves. That's it from me. Let's get started with question and answer session.
Let me repeat, one question at a time. We won't take the microphone from you. We'll get started with questions here in the hall, and we'll then go to any external questions or online questions. And we have simultaneous interpretation. So please, one question at a time. Microphones will be handed round. Who is going to do that? Well, you can always give him the microphone. He's always the first one.
I've got four questions. Two are very quick ones, two for real estate, and two on asset management. The first question concerns the yield of the sales and the objectives for the planned sales in the second half of the year on average, so that we can get an idea of how the portfolio is going to change. We want to, of course, improve, and that's why we do the capital recycling and improve locations. You can expect that our yields are going to be slightly higher than the average...
Yes, of course. Also, the risk has to be included in the price, and if you sell retail space in the Valais canton, then the yield's not going to be 3% or 4%, but a little higher. I think the quantification is interesting.
The second question, you mentioned that Paradiso has been let now, and so what is the rent price per square meter, or what's the increase anyway? In percentage, it's 20% more. Thank you.
We heard something similar from SP, from PSP in prime locations.
Now, a question on asset management. You said that CHF 270 million was raised in the first half, and the objective is CHF 1 billion per year. So does that mean that we have to expect CHF 740 million in the second half? Can you quantify the growth?
Yeah, your calculation, your numbers seem to be right. But of course, we can also leverage. And so we expect that we will raise CHF 300 million in the second half.
Leverage is one-third, so you can then calculate the 600 million and one-third, nine, and that makes 900.
The second question on asset management. In terms of the integration of Akara, of SPSS, how is that working in terms of merging the cultures? I also saw that personnel costs have grown from 8 to 11. Can we expect reductions in personnel costs, and if yes, by how much?
Thank you for the question. The integration is going very well, as we saw in these first two integrations that we had with the Jelmoli Akara, and now we are doing the same. The offices are going to move from Alpenstrasse to Poststrasse, and we are very happy.
Let me also add, well, you know, our objective is we want to grow by CHF 16 million, and we can do that with the headcount we have at the moment. There's not going to be a cost reduction in personnel. Of course, there's going to be a cost reduction, because if you apply the same staff to the CHF 16 million, of course, that's going to be much more efficient. Of course, like with any integration, it's going well, but of course, there are always some who don't want to come along, and those are not going to be replaced. In the medium term, because we have this portfolio, we want to grow, and that's why we are also going to need the staff. Are there any more questions from the room? Thank you.
Another question on asset management. So you expect that the transactions are going to increase in the second half of the year? You're not the only ones. Does that mean that the share of non-recurring fees in asset management is going to increase?
Yes, it does.
And has that share changed with the integration of Fundamenta, or is it the same share? It's remained stable, and you can see that if you do a year-on-year comparison, because in 2023, it was without Fundamenta, in 2024 with Fundamenta. And can you quantify the non-recurring share on average? Well, we want to have more than two-thirds of recurring, but it depends on what's happening in the transaction market, too. So maybe 70%, 70%-80%. Well, I tried to reactivate the recurring and non-recurring assets.
That's an interesting figure, because if you have great years with a lot of issues, then you do more transactions, you buy more, and that will increase the non-recurring part. And that is why I use the actual figures between how much do we earn and how much in yields, in terms, in comparison with costs. And that's irre spective of the relationship between recurring and non-recurring. Because if you need transactions and issues to maintain the structure, then you have a problem, and that's not where we want to go. And another follow-up question: In the medium term, you want a vacancy rate of 3.0%? Yes, that's the objective we set ourselves. Well, there are always some strategic vacancies, and a small vacancy can sometimes be beneficial.
In the medium term, we want to achieve the 3%, and it's feasible with our portfolio. By when do you want to achieve that? That's a more difficult question, actually. Medium term. Karin, do you want to tell them what medium term means? She says no, and that's a result of portfolio optimization?
Well, we sell the less favorable locations and smaller buildings, and that makes us very efficient in terms of cost because we have larger buildings. You have to understand that operational costs are not low for small buildings, and that also has an effect. We try to sell the B locations so that we only have A locations, and then that will decrease the vacancy rate. There are some worries in commercial real estate that maybe also in prime locations there may be a problem. I don't know if what you're talking about here is a prime location, but of course anyway there's going to be more space in the market.
Yes, we are very optimistic, but without naming names, there are also other real estate companies who said that renting out office space is difficult, but that depends on the location. If you're in a smaller city, that may be the case. I totally agree with our main competitors here that office space is going really well where we are, and that's in the center of large cities. That is why when we talk about the favorable situation of office space, that refers to those prime locations.
I have a few questions on FFO I development. With the integration of Fundamenta, it's doing well, according to plan. It was once said that they're going to contribute CHF 0.20, and can you talk about expectations for this year?
The 20 cents are after complete integration on an annual basis and after synergies. I would assume that for 2025 or some overlap in 2026, we can expect that as well. As you heard before, we're working on the integration and on capitalizing on synergies. We're giving out our offices in Zug. We are merging IT. This is going to happen in September, and you can see the synergy effect only in 2025, in full, as we are currently using them and from September. We'll see them in 2025, and the 20 cents are really calculated on the basis of that period, not on 2024, where we also have CHF 1 million of transaction costs and one-off costs.
How about without synergies?
We said about 2/3 is what we import, and 1/3 is synergies.
So the CHF 0.05 are from Fundamenta entirely, or is there an adjustment, a downward adjustment?
No, there won't be a downward adjustment. On the contrary, Fundamenta plus good performance here, as you saw, on the basis of this low vacancies and cost disciplines and higher rents.
2.04, FFO I for the first half. 2.03. 2.03. And last year, 2.01 at the first half year. So why this adjustment?
Oh, that's on a like-for-like basis, what we're showing here, and it's due to Wincasa. Wincasa contributed the difference there, and that, of course, did not apply this year. So we're only showing like-for-like figures, as we do in the financial report, on the basis of IFRS 5.
On the Grand-Passage project in Geneva, the beginning of the year, you said you would assume that 2024 to 2026. Now you're saying from 2026. Why the delay?
The delay is due to Globus being one of the main tenants there, and that's due to. That, that's the reason of the delay. We're not making a rental agreement with a counterparty that is only 50% known. We need to wait for the Central Group to buy in. Maybe they will see things differently, but we can make different use of the building, more office space, for instance. Currently, we're planning for Globus to remain there. If the Central Group approves that, it will be okay, and otherwise, we'll need more time to make the switch from more retail to more office space. That's the reason for the delay or the postponement.
Final question on JED in Schlieren, Zurich. There were also changes compared to the beginning of the year. I think you said you talked about CHF 105 million of investments, now it's CHF 110 million, and there was a plus of CHF 300,000 of rental income. Why that?
This is due to the constructions by the tenants that will pay off over time.
Thank you very, very much. More questions from the audience here? Yes, please. Perhaps at the very end of the room. About your CO2 reduction path structure. My question is, you are leaving the path for 2034 and do not believe in net zero by 2040. So what will be the incentive? What's possible? What do you think is possible for CO2 reduction?
Well, in the appendix, and you can see that, 2040 will be at zero CO2. That's certainly feasible. Now, looking into this appendix, maybe not every one of you will have it on hand, but every single dot of the line is a real estate, and we exactly know what we're doing when. But there is a difference there. There are certain things that are unclear about district heating.
What's the quality of district heating for particular buildings? That will certainly all be settled by 2040. We're very confident to go down to zero by 2040, but it's, of course, a thing that you have to talk about with every municipality. In my private home, I have a connection to district heating, but I have to check what's in it. And we update it once a year, by the end of the year, because it takes a lot of effort putting it into figures. Thank you for the question, anyway. More questions? Did you want, Ken, you want to come in first?
A quick question on the financing situation.
We are hearing that UBS, from various sources, that following the merger with Credit Suisse, will be less willing to grant credits, and if so, at higher yields for the bank, of course, at less favorable terms for borrowers. What effect does that have on the SPS Group, and how are you trying to cope with this new setting?
Well, I think we're in a good situation. We have a consortium credit that is going on for four years, four and a half years, with a renewal option, renewal for one year. We will assume that UBS will comply with the agreement and perform the renewal. So we're secured for the funding for the next five, five and a half years, and otherwise, we work in good agreement with UBS.
We work with them very closely at various levels for SPS, but also for solutions in the various vehicles. Thank you. Tommaso from UBS.
I could have passed on Ken's question to you directly, but we haven't done that. Well, I can stay with the matter. UBS quickly recently announced that they want to close a commercial international commercial real estate fund. There are signs that similar thing is going to happen in Switzerland. What would that be? What effect would that have for you in Switzerland? Well, in the world of funds, I'm not seeing any closures in Switzerland. I haven't heard about that. Our commercial fund, the IFC, is performing very well, and the market sentiment is turning, we believe, and fund product becoming very interesting again.
We had great investor talks in the past two and a half years. The excess yield you're getting is not risk-adjusted. We know there's too much risk in there for the disproportionate yield profile you're getting. And what about market shares? Are you winning market shares?
Well, looking at what we did last year, we grew by, organically, by CHF 800 million, more or less. And when we see what we did with the products in the first half year, we're gaining, slightly gaining market share. Follow-up question on vacancies. In the short term, you're expecting a higher vacancy by the end of the year? Yes, but this is due to Pont Rouge we're taking over, because the others are fully let, and Pont Rouge has a pre-letting status of 80%, so there's a slight increase of 0.15%, I think.
That's why we have approximately 3.8. But that will even out again. If it's fully let, we'll be at 3.6 again. And about Pont Rouge, any news about FlowBank? Who wants to take that? Karin, perhaps? Well, there's no news. We're secured. We are secured for some period of time. We'll. There won't be any damage we're going to take, and I think we will be able to rent it out after that. So we're not seeing any risks, given the contracts we have. No financial risks on. As far as rental income is concerned, we will be able to re-let the rooms.
But of course, it's not a nice thing if you have a tenant in that situation, for one thing, and, apart from that, you don't get up to 100% quickly enough, with a new tenant, if you have to replace a tenant. But it will throw us back, perhaps for three months, to get back to 100%. That's not terrible. More questions, Cedric?
I have a question on asset management. In Switzerland, you have a very comprehensive product range. Does that mean that the focus on inorganic, in inorganic market is more or will be more on the international markets or more potential for consolidation in Switzerland?
Well, the latter applies. So major foreign market, Cedric? ... has not been released by the board of directors, by the way, with the Fundamenta acquisition.
It's yes, Germany, yes, and we have a small unit through the investment foundation operating in Germany, but strategically is the international market has not been released, so we're going to continue to consolidate in Switzerland, in particular, through contributions in kind, which is some way of consolidation with.
I have a brief question on the EBITDA of the asset management. What's your expectation for 2025, 26? Well, I can tell you about 2027 . Anyway. No, we haven't issued a guidance here. Maybe do we have a question from the room? One last question from the room, perhaps. If that's not the case, maybe we have some from the outside.
There's one question from Brent Adult from Camden. New question.
We have one question actually on the asset management business. I'm looking at investment from commercial, and I noticed that the LTV is 43%. How do you look at that? As far as I'm aware, for some funds, there is a cap of 33%, so why is this one exempt? Thank you.
Thank you for the question. The LTV is at 43%, and the pre-contract allows 50% during the five-year initial period, and then we're going to reduce it slowly and, but still at the moment, to benefit from the leverage.
Jut another question.
Is there another question from external, from the external line, Florian? No, there are no further questions.
Well, in that case, I don't want to keep you. As always, you are cordially invited to join us for an apéritif, which is going to be held on the third floor. That's one floor below. Thank you for being here. Thank you for being loyal to us here, and I look forward to toasting the first half with you.