Good morning. Welcome to our Balance Sheet Media Conference today on Thursday the 9th of February. Just to jump right in it, our results for 2022 were positive, still it's not the right time to applaud ourselves, because we were forced on Monday to communicate to 550, not 850 as was reported, because 350 are our tenants' employees. I just assume they're not going to lose their jobs, they're just not going to work at Jelmoli anymore. Nevertheless, we were forced to tell our own 550 employees on Monday that the department store is not going to continue the way that our employees liked it across six stories as of the end of 2024.
The results are positive, but we are keeping in mind that we have had to give our employees this bad news, that's something that we do take seriously. Now about the results. I'm not going to go through each and every item, but let me just pick out the most important points. On the right-hand side, increase of rental income, which is still the most important performance indicator, which rose by 1.1% to CHF 431 million approximately. The like-for-like growth rate is almost 2%, 1.9% to be precise. The reduction of vacancies by 4.6% at the end of 2021 to 4.3% is also positive, and this was as per the end of last year.
The figure that you're all looking at is the valuations. We've read a lot in rising interest rates, also means rise in discount rates, -1.1%, CHF -50 million is what we read. That's a plus of CHF 173 million. We, in the middle of the year, we always said that we expect the valuation results to be the same in mid-year and the end of the year, that's actually been confirmed. CHF 146 million last year, it was practically flat, but slightly positive. Last year's highlight is our strong asset management. We were able to show some organic growth without acquisition, CHF 1.8 billion - CHF 7.7 billion. Today on the 9th February, we have already exceeded the CHF 8 billion mark.
We were able to reach our target EBIT of CHF 30 million. The EBIT, adjusted EBIT was up by 6% to CHF 430 million. That means before revaluation and one-off items. I'm not going to talk about much about finance because Marcel Kucher is going to go into more detail there later. Let's take a look at the right-hand side, strong balance sheet and FFO. Of course, the reduction of LTV from 40.2% - 38.9% is particularly interesting. We're no longer at 39.8% or 39.9%, but we have actually cracked the 40%, the magic number, for the LTV. The EPRA NTA rose to CHF 102.69. That's an increase of 1.7%.
That is what allows us to pay out a dividend. The FFO one per share, unlike the FFO two, this does not include the sales proceeds and this, the FFO one, rose by 6.2% from CHF 4.01 - CHF 4.26. We are going to propose a dividend of CHF 3.40 per share. We're also are going to have a change in the board of directors that will be proposed to the annual general meeting. In addition, we have EBITDA from 4.8% to CHF 448.6 million and profit adjusted to CHF 300.6 million. We are the first to publish our accounts, the question is always how we see the market as it is.
We have three points that we would like to make. Transactions, well, you've all been able to see that in the 2nd half, 2022 , it was a little lower but with Swiss Prime Site Solutions, we were able to sell 100 properties and bars in 2022. You might say that anyone can buy as long as they spend enough. Let me tell you that the performance of the product is always above the benchmark. The other point we would like to make is that we also sold properties. One figure that's important is the one what you sell at. We sold long tail.
Those, so those are not the CBD district, not the CBD district, properties, and we were able to sell 15%-20% above book value. That means that the market is still healthy, and it also means that the valuations had been reasonable and realistic, so no overvaluations, if you can still achieve above book value. Much on the transaction value. Let's talk about lettings. We have been able to let 172 sq m in addition. This is a very good market in central locations, especially now with our sustainability standards. You already know about our tenant survey. Particular to our guests from abroad, let me just say you should forget all you know about working from home.
Maybe that's true for other countries, it's not so much true for Switzerland. We have a very strong demand for office spaces in good locations. If you read Credit Suisse or any other estimates, and they all say that particularly Zurich, which is our main market, has not enough demand, actually, in terms of office space. That means we expect to be able to renew contracts at better conditions. Now, let's talk about valuations. Well, valuation is always a little bit about looking into the crystal ball. Well, what are we expecting? We are expecting the discount rate not to go down even more, but. The question is, what will happen to property values? There are four levers to counteract an increase in discount rates.
The first one is, of course, adjusting rental income. That's the first lever. The second lever is an increase in rents, whenever there's a rent option, whenever we want to renew a rental contract. Another lever is to decrease vacancies further, and we expect to be able to do that. The fourth lever is our development pipeline. Once a property is ready for rental, we expect a revaluation effect. This particularly goes for the end of the property. A property is ready at the point when tenants move in, so that we can attract the right kind of tenants. That is where we usually have another positive effect in valuations. That's our view on market transactions, lettings, and valuations.
Before I hand over to Marcel about the figures, let me just say a few things about the Allmend. Let me just talk about the investment volume of CHF 100 million. This is a very accurate estimate for the idea that we have, because of course, the question is what will happen to it. We are already having a dialogue with the city, and we'll have to see whether our ideas will be put into practice. One idea is to open the side to have more access from street level. We also want to have a plaza with air and light from the inside, daylight lighting inside. We also want to use the roof surface.
Architects always say that the roof is the fifth side of the facade, and I absolutely agree with that. We want to be able to open that to the public. I just read Andrea Martel's commentary, who said that it's a shame about the house, but the house is going to see improvements. The building is going to become more open. It's going to be better than before. At the moment, it's a department store in Zurich. It's going to be more open for more possible customers rather than those who just want to purchase goods. It is going to invite the population. I think we really have the possibility to realize a very good project here. About the CHF 100 million.
It's going to be around the summer, I think. By then we'll know, also from the authorities for listed buildings, we'll know what we'll be allowed to do and what we won't be allowed to do. Then we will be able to adjust the investment volume more precisely. That's about the Jelmoli building. Now it's over to the financials with Marcel.
Thank you very much, welcome to Prime Tower on my behalf. Before we look into the figures, let me make a general remark. You will remember we changed over to IFRS. All the figures we are presenting are IFRS figures. Conversion was in the framework of which we announced as extrapolations last year. When you compare previous year's figures with the old figures, there are slight adjustments. All previous year's figures have been restated to provide for like-for-like comparison based on IFRS. Let's look at the details of the figures. We've got the operating income here listed in detail. Let me refer you to three components, in particular. The first thing René mentioned already, 1.1% of growth in terms of absolute rental income. Last year, we sold a few properties within the framework of capital recycling.
The like-for-like growth as a result is clearly higher than that at 1.9%. This goes to show that we have the right properties in the right places. Last year, the main increases occurred at the beginning of the year. When you remember properly how inflation evolved, you can see that Relatively little index adjustment is included. The majority of them are appealing renewals of rental agreements. More is to come based on the development of the inflation in the 2nd half of the year. What René also mentioned quickly was a return from asset management, clearly increased by 186%. It's really a trebling of the figures, and I'll be looking into the details in a minute, and to where the origins are, how stable this growth is.
Let me also say a word about income from real estate services. That's Wincasa in this case. A plus of 5% at constant pricing, by the way. We are seeing that growth continues to be possible with Wincasa. We're talking about more than CHF 80 billion of serviced assets currently. Total operating income of just under CHF 775 million. A plus of 3% compared to the previous year. Let me say more about the cost side, operating expenses. Let's begin with the simpler things. Direct real estate cost rose by 6%, around half of which is attributable to higher energy costs for Jelmoli on the one hand, but also for the vacancies on the other hand, which account for about the half of the increase in the real estate expenditure.
We assume that this is not going to increase or even going to come down a little bit as energy prices have come down. Second point I would like to mention here is that we saw previously that there was growth of income in retail of 10%, with cost of goods sold a plus of 18%. Bear in mind that given the decision to transform Jelmoli, we looked into proper appraisal of this and carried out CHF 7 million of impairment, and this is part of the CHF 34 million that we communicated as one-off expenditure for the Jelmoli transformation. The rest of the CHF 34 million, the balance of it, can be found in impairments and depreciation, with a high increase, as you can see here, which is almost exclusively attributable to the impairment related to Jelmoli.
Total operating expenditure is + 14%, CHF 438 million, adjusted for the one-off expenditure that we commented. This brings us to CHF 397 million, a plus of 3%, which is in line with top-line growth. Cost and income taken together produces EBIT results shown on the next slide. Let me mention revaluation here. As René mentioned a minute ago, it was stable in the 2nd half year of 2022, CHF 170 million, approximately. Especially gratified to see that the capital recycling properties that we sold account went at around 20% above book value and produced a profit of CHF 51 million, approximately. Total EBIT, including revaluations of -20%.
As you can see here, it's slightly decreasing, and if you take into account the one-off items, you will get a plus of 6% of adjusted EBIT on a like-for-like basis, which underscores good operating performance of our group last year. What counts in particular for dividend payment is a cash view. In our guidance and in our daily operations, we focus very much on funds from operations. We do not have to do any additional corrections, as this is a cash view. Here, as shown and in line with the adjusted EBIT, we have a plus of 6.2%, which is above our announcement of 5%, particularly due to our operating progress with higher top line at controlled cost.
EPRA NTA rose by just under 2% to CHF 102.70, which is due to successful capital recycling that we've implemented and balanced dividend payout based on AFFO. Let me focus on two specific components in more detail. One is growth in rental income, 1.9% on EPRA like-for-like basis. The key components certainly are reduction of vacancies on the one hand, and very effective management of properties with a strong focus on letting in a strong rental market. We have around CHF 4 million that we sold under capital recycling. About CHF 1.8 million of rental income was taken from the market. These are properties that we are beginning or have begun to refurbish. Müllerstrasse in Zurich would be a case in point here, but it was compensated by existing properties. Let me look ahead.
Around 90% of our rental income is indexed to inflation. We are intensely making sure to make use of that. There's no negative reaction from tenants, we can implement that as announced and as laid down in the contracts. CHF 11 million-CHF 12 million will be the amount of additional income, some of it this year, the rest will follow in next year. Not all the contracts can be adjusted for the 1st of January. That's why there is some degree of overlap. On the other hand, from the sales in 2022, our rental income will be reduced by around CHF 4 million. Second component I would like to highlight is continuous portfolio enhancement. Look at the compensation of the value. We sold total book values of around CHF 266 million.
That's what we made the CHF 51 million profit on, which amounts to CHF 317 million of cash income. There, it's important to say that the 19% or just under 20% that we sold beyond book market, this will be continued. It's not everything from the 1st half year of January last year. Last December, we sold properties in the amount of another CHF 80 million that we now close in January at, or are going to close in the weeks to come. For the sales that we conducted in December, we clearly were beyond book value again. Just to remind you, we are selling things that are making our portfolio better in the course of capital recycling peripheral properties that are not part of our core and prime portfolio.
You can also see by the number of properties, despite an increase in the real estate value, we went down to 176 properties, which makes it more efficient for us to manage the properties. Let me say something about value increases. The valuation in gain of CHF 173 million that René mentioned, contrary to 2021, around half of it is due to higher rents and reduction of vacancies and the balance by reduction of the discount base rate, the reduction compared to the previous year was clearly lower and accounted for only half of it. I think this is important to know going forward. We clearly focus on a further reduction of vacancies and like-for-like growth to go with it. Two more components I would like to highlight on from asset management and real estate management.
Asset management, we mentioned before, strong growth of around 30% on an organic basis, CHF 1.8 billion in addition to the CHF 2.3 billion from the Akara acquisition. Currently, this amounts to CHF 7.7 billion. CHF 240 million have been added in the meantime. We're already pushing up, pushing the CHF 8 billion threshold. An important component is how much of it is recurring. You would assume that a great deal is non-recurring. It has come down a little bit, but we're still at about 2/3 of our fees that are recurring, 63% to be precise. This is a very significant figure because it's the recurring one returning every year. To remind you again, the whole growth is non-recurring in the first year. In the second year, it's recurring.
This figure, of course, is certainly going to increase in the years to come. CHF 30 million of EBIT, we communicated already. 58% EBIT margin, we were where we used to be two years ago. We clearly have the economies of scale there, given the size and we can see more economies of scale with the current personnel for the future. Let me also remind you that the Akara acquisition was fully integrated by August. The merger occurred in August. In that point in time, we cut off certain duplication in back office, and some of these effects continue to be there in 2023. Let me also add a comment on real estate services or Wincasa. In our case, we showed you one figure before. CHF 1 million-CHF 81 million of serviced assets, which is a record figure.
Clear increase of around 6% compared to the prior year. It's important in this context that this clear increase was at constant pricing, managed at constant pricing and both on the basis of existing clients and new clients. We have a high degree of client satisfaction. We even increased it. We carry out detailed client surveys with all major clients every year, and we clearly increased the results again. Which is a good basis to gain new clients. In 2022, we renewed the contract with Wincasa for another five years. The best thing is that in recent years, we invested a great deal of money in IT and digitalization and which will help us to be a lot more efficient. I think 2022 is the first year where you clearly see an impact on the figures.
Our personnel cost ratio was clearly reduced to below 70%, our operating EBIT margin is 11.3%, clear increase compared to the previous year. This is not to be the end of the line. Some of the IT projects are only going to go online this year and in the years to come. We'll clearly see upside potential there. Over on the other house side of the balance sheet, onto funding. This is a presentation over the past three years, our financial liabilities and our investment properties. We can see a clear trend here. Financial liabilities are being held stable or even being reduced under the capital recycling at slightly increasing real estate value, which brings down LTV from 42%, two years ago to now below 39% in 2022.
This is an important signal showing we're taking things very seriously and implementing well. We're deleveraging slowly but surely. The same thing at unchanged maturity profiles and. This is always as of the 31st of December at appealing interest rates due to the strong basis of our funding and new appealing of opportunities for funding is currently at 0.9% average interest rate at the end of 2022. 86% of our funding is unsecured, which is important for maintaining our rating. We're making sure that the vast majority of our creditors are on a level footing. We've got a good mix here from unsecured bonds, capital market funding and unsecured loans, funding from banks. This is an important component as well. We're widely diversified in terms of funding and can resort to all sorts of resources.
Our maturity profile is very balanced, as you can see. We had a peak. We were going to have a peak in the years 2027, 2028. These are consortial credits with a total of 13 banks. These credits include options for renewal for a year or two years. Under current terms, we are assuming that we will make use of these opportunities. Something we haven't communicated yet, but are communicating now is open credit lines or cash amounts to around CHF 800 million. The maturities this year and next year, we're facing them in a pretty relaxed mood, depending what the situation in the capital market is. We would like to go back to the capital market. There is no pressure on us to do that. We can do that earlier or later.
Doesn't mean we're not wanting to go back to the capital market. We're keeping a close eye on opportunities. The CHF 50 million, if anyone would ask for that, is private placements that are revolving. We've got good access to the placements, and we're placing them currently at a margin of 31 bips. So much in terms of figures. Let me hand back to René.
Thank you, Marcel. I always thought that I was a fast speaker, but he's even faster, isn't he? Let's talk about the portfolio. I don't think I need to go into deep dive. Our properties are still in the same place, the banana-shaped area between Geneva and Zurich. We had 170 to 1.7 million sq m of rental floor space. That's excellent. Of course, it always depends on at what time options run out. This is much better than last year and in the previous years. In 2022, we had the best peak in the pandemic, that was even better, also better than 2019. The vacancy rate. This is the lowest vacancy rate that we've ever had.
We are now at 4.3%, we are going to work towards lowering the vacancy rate further. The target value, you may wonder, well, we expect that we will be able to reduce by 0.2% at least. That's not quite the same degree as last year, but it should get us to 4.1% of vacancy at the end of the year. Now, this slide is interesting. In terms of rentals, not much has changed, but the question is, what will happen after the Jelmoli building has been refurbished in terms of usage distribution? As you can see, the share of sale, retail is going to go down to 22%, and this will be compensated by more offices and increase to approximately 48%.
Now if you're looking for the laboratory spaces, I can tell you that those are under the logistics infrastructure heading, the 9%. Laboratories for us are part of infrastructure, so they're under that 9%. This is a slide for our shareholders from abroad, just to give you an idea of the retail business. We now think 26%, not the 20%-22% that we're heading for in a few years' time. The question is, what's happening to retail? Retail still has a role to play. We absolutely agree on that. In CBD locations, we need retail. There's no doubt about it. This slide shows that the 57% of rental income from retail can be repositioned, and that's what we're doing. 24% is food or near food.
That's the Migros and Coop, and 19% will be other types of retail. This is not, we're not saying that retail won't be happening at Jelmoli anymore. We still will have 10,000 sq m. Nobody has an idea of how much 10,000 sq m is. This is about the surface that Globus has in Zurich. We are going to be very big. Retail is, of course, part of any inner city, but it can take different shapes and forms, and we will be able to show you what we have there after the end of the refurbishment in 2027. This is something that we've never shown before. This is the location of our properties. It's good to be in the top right-hand corner.
This is where 83% of our portfolio value is located, and you can compare that with other companies. The 14% are also interesting. These are about excellent location quality, which can be further improved by making investments into the building, for example, to improve the sustainability or to upgrade the area, the surface area. Then the 2% and 1% are what we call long tail properties, which are predestined for being sold at the next opportunity in order to have funds for refurbishment elsewhere or development elsewhere. When we invest in life science and laboratory areas, they will not be next to Zurich main station. Laboratories are usually, for example, at the Stücki Park in Basel.
In Zurich, they are wherever the cluster is, that is Schlieren in the Zurich area. It's important to stress. If you look at where the property is, that's an approach that doesn't do justice to the different use cases. You always have to look at what is the perfect location for a particular type of property. That is why we also have some properties in that 14% segment. Here, this is the lease expiry of rental contracts. It's always good to be in line with the finances, 5.3 years on average. You can see how these are distributed. Long-term rentals over 10 years, very much driven by Tertianum. We are still the proprietors of various buildings here.
That was about the portfolio of Swiss Prime Site AG. Let me talk about asset management next, some project developments. Asset management first. I'm not going to go through everything, but just from left to right, we have three parts. One is fund management. Where we make our own decisions about investments. It's always important to know who makes those investments, who makes those decisions. That's what we want to expand most because we think this is where the potential is the greatest. At the center, this is the investment foundations, the fiduciary segment. This has been extended until the end of 2027. That's great, and I would like to thank the investment foundation for having extended the contract here.
It's important for you to know, when we, this is, we are the asset managers here, the board of the foundation decides whether we buy a property or not. We just suggest it. Then we also have the real estate advisory for third-party clients. Here we want to make sure that the buildings are in top shape. One, the Asger Penzul's Casa has shown very strong growth last year. Now, I wonder whether you maybe we are competition for ourselves in terms of acquisition. We have different acquisition sales teams with different products. Fund management, this is separate from asset management, it's separate from third-party business and from real estate advisory. Of course, there are a lot of synergies.
As Marcel mentioned, the back office, finances, sustainability, all these topics are covered by us as the parent companies for asset management too. That means that we were able to keep the costs quite low here for the asset management part. Maybe the colors are a bit difficult to discern here, but the largest share is living, is residential segment. Looking at the Immobilien AG, the real estate AG, we are still looking for commercial properties, so there's only a very marginal overlap. Going into the individual products, drilling down into the individual products, you can see that it's not just about how the product is split up and what the typical investment size is. Here, these are smaller investments than the medium investments of the investment foundation.
There's hardly an overlap here in the market either. If two products bid for a property, then that's the way it is. The better price will get the deal. That is, of course, a result of having those two acquisition organizations separately. Now let's take a look at some of our projects in our pipeline. This slide shows exactly where we want to go. This is sales of CHF 370 million to get this cash in and acquisitions and developments to the tune of CHF 274 million. I think we've done a lot. We've got it right in terms of capital recycling. I don't think I need to go into detail about the individual projects. I think you've heard it all before.
This is the development, the project pipeline, in summary. We have projects worth approximately CHF 1 billion, and we still have CHF 330 million to invest. CHF 740 million have already been invested. This shows the capital that we still need to finance the development pipelines. The message is important. In the CHF 740 million, now have just CHF 5 million in terms of correction. We are in full control of the costs, and I think this is an excellent achievement, excellent performance by the management. When you go, the costs are under control, CHF 840 million are for projects and planning, and I'll go into more detail about that. This slide is important. These are our major projects under construction. Müllerstraße.
Before you ask, Müllerstraße, Google is not a problem. We just have been able to sign Google. The question is, Google is going to continue to grow in Zurich the way it has been. That's a different question, they will move into the building. That's what you need to know about this. In the 4th quarter is going to move in time. Alto Pont-Rouge is also going to be ready in the 4th quarter. That's the normal occupancy rate here, 60%, unless we have a 100% deal with Tertianum. Normally, 60% with this kind of timeline is totally normal and positive. Stücki Park is going to be finished in 2024. The new building in Schlieren with laboratories, also 2024.
Tertianum, two buildings will be concluded in 2022, 2024, excuse me, the Paradiso in Lugano and Olten. Then the new project in Bern, BERN 131. Looking at this, you can see why we are expecting to once again increase the FFO one in 2023 and 2024. Particularly Müllerstrasse and Alto Pont-Rouge are going to be added in 2023. This will be at the end of the year, so that's not going to have much of an effect on the 2023 figures. 2024 is going to be a very strong year because we'll have these new occupancies. Then we have some. These are some of the projects that we are planning. Of course, there are more. I've just shown a few.
First of all, the Route de Meyrin in Geneva, this is the conversion of an office building into a residential building. We are going to file the application at the end of the year, and we're going to see how this, that we may well sell this again in the market. Mark-Life is also going to have a residential tower. We're definitely not going to sell that. We're going to keep it as part of our portfolio because it is more or less our living room. This is where a home is. We don't want someone else to own it. We expect that we will get building approval in the next few weeks. In the canton of Zurich, it works differently to other cantons.
Here in Zurich, it's the other way around. You first get the building permit, then you submit your plans for 30 days, in the next 30 days. Then you can get all the responses from the population, and then we get the final permit. But once you have received the building permit, that means that you have done everything right, you've met all the requirements. I think I don't need to go into detail about the other projects listed here on this slide. Now let me talk about sustainability. The certification strategy, let me just say here, that we have been able to certify 75% of our floor state with different certificates.
Most of them are the BREEAM In-Use certifications, but there are some other certifications such as the Minergie, the SNBS standard for sustainable building Switzerland, and other certifications. The tower is also certified. Certifications of the existing building stock should be finished by the end of the year. Of course, we also have some other floor spaces, such as car parks, for example, that we're not even going to attempt to have certified. We are going to certify whatever can be certified. Of course, we want certification for all of our new development projects according to SGNI in Basel. This is the pendant to the German sustainability standard. We chose that because the site allowed the certification of laboratory spaces at a relatively early point. So much about certification.
Let me just jump back a little. We were able to achieve CO2 reduction, and we are able to continue on the CO2 reduction pathway. We have been investing into the circular economy. You may have seen in Müllerstrasse, but also at the Messeturm Basel, and also for the new buildings here in Mark-Life , and BERN 131, which are new wood hybrid buildings. It's very important to us to actually continue on this path towards the circular economy. My objective would be to build a circular building where 80% of materials are recyclable.
At the end of the life cycle, the materials should be ready for reuse and, either for our own projects or to be sold. One thing that's new, for some of you is the green finance framework. That means that new financing has to be green, and you may say that they're always green, so this has to be validated by an external body, otherwise it's not worth anything.
For the GRESB standard, this is the standard we believe will prevail. We improved the portfolios at 85 points and the development portfolio at 88 currently. We expect for 2023 to achieve 90 on the development portfolio and to improve by two to three points the portfolio in general. It's very difficult to get to 100 as the last mile or the last meters are the most complex ones, but we want to be in the lead, and I am taking personal efforts to make sure that we're better than the peer group. It's our responsibility as a real estate business. The final two slides are on guidance 2023, FFO stable. 2024, we are expecting another increase based on the large-scale projects that will then be taken into the portfolio. LTV is to remain under 40%.
It will be nice if it's even under 39% rather than pushing the 40% threshold all the time. Vacancy, we guided for 4.1% by the end of the year. Assets under management, now this figure relates to Solutions limited only so that you don't always have to say what's the direct and the indirect portfolio. For Solutions, it's to be larger than CHF 8.5 billion by the end of the year. Before the questions, this is the last slide. Our key proposals to the annual general meeting. We already communicated on the proposed new member of the board of directors, and we propose payout of a dividend of CHF 3.40, half of it, not subject to tax, CHF 1.70. This tax exemption should be possible for another five years on our stock.
The CHF 3.40, after all, is 80% of the FFO, one of the cash that we achieved. This is precisely at the lower end of our dividend policy. This is why we're making this proposal for CHF 3.40 per share. I don't think I need to provide the details. We won't be the only company that will have to amend the articles of association to the new code of obligations this year or the next year. Will be a huge business for law firms, but I won't talk about the details here. We specifically mentioned the concept, the capital band, but read the attachments to the annual general meeting invitation, where you will find all the details. Thank you very much so far. We're going to have the Q&A session.
Always, we're taking questions in the hall first, then I'll see whether viewers connected online have any questions. Please don't ask five questions in one go. We won't withdraw the floor from you, it would be nice to have one question at the time. No, it's nice of you to wear a tie as well. We agreed to wear a tie, you are the only one in the hall supporting us here wearing a tie.
Thank you for the presentation. I have three questions, I'll take one at a time. The first one relates to indexing. How realistic is fully handing down indexing or... How's it been the development in this regard?
Well, I mentioned it briefly. We've had a nice round of indexing that we've already completed by December 31st. As far as I know, we haven't received any negative feedback.
Well, second part of the question for Karin Voigt, she's our head of CPO, chief portfolio officer, that is. The question is, are we in the process of making more concessions to tenants?
We have no additional concessions for tenants or any other concessions. I can't see any stronger demands coming in from tenants or any impact on indexing on the rental agreements.
The question was more about, assume I have a rental agreement at 100 and I renegotiate it. Can I then negotiate on the basis of 100 or 100 plus? In new negotiation, we will take the higher level and a renewal...
Well, of course, for new negotiations, the approach will be the plus one, but that's different from renewals.
Okay, thank you. Second question? The second question relates to Wincasa, the operating outlook. I would be interested to know about personnel retention rate. You mentioned certain IT investment efficiency gains that you've made. I wanted to ask whether IT investments have been concluded and what the IFAM AXA margin compares to SPS.
I'll pass the question on, but the question is also how much business are we making doing together? Well, just to give you the order of magnitude, 80% of Wincasa sales is attributable to SPS, be it SPSI or SPS. As Wincasa generates more than 75% in the third-party market. Well, it was actually three questions. First question about the retention rate. We do not refer to it as retention rate, but attrition, a fluctuation rate.
There's a lot of fluctuation in the industry and has been for many years. The average across recent years was between 15% and 25% in the industry. That's normal in the industry. With us, fluctuation has slightly increased in recent years. We are around 20%, but in 2022, we've lowered it by one percentage point. We have fewer fluctuations or less fluctuation than the previous year. We're doing a lot for retention by quantitative measures, salary increases, appealing bonuses, for instance, but also a lot of qualitative measures in terms of training, further education, coaching, change management for management. We expect to hold this rate. Now, second question, how about investment cycles related to IT changes and transformation? We're at half point, more or less, of the program.
We said we have a Wincasa 25 strategy. By the end of 2025, we want to take the platform to the next level. A lot of the investment has been made. Marcel has given you information about the steps. Last year, digitalization of incoming mail and of tenant files was important so we can work no matter what location. Everything has been fully digitalized. Apart from the tenants' and owners' portfolios with portal, we've also set up a portal for suppliers. Now, we need to conduct ERP migration. We have chosen the Swiss standard to convert to. We will need to do that by the end of 2025. The third question was about our terms. EPRA, AXA, SPS, I can say that these are all at arm's length agreements. Marcel mentioned it already, new mandates such as EPRA.
Well, there were various contenders for it, various competitors for it, we won the mandate, but on standard market terms. Add to this, that we have a pretty tough profitability view. We always set the standards of we're not going below an EBIT margin. Should that be the case, we would be opt out of a process, we've got our clear criteria there. Thank you.
My final question going to Marcel, whether the FFO, particularly when interest rates are rising, is the right key ratio for dividend payment as FFO is available?
Basically for capital for investors. Well, I think it's the right ratio, especially when interests are rising as we have to generate the cash that we can pay out to our shareholders. That's precisely the figure covered by FFO.
In an extreme scenario, when interests accounted for rose to 10%, for instance, almost everything in terms of FFO would have to be available for interest payments, as this is an obligation. There would be nothing left for a dividend payout. I think it might be difficult in... Well, I don't really see it that way. If that was the case, if there was nothing left, one would have to discuss the basis from which to pay out, to make the payout. That's why we're working on this not happening. That's why we are guiding for flat FFO, and it's our job to make sure we can perhaps hand down higher inflation to tenants, for instance.
We showed at our capital markets day how we can do that in a hypothetical scenario that we were assuming on that day. Interest rates rise to 10%, then our guidance wouldn't apply anymore. I simply wanted to add that. Well, FFO is after interest rate payments. Well, FFO is funds from operations, if that wasn't clear. That's with interest rates deducted. Interest deducted. Interest went down by around CHF 10 million this year. It's part of our new funding round. About CHF 10 million less interest that we paid despite the slight increase, and that's included in the FFO. FFO is all cash. Interests and taxes is everything deducted. More questions?
Yeah. I have two questions. A brief one on LTV below 40%, very nice. It's still excluding leasing liabilities.
Would it be a realistic, objective to be under 40%, including leasing liabilities? What is the correct LTV view from my point of view, for a potential creditor, it is to show what would happen if I had to sell the portfolio in a certain situation.
Our portfolio valuations are appraised on the basis of whether you have a permit to build or not. Everything correct on our books. Then the other thing is accounting technique, but that is not to be substituted in the year case of a sale. Everything is reflected properly on our books, and from my point of view, it's the right cash view that we have in there, and I can't see a need to adopt a different view. On the 23 maturities, this includes the convertible bond.
I don't think there'll be a refunding through a new convertible bond, or are you discussing that? Well, we're looking into various or different options. A convertible option would certainly be an option. Like a straight bond. It will certainly be a green bond. As backup, we have other options, including an RCF.
What's your working hypothesis regarding the 0.9% of funding cost? Are you assuming it's going to go up? Do we need to expect 1%, 2%?
Well, it will depend on what the S&P is going to do. Our marginal funding costs are around 50 bips spread. At the current interest rate of 1%, they'd be 1.5%. That's the marginal funding that we're getting at the moment.
Final question, mortgages, would that be an option if you get more appealing funding to raise your mortgage component?
Well, in this transitory phase, there was big difference between funding from banking and funding from capital markets, whether secured by mortgages or not secured by mortgages. We didn't really identify a major difference. I don't see a benefit. I really see a drawback in that because you get less flexibility and it's advantageous to certain creditors, but not others. Thank you very much. More questions?
Thank you. I have a question on FFO again. Why are you only guiding stable for FFO for the year to come? You've got rising rental income, asset under management rising. What's really keeping you from?
Well, we're also selling properties. As a result, you always lose top line and income. Unfortunately, that's inherent, losing rental income as a result. Next year, we're seeing for the curve to remain flat.
It's always nice to see the project development pipeline, the strong effect will be in 2024. That's why we believe FFO will remain flat. You've got the two main drivers. Rental income on the one hand, of course, as René said, we've already sold CHF 4 million in the new year on the sales of the last year, so it will go back to some extent, compensated for the increase in rental income, but there's hardly anything coming online. We also show that under the heading of project development, and that will be eaten up by rising interest rate to some extent, which you will have to fund. That's the framework within which we're guiding for flat. Thank you.
A question on Wincasa. You said pricing remained constant. If you wanted to raise the margin, would that happen on the cost side only, or are there any possibilities to increase prices? Maybe you can take that question again.
In the core business, I think the outlook is stable. The fees are stable, have been stable for more than one year, for several years, and the way we're experiencing it, we're only taking on new mandates under these premises. The great opportunity is to sell additional services to create added value there. Sustainability is important in institutional investors at the moment. We have a team of 20 specialists who's been operating for around 10 years. There is a lot of interesting and profitable opportunities in that realm. Our digital subsidiary, Streamnow, grew by 15% last year. We expect for it to continue to grow.
There's strong demand for services that Wincasa can provide in that context, and you can see how we've grown. Of course, Growth was done at more or less the same volume of personnel cost. We're not reducing jobs, but we want to manage the same growth by digitalization with the same personnel. Almost with all our, the tenants, we rolled out Wincasa Home, let me mention at this point. We are getting around 30% of our tenants who respond through digital channels and communicate through digital channels with us, so that helps a great deal. We don't have to answer phone calls and can automate many things in the background.
Just to make it clear, this concerns residential tenants, 60,000 apartments. Of course, here, digitalization in this volume business is key, and it's making fast progress. Any more questions? Yes. Okay. I'm looking at you, Mladen.
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I have a few questions. The first one is one for clarification. The value reductions in software, what segment did they refer to, Immobilien, Wincasa, or Asset Management?
They were part of the IFRS switch and a technological change at Wincasa. What's important in this context is that this is a question of timing. The total cost for the digital transformation of Wincasa are going to stay the same, and the timing is also going to stay the same. We looked at it in more detail due to the IFRS switch, but it's not going to have any long-term effects.
I have three questions about the Immobilien. The first one, we have... You were talking about investment costs of CHF 100 million, I believe, CHF 30 million write down, and two years of no takings rental income, and you're expecting more than CHF 1 million increased rental income. Isn't that a below average return for a modernization project for the group? Next question, what's the plan with the other department stores, particularly in Lucerne? Third question, wouldn't it be in the interest of the investors also to check the exposure in for the Fust subsidiaries?
Okay. Let me start with the exposure for the Fust subsidiaries are always being checked, and they are part of the long tail that I mentioned. We are aware that they're not always the best location. That's the first point. The second point was the other department stores.
Well, ultimately, they work, and that's why we did that deep dive. We are going to reduce retail areas to 20% in the mid-medium term. First to 22, and then to 20. That's the way that we're going to go. Then you asked about Lucerne and Lausanne. Well, we are talking to Globus here, and it doesn't look like Globus want to give up those department stores. If this did happen, Mr. Von Arx , well, then we would have the advantage of having very good locations here. We would be able to refurbish those buildings too. Now, as far as the return is concerned, please give it a little bit of time until the end of the mid-year.
We have some excellent ideas. First of all, we have to talk to the city of Zurich before we know what the costs are going to be. Some of the costs are not just because of the repositioning of the building, but once we start working on the building, we have to make it earthquake-proof. That's additional cost and also additional costs for heating, air conditioning and cooling, because all of that will have to be redone. Concerning your first question, please give us a little bit of time. We can tell you more about the return on investment here.
One question about the valuation. The real discount base rate has gone down to 2.69 and 6 basis points compared with the year.
In the same period, 160 to 170 basis points were increased. So how do you do that? If you have a 1% interest change and a 30% valuation adjustment, isn't the risk here that investors lose trust in external valuations? We have seen abroad that the market valuation of investors are totally decoupled from the share price.
Well, I mentioned that we sold to the value of CHF 80 million and 10% above valuations. That's exactly what I have to say in response to your question. Well, valuation models, et cetera, well, they are always up for discussion, but last year, in the 2nd half, we sold more than 20% above valuations. This year already, we are 10% above valuations.
Those are our long tail properties. They're not in the first quadrant. There were two Fust properties here too. I think those are the hard facts, irrespective of any valuation models. I don't believe that our investors are losing trust in our forecast.
My last question on the discussion about FFO one's guidance. In Germany, the largest real estate company has started guiding FFO after maintenance CapEx. Wouldn't that be a good basis for Swiss Prime Site too, to use this as a basis for the dividend? Taking the FFO and deducting the maintenance CapEx of the portfolio.
We have already deducted the maintenance CapEx. That's the CHF 50 million. In Germany, there are other elements such as residential properties, which have a much higher maintenance CapEx.
Where you have to invest a lot more to get the same degree of sustainability. In our case, we have modern buildings in prime locations, so maintenance costs have already been deducted from the FFO. Okay, thank you very much, Mr. Von Arx. Have we got any more questions?
Okay. Yes, one last question here. Yes, on the valuation, you mentioned that no more value increases due to discount base rates are to be expected. Are you expecting any decreases? What are you expecting here?
Well, I think I already mentioned that we are not expecting the discount base rates to drop any further. There is a certain amount of pressure on the valuations, and there are four levers against that.
We can carry on the inflation calculated on, we can also obtain higher rents in the prime locations already based on a higher already on top of a higher basis. We are going to reduce vacancy rates. Then also we have large projects that are going to be added to the portfolio that will increase the value. We believe that is going to compensate this. The four points are going to compensate that, even if the discount base rates were to increase slightly. Thank you. Thank you very much for being here with us today. Thank you for your interest. As always, let me invite you to the 33rd floor. Those of you who haven't seen our new offices yet, can take a look now.
Just, we're not going to give you our guided tour. Just, move around, at your pleasure. Thank you very much, and have a nice-