Good morning. Welcome to the Media Conference by Swiss Prime Side providing you with insight in the first half year results in 2020. First half year was not an easy one, of course. It was extraordinary for all of us, including our staff. And I would like to take this opportunity to say thank you to all our staff, many of them who had quite different work to do from March to June than they originally were used to.
And I would like to thank them very much for their flexibility. So let's get started with our agenda today. First of all, we're going to look at the first half year figures, specifically look into the first half year of twenty twenty and then do a deep dive on the sale of the Tasi Arnhem Group. Next, we're going to touch upon the COVID-nineteen pandemic, then move on with Markus Mayer on key financial figures and I will then touch upon the project pipeline and give you an outlook. Now if you try to compare 2020 results with 2019 results, it's relatively difficult especially in our case.
There are 3 very specific effects. First of all, the sale of Tocyanum which we will come back to in a minute. The second thing is the tax effect in 2019 after the staff referendum. We have a tax effect this year, but it's a lot smaller than it was in 2019. And thirdly, the implications of the COVID-nineteen pandemic at 3 levels, by the way: 1st of all, first of all, revaluation secondly, rental income and thirdly, and specifically, with regard to sales of Yal Moli.
So let's get started with an overview of the figures. These are the figures. They are good, if not very good, which is a lot to do with the sale of Tertianum, of course. Our real estate portfolio has grown to around ARR 11,900,000,000 worth today growth of EBIT before revaluation of just under 80%. And also, rental income grew in the Real Estate segment by 0.7%.
And the ROIC return on invested capital was considerably increased from 3.2% to now 5.7%. 2nd chart is even more impressive, especially the increase in profit, again attributable primarily to the sale of Tersyanum. The profit is always without revaluation and all deferred taxes. The increase was 111%. The same goes for earnings per share.
And over on the right hand side, I think these are the very important figures. We've got a strong powerful increase of the equity ratio to now 46% and we've booked an increase in net asset value by 10.2% to CHF 75.62 currently. So bear in mind that last year, if you looked at this in terms of investment yield of the SPS stock last year, you would also have to include the dividend that we paid out CHF3.80 it was. So this is a fantastic investment yield of 16%. 16% that is certainly worth writing home about.
Let's get started with the details of the various subsidiaries beginning with real estate as our core business. As I said, I mentioned the increase in the portfolio to the BRL 11,900,000,000 and certainly revaluation is essential there, negative BRL 47,300,000. But this has to be put into perspective of the entire portfolio. We're talking about 0.4%. 0.4% is not really grammatical.
And of course, it's always influenced by current market terms and market conditions. And especially at the time in May and June, the market was clearly impacted by COVID, so very negative in terms of retail figures. And these are net figures. We had a lot of positive revaluations, but the net figure was minus 47.3%. So the negative revaluation explains like this.
Net property yield went down slightly, which is due to COVID-nineteen as well and the loss of rental income as a result of COVID-nineteen. We'll be coming back to this in a minute. The vacancy rate is slightly higher than the previous year currently at 5.4%. It's important for you to know that we're not changing guidance. Guidance remains the same.
We want to keep vacancy rate below 5%. But due to the implications of COVID-nineteen, the way we're seeing them now, we will perhaps not make it keeping the vacancy rate below 5% by the end of the year. So temporarily will exceed the figure of the target figure of 5% of vacancy rate. But despite COVID-nineteen, it is fair to say that there was strong letting in transaction activity, in particular in the first month of January February and a little more again in June, beginning with letting success, new lettings, some of them at higher rents here in Primetower, then in the CBD district of Zurich and Opus of Zug where tenants are international or major Swiss companies and we are talking about a total of 41,200 square meters of re rented space. The purchases, we had 3 of them, a fully let office property at Zollicoffer near Bern and a development plot at Oster in the Canton of Zurich, which is an excellent complement to the plot we already have in that place.
And we have signed but not transferred yet a logistics property at books in the Canton of Zurich as well. We sold 1 smaller building at Laupenstrasse in Bern at the beginning of this year. Let's look at projects quickly. We'll get back to more details later on. We carried out the study for Marg Live, the Marg Live premises here next door in Zurich.
We got 2 building permits for the 2022 Jet 2 building at Schlieren in Zurich and the Tercianum Paradiso at Lugano. This procedure took a long time in the Canton of Ticino, but as long as we had expected it. And we started construction of Tercianum at Ritersville, which is a Tercianum building. And 2 important move ins we had for Zuk in JED 1 at Schlieren. This is the former Anzeitze printing shop building.
And the second one is Lonza, the Basel, 1 of the 4 finger docks in Basel. We'll be coming back to this in a minute. And we have completed one project well post park in Bern. It's a building well, it's various residential buildings that we did not want to keep in our portfolio. We sold them and the buyer was the Allianz Insurance Company and this has been completed and handed over to the investors.
So much for the core business of real estate. Moving on to services. Just to give you a quick look at the various group companies, beginning with Wincasa. Wincasa increased its assets under management to CHF CHF 71,200,000,000 and the digital rental contract was introduced for the beginning of 2021. This is certainly important for the digital environment and the new ERP with Winqaza.
Now what can I say before coming back to it later on? Of course, there was a strong impact in the first half year and wind cars are due to the additional work to be processed, 2,000 rental or rent requests. SPS decided to contact their tenants first, our asset managers did that. So we're talking about all other clients of Wincasas for the 2,000 requests without SPS customers. And shopping centers were closed, so they had to deal with that.
60 of the 90 were totally closed, 30 of them were partially closed. So this main traditional work that was a great load on their staff. By the way, fortunately, their staff were well equipped digitally and able to work from home. Now the negative side about wind cars, most of it seems to be looking good. The negative thing is that you don't get paid for the additional work.
Currently, most of the contracts are designed in such a manner that you cash in your fee on rental income made. And if there is no rental income coming in, then your fees will be decreasing. So there's more work, but less fees coming in, countervailing trends. Jelmoli was strongly hit in terms of operations as a result of the complete lockdown. We managed in a powerful action to relaunch the food area within 3 days of the lockdown.
I would like to thank all Yelmoly staff involved for the extra effort that they were taking. There was a lot of insecurity in the market regarding the virus. Can you be affected personally? Are safety measures sufficient and so on? These were the big questions, but they did a great job and it was very much welcomed by Zurich and its population and that was certainly a positive move.
Then we can open the circle site. Now the most recent date we got is November 5th and I would assume that this will apply. It's been postponed on several occasions, and we're going to have the relaunch of the online shop in the Q1 of 2021 when introducing the new ERP system at the same time. Let's look at Swiss Prime Sight Solutions quickly. We've got assets under management increasing to CHF2.3 billion by 5%.
We are expecting CHF2.5 billion to CHF2.6 billion by the end of the year. That's our forecast for the end of the year. The target investment yield can be confirmed to be between 3% 4% or 3.5% and better, let's say. And certainly another positive thing is Leuenhof, the Leuenhof building where the anchor tenant has moved in or is paying rent at least. And that's certainly decisive as Lionhov by far is the largest asset on the portfolio of the Swiss Prime Investment Foundation.
Let me also mention on a positive note, we decreased the vacancy rate to just under 5% to 4.17 which is certainly a highly positive development. And I would like to congratulate Anastasia's job on being elected to the group management from the 1st January 2021. So much for the first comments on 2020, the first half year. Let's move on to Terciano. We need to repeat briefly what we sold and what we are keeping just for you to understand.
The operating business of Tercionum, let me emphasize that, it was closed on 28th February 2020. No better timing by the way in brackets. I mean just mentioning it in brackets and the purchaser is Cap Vis, a Swiss private equity company. So what will be sold? We sold the operations, which you can see in bullet point number 4.
80 residential and geriatric care centers in 16 cantons in Switzerland, around 5,000 employees that we handed over and 3 1,150 nursing beds and 1700 apartments. So the cost block on the balance sheet has changed fundamentally. There's a huge gap without the personnel costs that we have now handed down. And what have we retained? We retained the 15 buildings, which we already own.
And in addition to that, the 2 buildings of 2 projects from the development pipeline that are being built and 2 that are in development. So that adds to a total of 19 buildings, which will be held by Swiss Prime Real Estate Limited. And just not to forget, the Investment Foundation is also an owner of buildings run by Tercionum of 9 buildings indeed. What could the future look like? Of course, we're interested in further growth in Tercianum and so that we can invest in the buildings, but the operator will be external I.
E. Tersyanum as a holding company of CapRez. And Terzi Arnhem has become the largest tenant with a share of 5.7 percent of rental income. As always on 30th June 2020. Now you're saying this may be a risk, Tasianu may be a risk, but no, it's not because Tersianum, our buildings held by Tersianum are in city centers, located in city centers and this is why we don't want to own a building say in the Canton of prisons.
And there is no special zone for geriatric care centers like the hospital zone. So in terms of zones, all Tersyanam buildings that we own could be reused for residential purposes and condominiums, which could be sold in the market. Of course, that would require some CapEx, but it's feasible. So the risk is certainly manageable. And quite apart from that, I don't believe that TaSEAN wants to shrink.
And people are not going to become younger, they're going to live longer. So this is a long term business. So it's by way of an overview of Tasi Anum. Now I have some comments on finances and financial implications. At the top line, we've got around €500,000,000 of operating income that we lost, if you like.
So at the EBIT level, at least considering last year 2019, it was 34,000,000 that we cannot show anymore. And the impact on the balance sheet then is relatively significant. That is why we managed to reinforce the balance sheet. You saw it on the basis of the 46%. We recovered goodwill of around CHF 305,000,000 and cash inflow amounted to around CHF600,000,000.
Sales proceeds, we communicated that. You saw that it was CHF204,200,000. Now it would all be easy if all this had been completed on the 31st December, 2019. We did the signing but closed only in February, which means that Tercianum still will be present in the 2020 results at least for a period of 2 months. We're talking about rental income from leased properties of CHF 10,900,000 and the actual income from assisted living in the amount of CHF 70 point CHF 72,400,000 and an EBIT contribution in the 1st 2 months of CHF2,200,000.
So at the end of the year, we're going to net this as well and make sure you can compare the figures. So much on Tersyanum and the implications of the sale of it of Tertianum on our results. Now let me say a few words about the pandemic. COVID-nineteen, well, you've got to read this chart as such as follows. On the left hand side, we've got the zero line.
Forget about the left hand side of it. What is this chart to tell you? It is to demonstrate to you the dramatic change of mobility due to the lockdown. Let's leave aside people going on foot. Let's take public transport at the bottom and people using cars at the top.
Let's take these curves and look at how mobility has increased again with every stage of easing of measures. Again, moving towards the summer vacation period, mobility increased anyway. And it is fair to say that the COVID-nineteen pandemic had extreme implication not only on buying behavior but also on general mobility. That's the first statement I would like to make. 2nd statement, which you can see at the bottom is, well, mobility related to people working from home.
Will people continue to work from home? Yes, they will. Working from home will be here to stay. But this is Switzerland. This is not a different country.
Everyone working in London City and covering 3 hours of travel to commute there and taking the tube that is really packed. So you can imagine that these people tend to stay home. But here in Switzerland, it's different. People like to go to work to the offices. There are industries in which it will be easier to have people working from home.
In others, it will not be possible. So there will be a balance of people going to work and people working from home. But those of us who want to work from home and there are many of them will require more work, be it space to work in or a backup space to make available to them to just to make their workspaces more appealing. So the question is how appealing does our office space have to be in future? And by the way, that applies to the entire industry.
You have to be as appealing as possible so that people really are fond of going to work. Psychologically, they would want to go to work. We noticed it in our case. People our people were happy to get back to work because they missed social contact. You can't do everything at home.
So we believe that this balance will reestablish and also in terms of figures. How did the various group companies fare In terms of real estate, of course, they were impacted by the closure of retail and gastronomy spaces. Then car parks, parking was impacted, especially in city centers, in inner cities, and we had some investments there, which in car parks that were almost empty. Then we had around 500 requests for rent deferrals. We have by the way we processed around 350 of them.
In the meantime, there was delays in transactions or no transactions during the lockdown at all. And it was difficult to let spaces in lockdown, which is easy to understand. There was insecurity in the market about the virus. You simply didn't want to conclude a rental agreement because you were having different problems. That will recover, but we felt this specifically in the first half year.
Now moving on to Yanomoli. Yanomoli had to close down entirely during lockdown. We reopened the food space with a positive response in the general public. The majority of staff was sent into short time working mode and that was a new experience we had inside Yealmole. For Wincar Sur, it was more complicated to work, although most of us would well equip digitally.
There were tenant requests that I mentioned already. 60 of 90 shopping centers were closed down. And for construction and facility management, certain projects, construction projects were postponed, be it refurbishments or others where Wincasor was very active for their clients, it was similar to the signing of new rental agreements. If you haven't launched your construction yet, the natural response would be to wait and see, not to get started. And this then led to postponement also in terms of fees paid on the construction projects.
And for Swiss Prime Side Solutions, we have a similar picture to the real estate company. No transactions. We had a major transaction yesterday, a year for the Investment Foundation. So we believe that we can catch up on fees in the second half year. But in the first half year, the market was almost fallow.
And it was difficult to get organized in this setting and but this is really a very positive note. Swiss Prime Side Solutions processed around 100 tenant requests for their customers and they have been processed as of today. So the implications on the results are as clear as they can be. In financial terms, what have been the implications here? So this is the real estate company.
I talked about the 500 tenant request, 320 were processed by the end of June, 350 as of today. So what did we report in the top line? The loss of rental income, the 1,100,000, that's rent deferrals that we granted. You will recall that we communicated that for tenants with less than CHF 5,000 and that's CHF2,100,000. And we also have sales based or car park rental income, CHF2,500,000 that we cannot catch up in the second half of the year.
That's what we booked in the top line. And for value adjustments, we have an additional €14,000,000 or impairments, an additional €14,000,000 How did rent collection fare in the first half year? It was at 95%, which is certainly an excellent value, 95% and 29% 92% rather in the second quarter, which was more severely affected by the pandemic than the first quarter. So it's 98% in the Q1 and 92% in the second, which aggregates to 95% in the half year. What do we expect?
And that's the forecast for top line by the end of the year. On the core business, we expect a rent loss of around CHF20
1,000,000
by the end of the year. That's less than 5%. So it's actually fairly manageable what we are going to lose. That's always the state of the art. That's today's expectation.
It depends on to what extent the pandemic will evolve. Over on the left hand side, you've got the real estate portfolio. We are really set up well for COVID-nineteen impact. We've got the retail space of 26%, but then hotels and restaurants accounting for 7%. Now our concern is that, well, the sale has done rather well.
You can see the figures with the El Moli and other tenants. The sales figures were very positive. Let's leave aside the compulsory mask wearing in Zurich, but our personal concern is really about the city hotels, travel industry. We saw Zurich Airport's figures. When do you expect figures to go up again?
Who is going to move into those city hotels? And we always wanted to certainly invest in city hotels, not in tourist regions. But when we decided to do that, we had no idea there would be COVID-nineteen. So our worry is about the recovery of the city hotels. Of course, there are better and worse schemes to recover, but we want to focus on hotel and restaurants as well.
We have seen that the innovative restaurant owners increase their sales. So I don't know about the bottom line, but it is possible even in such situations to come up with positive figures. I have another chart on maturity structure of rental agreements. On average, we've got a maturity of 6 years. This is bullet point number 3.
It's very positive. Well, 20.1% run for more than 10 years, especially due to Tersyanum, of course. That makes sense. And below 1 year, just to explain that, below 1 year, we have a separate field at the bottom. That's the indefinite ones that we do not even include anymore.
The indefinite rental agreements for residences or car parks can be have a notice period of 3 months, and 4.5% is their share. And the ones under 1 year have been extended to the extent of 60%. This year, by the way, does not go to the end of 2020, but it applies from July 1, 2020 to 30th June 2021. It's not the calendar year that we're showing here. We're very precise.
We're showing the half year figures and that's why this is a forecast for the entire next business year. Of the major tenants, I have already mentioned Tazianum, We've got the 6 largest tenants shown here at the bottom right. Just to show you the shift there, Tazianum is now the biggest tenant. What you're not seeing here anymore is MIGRO as Globus and Globus is shown here. Globus was the largest part of MIGRO that we held and Globus, it ranks 4.
And then we've got Zurich Insurance and Swiss Post on rank 6. So much on the maturities structure and for my introductory remarks, which was relatively long introduction. So let me hand over at this point to Markus Mayer to comment on the key financials.
Ladies and gentlemen, I would now like to talk about the key financial figures for the 1st 6 months 2020. There have been some highlights, but also some corona induced lowlights. We had growth in the core business of real estate generated by rental income and profits from divestments. Then there was also the successful divestment of Terzionum and growth in construction management fees as well as in the digital transformation. But also we had some increases in personnel expenses.
Swiss Prime Science Solutions was slowed down considerably, obviously. And then Yale Moly, well, of course, there was a lockdown and then the food market was open, but that certainly had some negative effect in the 1st 6 months. This is an overview before we get into the details and take a look at the key financial figures. So then here, you can also see the tax effects. Last year, there was a referendum, the staff referendum.
And as a result, various important cantons reduced their tax rates, in particular, the Canton Island of Geneva and Basel City, which means that in the second half of twenty nineteen, we were able to release tax provisions to the tune of CHF 158,000,000 and then another CHF 6 1,000,000 in the first half of twenty twenty also as a result of reduced tax rates. So that had an effect, of course. And then there was the negative valuation effect CHF 47,300,000, mainly in retail, restaurants and hotels and then of course various other negative COVID-nineteen effects. And now let's take a look at the development of our equity. We considerably strengthened equity and, as a result, the resilience of our balance sheet.
NAV increased by 10.2% compared with the 30th June 2019 and by 5.2% compared with the end of 2019. Additionally, the divestment of Tertiana boosts our equity and with sales profit of CHF 204,000,000. And this the this also contains CHF 270,000,000 of profit. And we also were able to get back the goodwill, which we had offset at the time, CHF 3,500,000 in Terzialum boosted our equity by CHF508,000,000. And we also had the dividend payout of CHF 289,000,000.
We also saw some share, capital increases through convertible bonds, which when the share price was marked above the conversion price and the 2 convertible bonds coming out for conversion, but the actual conversions increased equity by just CHF 2,400,000. The equity ratio is a strong 46%, which is within our goal. And this is the development of our real estate portfolio, which grew to CHF 11.9 1,000,000,000 by CHF 150,000,000. The most important growth driver is our projects, CHF 106,000,000 as their contribution. Examples are the buildings in Basel, Stuckey Park and Ged and Westlaug in Zurich and the 2 properties in Geneva, Plan Leroy and Pont Rouge, next to the new train station.
Modifications and modernizations also led to equity increases. Examples here are the Barfuse Platz in Basel, this was a former retail building, which is being converted into a banking service building, and it also contains investments into the former Stuki Mall. There was a drop in the value of existing properties where we invested EUR 45,800,000 and the revaluation effect accounted for minus EUR 53 1,000,000. We acquired a property in Solikorff near Bern for the price of $44,000,000 and a development plot near in Oster, near Zurich. We sold Laupenstrasse in Bern with at a considerable profit.
And 3 smaller properties were also sold as part of their Tazianum divestment. This is our financing structure. The funds, CHF 600,000,000 from Pletzianen, were then provided for investments earmarked for investments and the obligation, which will mature in October of CHF 230,000,000. The capital markets were at turmoil basically in the same week as our financial conference was in the spring. And so we kept a low profile here and were cautious.
But financing compared with last year was slightly reduced, and the maturity structure was continues to be very balanced and evenly distributed. And you can say that the short term loans, which are about to reach maturity, have been refinanced, so are being rolled. Then there are future contractual obligations towards various general contractors in connection with developments and modernizations, which are covered by secured and available credit limits with various Swiss banks. As per the 30th June, the weighted average interest rate in financial liabilities was 1.2%, which is a reduction of 20 basis points compared with the same period of the previous year and had a residual maturity of 4.6 years. The loan to value of our properties is 45.1%, which is within our targeted bandwidth of 45%.
This is a summary of or the group income statement of Swiss Prime Sight. And here, you can see the effects from the Tatiana divestment on the operating income and operating expenses. Here, operating income was down by €157,000,000 and operating expenses by EUR 144,000,000. Then there are some revaluations, CHF 85,000,000 and a reduction of CHF 47,300,000. Euros thanks to revaluation gains on some of the properties here at Mark area, prime tower and ancillary buildings and some other properties in Zurich on Mullerstrasse and Beethovenstrasse.
Another important contribution also came from property developments such as Yond in Zurich Alves region, which was opened this year and Torbjorn Blanc Mont Leuat in Geneva as well as Schoenberg in Bern and Stuckey Park in Basel, which is a laboratory and office building And the Voss, which led to the negative results, mainly in Zurich but also some in Geneva and St. Gallen, mainly retail properties. The fair value average real discount rate is more or less the same, 3.05% as compared with 3.06% at the end of
2019.
And this is normally, this is 3.6%. Now we had sales profit of approximately CHF14 1,000,000, CHF6 1,000,000 from direct sales and CHF 8,000,000 from percentage of completion from real estate developments. In relation to the progress of the construction work, additional profits will be generated via the POC of the Plon Leroy development in Geneva until the project is finished in 2021. And there's also a profit from the sale of Tasi Anum of EUR 204,000,000 and it consists of the equity value minus transaction costs. The equity value was EUR 477,000,000.
And minus the equity transaction in goodwill into shareholders' equity offering CHF 4,000,000 and minus the net assets sold worth CHF 69,000,000. The transaction led to a reduction in headcount from CHF 5,400 at the end of 2019 to 1480 full time equivalents. We use the market environment to further reduce our financial expenses. And here, we have the tax effect. We had CHF 106,000,000 last year, tax income and this year CHF 3,500,000 in tax expenses.
And this is mainly due to deferred tax reserves, which are still approximately CHF 1,100,000,000 today. All this led to a doubling of the profits to CHF 320,000,000, excluding revaluation effect or deferred taxes. And here, this is the net rental income for the group. It shows the effect of the Teresionum divestments of CHF 21,100,000. This is the rental income from additional properties, properties which belong to 3rd party investors and not just Crimesight itself.
And this is for the 1st 4 months of 2020. And we can also see that we sell properties from time to time, and we sold properties this year, which lost us EUR 3,700,000 in terms of rental income, but this was offset by the finished projects. This is very positive. We also had additional rental income from purchases from CHF 1,900,000. This is mainly Zolikov, Nurbin, And 2 properties that we bought last year in Basel, Munchenstein.
Those are properties with additional development potential. This now is the operating profit and the EBIT of CHF 313.6 million. And you can see here that the top line has changed considerably. This is the Tianxiao effect in blue, light blue.
And we
can also see the Yalmori drop in earnings and the lower asset management fees generated by Swiss Prime Side Solutions. We also have a reduction in operating income in real estate. This is not due to corona, but this is due to the percentage of completion sale. So L'Oreal, for example, will run into 2021. And so this always shifts a little bit and leads to lower income this year.
And in the middle, you can see the EBIT according to segments, Real Estate and Services, And those show a clear drop in our of CHF 149,000,000 in our core business. And these were the negative deviation in the revaluation by CHF 133. And now we also have the approximately CHF 16,000,000 as which are the COVID effect which are also being reported. And now the EUR 60,000,000 divided follows: EUR 2,600,000 are reported in the top line EUR 1,000,000 from parking and EUR 1,500,000
from
rental income depending on turnover and CHF 1,100,000 that we already rental payments that we waived during the time of the lockdown. And another, this is also included in the operating income. This is like a provision for possible future rental reductions according to our risk assessment for the second half of twenty twenty. Now let's take a look at the EBIT from the group companies. Wincarza, as you heard, assets under management, SEK 71.2.
So this went up. And now we are looking at the investments into the future in digitalization, transformation of customer value center platforms, which have play make a temporary burden on the EBIT. And Yalmori started into 2020 above the previous year's level and above budget. But during the lockdown, the company was only able to operate the food market where sales exceeded expectations, although margins in this area are below those of the company as a whole. And this will not be able to catch up with the loss of business incurred during the lockdown.
And thanks to transactions with Prime Sight Solutions, had a very strong 1st 6 months in 2019 and was also stopped in its tracks by COVID in 2020. And Tatianum EBIT contains its contribution of CHF 2,200,000 until the closing at the end of February 2020 and the divestment profit of CHF 204,000,000. So that was the overview of our key financial figures, and I would now like to hand over back to Renaissance.
Thank you, Markus. Let me move on with an overview of the project pipeline and the status of the projects beginning with a summary. So I'll give you the summary at the beginning. One figure remains unchanged. That's the size of the project pipeline.
It stands at CHF 2,000,000,000. We put together here the projects under construction totaling CHF 473,000,000, no longer included Schonburg and neither is Jand included in there because both of them have been taken on the portfolio. Then we've got around CHF 900,000,000 in projects in development and CHF600,000,000 under reserves. Reserves, again, includes development potential that we have identified, especially on properties on our portfolio, but also medium to long term potential, which we haven't yet tapped into. So no design plan or building permit has been submitted.
There is no hurry because often on such properties, we've got good income of 4% or more. So we are getting good interest on waiting and seeing until we have the right moment for development. What do we expect in terms of rental income? A total of CHF83 1,000,000 and we're expecting that on a project pipeline of CHF1.4 €1,000,000,000 not including the potential from what we call reserves. And what net return on cost do we expect?
We expect an average of 4.5%. There are projects clearly exceeding that then Schonburg, former projects slowly below it, but the average of 4.5% is certainly gratifying. And it's got to be gratifying because the development business brings a certain additional risk. I'm not commenting on the next chart. That's just for you to show which projects are under construction.
I prefer to show you pictures. And we are also showing the target rental income that we are currently expecting. If you add all this up, you ought to be getting up to the €83,000,000 posted before. Let me show you some pictures. Beyond on the left hand side, 90% 92% of it has been let.
And so this is the office, commercial office building at Albiesrieden in Zurich with an exciting additional potential of top floors, special structures where it can grow inside the building. And it's typical of such a new project and that will perhaps be the case for 2026, JET 2. If it's a new product, you will only let powerfully when potential customers are seeing the project and understanding what this is all about. So these figures are very successful. The 92% of letting status is successful.
And at the same time, we can inform you that when Casa has moved in, which we're very happy with, we talked about people working from home and the average of people working from home. There is office space there for Wincar's staff for 70% of Wincar's staff. So this is based on the assumption that 100% of staff will never be present in the office space. And due to working regulations, they can work from anywhere flexibly. So the factor of 0.7% and so 70% to 70% results from this.
Schonburg is fully at center. Westlog will be handed over to Electromateriel soon. We've got 85% of letting status. This is a typical example. We have 4 interested parties and all of them stayed on board, but simply we didn't want to sign in this period of time.
So we are optimistic we can fill Westlog within next to no time. And other projects in under construction for Plon Leroy, what we've explained several times over and we are pleased to repeat it. Now that Building C and D was sold a longer time ago to Hans Willstorp Foundation based on POC, percentage of completion. We're realizing gains there. And we are currently selling Building E.
This is currently going through the process of being sold as a whole building or in parts. And in a process of selling, we also have building A condominiums for commercial businesses. It's a very exciting thing. How come? The city of Geneva or I don't know whether it's the city or the Canton of Geneva, I'm not quite sure.
But the it's the biggest development area. It's called PAV Praia Cassia Vernet, which is just next door from our new project here at Port Rouge. And that is where we have a lot of commerce, a lot of people, commercial people who signed an agreement with either the city or the Canton of Geneva. And they have to move out in the next few years. That is why this project is so interesting.
These people are looking for new surfaces and they are already familiar with condominiums for instance. And so they might be attracted by what we are offering to them. What we're going to keep on the portfolio, so it's included in the €83,000,000 is Building B over on the left hand side. At center, we have JED 1, letting state of 75%. Zulker, the former NZZ printing shop, looks great.
It's fair to say, doesn't it? And it's interesting to see the figures. It's 9,000 square meters of space, 450 people working there who are almost always present. It's a creative space. They do not work from home.
And then and they use 20 square meters per capita. Now it's not a business like every other business, but you know that from banking and insurance industries, 8 to 10 square meters per workspace and here we per person and here we've got 20 square meters per person. So there is a countervailing effect with some people requiring more space. And over on the right hand side, we've got the first 2 Four Finger Docks. We received a building permit for 4 finger docks in Basel.
The first two have been built. The second stage will be triggered only when the first building is fully let. What have we let up to date? It's fully let here and this includes the labs of Lonza. This is an office building currently being let.
And when the letting status is good there, Buildings 34 will be constructed. And here we've got 2 projects under construction on behalf of Terceania. 1 is Rich de Sveil on the right hand side and the other is Monte on the left hand side. The example of Monte shows you very well, but I mentioned before, Tersyanum sites and it's easy to read here, allow for reuse as residential property. So we would have an exit possibility there, but I don't think that this worst case will ever apply because there is demand for care beds and residences for elderly people.
So much for projects under construction. Moving on to projects in development. Let me just say that on the left hand side, we're seeing the CapEx involved and the curve showing when projects ought to be completed. So it's the time axis to 2026. And over on the right hand side, current target rental incomes that we assume.
And I'm showing you a few pictures regarding the status of these development projects. On the left hand side, we've got actually 2. It's just one picture. The 2 projects being developed for Tocyanum, one is Paradiso, where we received the building permit. It's directly on the lake as it were.
One building is really located on the lake. And it shows you that it's a residence or residence means for well-to-do elderly persons who can afford such a place. And at the same time, according to we have submitted the design plan. The second project is Alton. That's not a residence.
It's quite a normal geriatric center. We have received the building permit for Alta Point Rouge. That's the new train station that we mentioned before connecting Lancy with Geneva Central. Looking at this tower building, our future tower building and looking across it, you will be getting to Praia Cassiaveen. It's just behind it.
It's like a gate towards the new huge development potential for the city of Canton of Geneva. Next is Jet 2 at Schlieren. We received the building permit. We are not going to trigger construction unless we have until we get a pre letting status of 50%, the plan allows for having several tenants, single tenants or 2 major tenants, there's enough flexibility in this project. Stukki Park, I talked about that, about the Buildings 34, we've got building permit for that.
Next is Muhlerstrasse of Zurich. And as a result of the assets with Credit Suisse Zurich, we submitted a building permit or submitted a building application. The building will not be taken down but will be everything inside will be removed and the structure will be refurbished, we are going to try to use the model of the aluminum facade and reuse it directly. So this is certainly a highly interesting sustainability project. Then we've got the architectural competition that we've had about Marg Live.
We have 2 internationally renowned architects ending up in the final round. No final decision has been taken yet. We've got 2 highly interesting projects that are entirely different. One project is based on the existing structure and the other project would erase everything. So we are going to continue to negotiate with the city presenting 2 different options of what to do on this premises next door to prime tower and we are excited to see the final outcome.
There will certainly be an exhibition as is appropriate after an architectural competition where all the proposals will be on show. And last but not least, we've got Rheinstrasse and AUGS where the zone plan has been granted and we've got an interim letting situation that we're thinking about later than the other projects on the left hand side, so much about the status of projects in development.
Now let's take a look at the outlook. Of course, it's difficult. You all know the equal figures. We are expecting the economy to shrink by 6.2% in 2020. The recovery of the global economy, of course, will very much depend on the general development of the pandemic.
So it's difficult to make forecasts at the moment. But this year, certainly not go down in history as the year of great growth. In terms of population, migration is expected to fall in 2020 irrespective of the migration curbing initiative. And interest rates, we are expecting the Swiss National Bank to continue their expansive policy. The limitation initiative is going to be voted on, on the 27th September.
And then also, there's going to be a referendum on the COVID-nineteen business rent law also in September. And well, let me say a few words because we are affected. I strongly believe that this law is anti constitutional in 3 points. And also, it would have to be retroactive. And as a lawyer, I know that this is not possible.
And the third point is that now at the moment, the idea is that the law should be valid until the end of 2022. And how this is how to explain this, 1st 2 months and then retroactive and then you want it to have effect until the end of 2020 2. That is not possible. So let's just hope that parliament will see the light and not put the law into action, implement the law. And the other point is that since we've had this discussion, it's become more difficult to negotiate with tenants because some tenants don't care whether they wouldn't be affected by the law.
They also say that they would be affected by it. And I think it's a hurdle for us. And I think that our rental negotiations would already have made much more progress had it not been for this law. Anyway, let's just assume it's not going to be implemented. And so what are we expecting?
The profit above the previous year, the sale of Tatiana, of course, is going to continue to have a positive effect on the annual results. And we've also already mentioned the impact of the pandemic on rental income of approximate EUR 20,000,000, a little less than 5%. And the vacancy rate of below 5% is going to be missed temporarily, but we expect the targets to still be good for 2020. And now we are open for questions. And there's one thing that's a little different this time.
We want to avoid having to disinfect microphones, [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] So what we're going to do is you're going to ask your questions, and I will repeat it so that the interpreters can hear it, and then I'll answer. My colleagues also have microphones, so I will the alternative would have been not to allow questions, and that is not what we wanted. And therefore, please just ask one question because it will then be I will repeat it and will then be translated. So the large Globus properties in Geneva, Lausanne, Lausanne are not at risk. Of course, we are in contact with the new management.
That's the way it should be with the key tenant, and they're not at risk. And we can say specifically that the main focus of Globus, apart from Zurich, is Geneva. Also, their new luxury focus is going to be particularly implemented in Geneva and Zurich. Sorry, I forgot to repeat the question, but I'll do it next time. So any question?
It concerns the circle. First question is whether we are going to ask for a rent reduction. And the other question was how far we've got with employing staff for the 5th November for the expansion starting then. So first part of the question? Our commitment or involvement at the airport is 2,500 square meters.
I keep hearing that we're rebuilding Yale Moly at the airport. That's not true. 400 square meters of the 2,500 airside, and the airport has been very helpful during the lockdown. And so during the lockdown at the Airside Center, they were very helpful. And opening of the circle, this concerns 2,000 square meters and that's not passengers.
I've never really had airport passengers in mind when I'm thinking about the circle, but that's not the customers are people in Zurich North and people working at the airport too and working at the circle. And of course, here, we already have a very high rental coverage, and we're expecting 0 vacancies next year. And I think we're very well positioned for that. And particularly on the circle, we have a very interesting rental income rental contracts based on turnover. Now there was a question about staff employment.
Well, we are currently looking for staff. We're trying to recruiting from both and outside the company. So we are we've made some progress here, too. We're start date is the 5th November, and we're expecting our staff to be employed by mid October so that everything can be prepared for the big opening. So it's all well underway.
The expansion is working, and we're going to have 2 fantastic properties there. Well, this is a question that we've been waiting for. No, Yalmal is not going to be sold, and I will tell you why. We have of course, we calculate this, and we have calculated this with the rent from Yaelmole. And we are expecting the EUR 27,500,000 of rent payments to keep coming.
And we are going to affirm this for 2022, 2023 in operative terms. And we have also repositioned the property and tried to consider smaller surface areas for L'Aumale and renting out the rest as offices. And we have this calculated from an external party. And we also considered doing what Swiss Life is doing with the Mano building, just doing having retail on 3 floors and then offices on the top floors. And the message was the value of the property is EUR 800,000,000, whatever you do, and that's what it's worth.
And the second message was that variance 23 will require an additional EUR 150,000,000 CapEx to invest without achieving a higher fair value. So this is something that we're going to still do if we feel it's necessary, but at the moment, it doesn't make sense. So we had 3 d models and calculated each and every staircase. We involved the fire experts, the static calculation, the all of the engineering side. So these are really detailed calculations, which allowed us to weigh the pros and cons of the different scenarios.
At the moment, it doesn't make sense from the point of view of the property to change anything. But our expectation of the operative business is, of course, black figures, not red ones. So the question is a comparison with PSP in 2 items, either value increases or cuts and I am happy to answer that question. We have a larger portfolio compared with PSP, and we have more usage types, which were directly affected by COVID-nineteen, 20% retail space and also our restaurants and hotels, 7%. So that's 33%.
And so the negative ones were just 4% of the total portfolio. That's not bad. And this could be completely different at the end of the year. At the end of the year, we may have 0. So this will depend on the market valuation at the end of the year, and that will depend on a lot of factors like and how the pandemic progresses.
And we have decided to reduce the retail spaces in the medium term. We are now at 26 percent, and we want to get to below 20%. But I'm not talking about the Almori in that connection. And I'm also not talking about the A locations, but about the B and C locations. And I'm not talking about food, but more about fashion.
So we have to look very closely at which parts of retails we want to reduce. And the second question, vacancies. Well, vacancies are an opportunity, always an opportunity because reducing vacancies will lead to additional rental income. And so it's always good to vacancies to the level that we have them are not a worry at all but rather an opportunity for the future. And then there is another difference between PSP and us.
You're asking, you may, about the basic vacancy rate is 4% to 4.5% and not 3% to 3.5%. And that's the development business that is accountable for that. And every year, we add new development projects to the portfolio. And these are included in the vacancy rates because, of course, during development there, we have vacancies, which will then be filled very quickly. And then we have the next development with so of course, it is normal that we have a slightly higher vacancy rate than PSP.
Are there any more questions? So this is a question where the outstanding payments of EUR 10,700,000 are forecasting to have low interest yields. Yes. Yes, they're already included in the top line as the parking yields and also the sales related rents. And this is a risk assessment and as possible losses that we reported.
But this is actually a forecast between now and the end of the year. Are there any more questions? So the question is about the share of different usage types in our projects compared with the current usage type distribution, I assume? Well, I'll start at the back end. So we're not going to have additional retail areas apart from some properties that may have retail surfaces on the ground floor, but that's going to be the minority.
Mostly, these are going to be service properties such as offices or offices of the type that we are having we are marketing at Yong. And we are also going to have a slightly higher percentage of residential areas, particularly in Marg because we also want to add residential units wherever that's possible as well as logistics. Those are the 3 main segments. Well, a little approximately 60% is going to be services, 5% to 10% residential and approximately 20% logistics. Just to continue that calculation, the retail share is going to go down automatically.
That's the logical conclusion without being active in that sense. So this will simply reduce the percentage of retail space without selling off any retail space.
Question was, what would the influence be of this COVID-nineteen business rent law if it was passed which we do not hope but if it was passed, let me summarize, and I'm only taking the CHF15000 cap. As you are aware, there is a range of CHF 15,000 to CHF 20,000, but you're actually free. Well, in that regard, Marcus, so Peter, what would be the influence, the impact? Well, you can assume that the figures we have calculated includes this scenario, include this scenario because we have discussed most of it. We have 500 requests, 150 of them have been processed.
And for the balance, we are in the process of have actually progressed to about 3 quarters of processing them. So it wouldn't kill us fundamentally. The question was €2,500,000,000 and we've got €1,100,000 now. That's what we have given away voluntarily. So if we just included everyone from 5,000 to 15,000, that would add up to 1,400,000 and that again adds up then to 2,500,000.
Always on the basis of the CHF 15,000 cap. Without that, there would be more. More questions? Yes, please. You have 4 already.
Peter, the question was about utilization of Motel 1. Well, it's increasing by the week. We're currently at more than 20%. Of course, we started off at 0%, then 5%, 10%, 15%. Of course, not satisfactory, neither for you nor for us, but the trend is important and the trend is pointing upward.
As far as hotels are concerned, I'm actually optimistic that we can rescue all of them to the final phase that will be sometime in 2021 because that's important for us. The total loss of a hotel would not be a nice thing neither for us nor for the operator. Well, the first question on the transaction market in retail, whether there is any interest at all on the buy side. And my answer is Swiss Life as someone bought the Glatzeentrum and paying a hefty amount of money. So there is interest.
And bear in mind that our retail spaces, not all the building would be retail. In B and C locations, you often have the main roads in villages and you have retail on the ground floor and residential space on upper level. So that can only be part that can also be part of, but we're not in the market yet currently. Question is 2 major assets in the market being in the market in Geneva and whether we are actively involved in acquisition. Well, we're always keeping an eye on the market.
We want to be up to date with what's happening in the market to position properly. So that's all I can say on that. But let me add to this question that well, we want to realize our development potential. So of course, we are condensing profit. We're working at the bottom line primarily.
And I mentioned that as early as February, we are very guarded. Not saying we're not observing the market, we always do that, but we are very guarded as far as acquisitions are concerned. Well, we've included that in our calculations. Bear in mind, at the end of the year, when we do the budgeting for the new year together with Peter's team, we calculate vacancy and in developments, we consider what we believe to let and that is included already in our calculations. It will not bring down vacancy rates.
Do you know the figure off the top of your mind? Well, it would perhaps have been negative. We have these 2 finger tox in the docks in Basel. 1 is fully let. The other is not let yet.
So we've got a 50% letting status, and that is subject to quick change if we come to an agreement in the negotiations we're having at the moment, but it's not easy to answer to give you a black or white answer at this point. Yes, please. You'll find that in this pipeline chart. This is why you can always see the time factor here. We're at 2026.
That's these are the ones in development. And let me repeat that the reserves we haven't touched, we haven't tapped into are not included here. So here, you can read that properly, which additional rental income is attributed to which projects and in what year it will be completed. This is why we're making this available to you for you to understand. We are keeping this up to date every half year because this is always subject to development over time.
Any perhaps final question at this point? Well, you are allowed to ask the final question if it's the final one. Well, that will probably be by 20 23. And it will be specifically from 2 different parts, from project development, additional rental income, maybe rental income isn't tantamount to EBIT, but around 70% of it is has an effect on EBIT for you as a simple calculation. And the other thing is, and we define that internally, it will be attributable to strong additional growth, which we want to go for in the field of asset management on behalf of third parties.
And Astacio's job is promoted, not only because it is a good job, but because we want to grow specifically in this area. That's growth capital light growth, light capital growth. And it's really justified to take up this position and to highlight on the significance of asset management on behalf of 3rd parties. Well, I said it was the final question. So unless there is any final, final question, I would like to thank you very much for your kind attention and for coming here in the first place.
It's nice to have a small crowd of onlookers when you present the figures. I would like to invite you for refreshments in the large classroom upstairs, so there will be enough space for you to spread and to comply with social distances. Thank you very much indeed. Have a good day.