Ladies and Gentlemen, welcome to our media conference. Today, this is the agenda that we are having. You're familiar with it. Short welcome, then the highlights and the key figures for the financial year, outlook and expectations. Five, we are going to have question-and-answers. Six, Apéro riche, as people like to say. The business year is one with a record result. Operating income rose by 3.7% to CHF 1.258 billion. Profit rose as well. Clearly, as you can see here, the property portfolio went up as well to CHF 11.8 billion. Revaluations rose as well. Everything rose.
Vacancy rate went down though by 0.1 percentage points. The annual general meeting will propose a distribution of CHF 3.80 per share. A new Chairman of the Board is going to be elected, of course. This is a quick overview. We would like to dig further into it. Let me hand over for the first perspective that is going to be highlighted to the CEO, René Zahnd.
Thank you, Hans Peter. Good morning. Welcome to this media conference. It's always easy to be able to stand here when figures are not too bad. We are certainly happy with 2019. Talking about the details, we had a rise in the property portfolio by 5% to, as it was said before, CHF 11.7 billion. An increase in operating income by 3.7% to CHF 1.2 billion.
On to rental income, which is always highly essential as it reflects top line CHF 487 million or a plus of 1.6%. At the level of EBIT, we've got a nice increase in excess of 30%, 31.3% to be precise, up to CHF 628 million. Now, of course, this is the figure that we are particularly pleased with. That's profit of CHF 609 million, which is more or less doubling profit over the previous year. You can see the small asterisks. Of course, this doubling was to do with a STAF effect of around CHF 173 million. It's also related to revaluations and I'll touch upon the details. Revaluations which we had a positive impact on ourselves. The equity ratio rose by 50 basis points to 44.4%. Profit or earnings per share is CHF 4.14.
Our chairman would, of course, say you earned your dividend of CHF 3.80, which we would like to pursue as our objective. We also have a nice increase on our net asset value up to around 72%, a plus of 6.1%. I keep repeating it, bear in mind that this figure includes the services segment only on the basis of book values. Moving on to the property portfolio. I'll talk about revaluations later on, so I'm not touching upon it at this point. Net property yield continues to be gratifying at 3.5% versus 3.6% in the previous year, 0.1% less. The discount rate, as you can see, further compression on the discount rates on to currently 3.06%.
The vacancy rate, as the Chairman mentioned before, went down slightly versus the previous year from 4.8%- 4.7%, compared to the first half year in 2018, it evolved stably. What's the composition of the portfolio? The largest share is, of course, offices, office space. Let me mention it, the retail share was reduced considerably from 34% to currently 26% in recent years. Saying this, that retail share was reduced. Well, retail is not retail and the locations are not all the same. We went through the different locations, high street to A or B locations. When we reduce in terms of B and C locations, in particular in the field of fashion or garments and shoes, these were smaller sales that we proceeded to last year. It is also interesting to look at the maturity profile of rental income.
A malt of in excess of six years, that's nice, and around 25%, or to be precise, 22% with a maturity of over 10 years. This 22% specifically includes Tertianum rental income. This chart you'll be able to read at home in detail. I'm not going to present everything but just pick out the highlights. Letting success. This is what we are measured against, 128,000 sq m or 8% of the entire portfolio was let or re-let last year. Nice figure, I think. For sales, I mentioned it before, we streamlined the portfolio, selling smaller properties, including some retail shares, C and B locations of retail. It's also exciting to look at the condominiums at Plan-les-Ouates commercial property there, not residential property.
Peter yesterday said, "Who invented it?" Well, he invented it, by the way. This really is an interesting model, I believe. The sales have proven us right. I will show you a picture of the office. We are convinced we will have let it by the end, or sold it by the end of the year, for condominiums. Finally, project developments. I'll show specific charts about this. We purchased some things there. We live on property. We have project developments that we're taking over in the portfolio. It's a matter of adding to this portfolio. You will see the figure of CHF 2 billion on the portfolio. We want to maintain it. Now, what are project or development properties? Well, we reinforced ourselves in Praille Acacias Vernets, PAV.
That's this future big development property by the canton of Geneva and the city of Geneva, behind Pont Rouge, behind the new train station. Which is the introduction to the new development plot. We secured some plots there for the long run. It will take some years. It will be an exciting environment for the entire canton of Geneva. We also bought some development plots at Uster to round off our portfolio there, to be able to develop a larger building there, and at Augst in the Canton of Basel-Land. We also purchased to reinforce top line quickly. On the basis of rental income, we purchased fully let properties in the field of logistics in the region of Basel and for office space in the region of Bern. Moving on to portfolio management.
What stood out last year were the negotiations and the closure of a new rental agreement with this tenant that you can see here, this location. Remember, we bought it in an asset swap with Credit Suisse against Sihlcity, and we also took over Worblaufen fully to our portfolio, and were given other properties. The focus is on this property. The current tenant is no secret. It says here in the chart, it's Swisscom, and they will move out and move to District five in Zurich. Releasing some of the surface here. The question is that a risk to have a vacancy there, or is it an opportunity? Well, it turned out to be an opportunity. We clearly let these surfaces better than we expected, and this is an important thing when it comes to re-evaluations.
I promised I would talk about revaluation gains. If you look at this and analyze it in detail, you will see that one part of the revaluations is to say, well, we were lucky. That was driven by the market. Well, it was driven by the market to the extent of CHF 65 million. That's discounting, the reduction of the discount rate. That was due to the market. That was not our achievement, but our own achievements, what we generated internally as active portfolio management, a large share of the CHF 110 million of revaluation gain is attributable to Müllerstrasse. Of course, it was one of the objectives in project development. A further CHF 28 million of it is from the development business, that's how you get up to the total of CHF 203 revaluation gain. Moving on to buildings under construction. Let's specifically talk about the project pipeline.
Over on the right-hand side, you can see that the pipeline in total is CHF 2 billion, but the composition is different than from the past half year. We're taking you on the journey. There are developments that we have already transferred in the portfolio, and the amounts that you're seeing there for projects under construction or being developed or reserves are always adjusted to the current situation. These are the updated figures, CHF 560 million projects under construction. The CHF 560 million do not include any more projects. The projects of Schönburg, Bern and Yond, they've been taken onto the portfolio. You can deduct them and the others add up to CHF 560 million. What is interesting is what we're going to transfer to the portfolio this year.
That's West-Log, and you'll see a picture of it, and Stücki Park One, the first part of the Finger Docks, and conversion of the former NZZ printing shop. Just show you a quick succession of pictures. Yond has been let to the tune of 90%. We're doing very well there. We told you it was going to take some time and courage to do that at a pre-letting level that wasn't at 50%. I think we can say that, Peter, now. These hyper large rooms in the mezzanine floors, I think you need to see that first. You need to sense that first before you accept it and find it good. As you can see, the market welcomed it very well. We are at slightly above 90% of letting ratio. It's already on the portfolio of Swiss Prime Site. Same goes for Schönburg Bern.
It says 95% let here of 142 apartments. Yesterday, 138 have gone, so four are still available. The hotel is fully let. Retail space is fully let with Coop food. The gym, the Coop gym, has also been fully let. It's a wonderful story, a transformation of an old office building of the Swiss Post. Over on the right-hand side, at a letting ratio of 85% with Elektro-Material as a tenant, we have this logistics office as you come into Zurich. Over on the left-hand side here, this is the well-known picture of Espace Tourbillon, the five commercial buildings from A- E. To remind you, we sold C and D, buildings C and D. They were sold to Hans Wilsdorf Foundation two years ago. The condominium segment is now being performed in building A, the smaller building.
We will have sold that by the end of the year on the basis of our analysis. We are keeping on our portfolio, have various options for buildings B and E. The first stage then at center of the former Ansetz printing shop, and we have a picture of the old situation here. The first stage over on the right-hand side of Stücki Park, the first two buildings here that we're going to take onto the portfolio in the course of this year. We have under construction two projects for Tertianum, one based at Montet, the other one at Richterswil. Fully let, both of them, and I'll be coming back to these projects or these buildings. We haven't sold them. We just sold the business, but they will remain Swiss Prime Site property or ownership.
In terms of planning, we are planning for around CHF 950 million worth of development projects. Beginning from the bottom, Tertianum at Olten and Tertianum at Paradiso, JED 2 at Schlieren. That's a new building, new construction set that we're erecting next to the Ansetz printing shop. I'll be coming back to this. We've got Alto Pont-Rouge. That's the office building, the tower directly at the new railway line. Stücki Park 2, that's Finger Docks numbers three and four. Müllerstrasse. Well, that's of course among the projects because it will be empty one day. When Swisscom has departed, it will be empty. You can see it on the basis of the amount. It's a deep intervention in the structure that we're making there to make the building fit for the new owners, and that's why it's in development.
It's not only greenfield developments, but also developments on the portfolio, especially in cities. We also have Rainstrasse at Au. It's a plot that we bought at the end of last year, and we're also showing here Maag Live, the development project here on this particular site here. Where do we stand when it comes to these projects? You're familiar with this slide from the last conference we had. It says whether we have submitted a design plan, whether it's been approved already, or where we have an architectural contest. The design plan has been published in Olten. Zone plan is underway at Au's, and we have an architectural competition for Maag Live here. We have submitted planning applications from Paradiso and Lugano, and it's being prepared for Müllerstrasse.
We've received building permits for Alto Pont-Rouge, the new building at Schlieren, and the former buildings three and four, the Finger Docks at Basel. At the bottom, I'm not going to read that off, you will find the pre-letting status with regard to the various projects. Much on the real estate property core business. Let's talk about services segment. What shall I mention here? We set an interim objective of EBIT from Wincasa and Tertianum to be more than CHF 50 million by around 2020. We achieved this objective one year early in 2019. Aggregate EBIT contribution from Wincasa and Tertianum amounted to CHF 51.7 million. This interim objective has been achieved. For the various units. Wincasa. We have a nice increase in assets under management to CHF 71 billion, and also a very nice gain of new mandates.
It was mentioned yesterday we won over BLS and Swiss as clients, Dominicé from the French-speaking part of Switzerland. These are all nice names to add to the client portfolio. We have an EBIT margin of 12.3%, certainly across Switzerland, we're doing well on the basis of a comparison to others. Now, this is Wincasa business. What else does Wincasa do? We also invested a lot of money in digitalization. Of course, management has to be digitalized, especially all the residential business is to be digitalized end to end. It's no use just digitalizing one part of the onboarding process. The idea is that everything should be digitalized, from applications to handover of apartments. Everything should be done in a digital manner if possible. Of course, the important part of management will be less about apartments. Well, apartments that become vacant will be full again tomorrow.
The risk is where we have clients who've rented 50,000 or 100,000 sq m of office space. That's where we certainly need personal management. We've purchased in a platform called StreamNow. It's a tenant-landowner platform that stands for everything that is residential. This platform, of course, is not only to be there for residential, but also for other products in the market. On to Jelmoli. Next Monday, if anyone's flying off from Zurich, next Monday, we're going to open the Jelmoli shop at Airside. Not in Circle yet, but at Airside. We're going to open directly after the X-rays, I would usually call it. You get not to the gate, but to Jelmoli first. We're looking forward to this opening. The opening, the surfaces at Circle will be open between the first and the 10th of September.
The 10th of September will be the official opening of the Circle at the airport. You're familiar with the name by now. We are happy to have won over a new CEO for Jelmoli, a female one who can start earlier. Her official start, which we're communicating today, will be April 1st, 2020. Swiss Prime Site Solutions had an excellent year, not only increasing assets under management by CHF 2.3 billion, but also they extended the contract early on with Swiss Prime Investment Foundation by the end of 2023. This one year before the expiry of the contract. These are nice indications that we're always happy to hand back to our clients. As you can see, EBIT increased from CHF 4.2 million in 2018 to CHF 7.8 million in 2019. Finally, for the services business, as we communicated before, we are selling Tertianum.
To be precise, we're selling the business, the operating business. We're retaining, and you can see this unveiling of partnership, we're retaining the 16 investment properties that we already have on our portfolio, and we will also retain the two projects under construction and the two under development. We will have a total of 20 investment properties that are used by Tertianum, and that will remain on our portfolio. Closing. Here it says expected by the end of February. I can tell you that closing will be tomorrow from 7:45 A.M. Closing will be tomorrow, Friday, the 28th of February. For the implications, I'll leave it over to you, Markus, to go into the details there and the results. Now, so much on my part. Let me hand over to Markus, our CFO.
Ladies and gentlemen, I would now like to talk to you about the financial figures of the excellent year 2019. We had growth in our core business, real estate, in terms of rental income and proceeds from property sales. We also had strong growth in assisted living in Tertianum, as planned, due to opening new operations, also due to the excellent vacancy rate. Tertianum is going to leave the group tomorrow. In any place where this has considerable effect, I will point those out to the extent that we already can do now. Of course, you will get the full results in August when we present the semi-annual results 2020. We also saw growth at Wincasa in real estate service provider, both in construction management and management fees.
We also saw a very strong growth of asset management fees for third-party clients by Swiss Prime Site Solutions. Let's start with the main element of yield net rental income at group level, which grew by 1.6% to CHF 486.9 million. EPRA like-for-like. That means that the identical portfolio 2018, 2019, from then we had a 0.8% growth. Sales and acquisitions, we were able to generate an additional CHF 3 million in rental income. New acquisitions more than compensated for sales of properties.
The rental income from acquisitions were not so much from 2019, but from the previous year when we carried out the asset swap with Credit Suisse, where we were able to swap 24% share in Sihlcity against 49% share in an office building in Worblaufen with Swisscom as a main tenant and two other prime location properties, such as Müllerstraße, already mentioned. The Sihlcity swap also reduced our retail exposure to 26%. The acquisition of Beethovenstrasse in Zurich also helped us to increase our rental income by another CHF 2 million last year. We had CHF 10.5 million reductions in rental income, mainly stemming from the Sihlcity asset swap. It can also be attributed to the sale of the retail properties at Bahnhofsplatz in Bern and on Rue de la Croix-d'Or near Rue du Rhone in Geneva, a major shopping street at low yields.
We also lost CHF 2.3 million due to modernization refurbishments. This happens sometimes, these are necessary parts of active portfolio management, we showed that we can be successful in that. For example, with the Motel One in Basel and in Zurich. This time it was about Stücki shopping mall, where we can't have rental income for a while due to modernization refurbishment, also a1 shopping center, shopping mall, which is now being reconverted into a specialist retail space, also the refurbishment of the former OVS property on Barfüsserplatz in Basel. This is an Italian fast fashion store. It's no longer fast fashion. To remind you, in 2018, we were able to find new tenants for all of the properties in the second half of 2018. Now, we are going to have a financial service provider and other service providers at Barfüsserplatz in Basel.
We also generated CHF 2.4 million rental income from Tertianum, which is going to stop as of tomorrow. Excuse me, it was CHF 2 million from Tertianum and CHF 2.4 million from the finished projects, such as Yond in Zurich, Albisrieden, and Schönburg in Bern. We also have some rental contracts from finished developments, Schönburg in Bern and Yond in Zurich, which were rented out at the end of 2019. Of course, we have some room for improvement here, because we are going to get rental income from that this year. At group level, we are going to get CHF 65 million less like-for-like, due to the Tertianum sale. If you see the rental income guidance on the developments, this 2019 bar is going to show net CHF 65 million less.
This chart shows the distribution of operating income, the top line, in other words. You can see the distribution of EBIT, a total of CHF 628.3 million. Total operating income grew by 3.7%. In both segments, both properties and services, 2% in properties, mainly due to rental income, and also POC valuations of the two properties, Rond-Point in Geneva and Belp Postpark in Bern, a residential property. The turnover from property developments was CHF 80 million last year, CHF 7 million above the previous year, but we also had expense from property developments of CHF 63 million in 2019. The growth of operating income in the services sector shown on this chart was CHF 38 million, CHF 32 million from the Wincasa growth contribute here, as well as a strong CHF 5 million from our asset management for third parties.
At the center, you can see the distribution according to segments. You can see quite clearly that we are a real estate company, the CHF 573 million are the core business of Swiss Prime Site, which is property. The services segment accounts for CHF 34 million EBIT from Tertianum. This is a strong increase over the previous year, which is due to the continued ramp-up, adding new operations, but also an improvement in the vacancy rate. The CHF 34 million will not be shown like-for-like anymore for 2019, but they will be compensated via over time through additional rental income from developments. 2020 is also going to show one sixth of the EBIT on our account, because deconsolidation is for the end of February. We've got a top line growth, as I mentioned, for construction management and management fees, CHF 70 billion.
You can see the effect of the digitalization process via the introduction of the digital business model, namely customer value center platforms and systems. These have a temporary above-average negative effect on the EBIT here. Jelmoli had a difficult year. It was a good year for food and gastronomy, but not such a good year for fashion and non-fashion. Business before Christmas did not meet expectations. We are very glad that the new CEO is going to help us prepare the way for more success in the future. Swiss Prime Site Solutions in asset management for third parties was truly excellent. Here you can see the condensed P&L of Swiss Prime Site. We already mentioned the yield, also revaluations on properties, more than CHF 203 million.
That was a strong year, which reflected the portfolio quality and the contribution that the portfolio management and the developments make here. Two-thirds of revaluations come from our operative business and are therefore not due to the lower discount rate. The 16 basis points to 3.6% was reduced, and this would be 3.58% in nominal terms. The big revaluation successes were very much centered on Zurich. Zurich West, the Prime Tower and neighboring buildings, these are also Beethovenstrasse and Müllerstrasse. Prime locations and the SkyKey at Zurich, Oerlikon. They all helped us achieve these revaluation results. Developments also had a positive contribution on revaluation effects. For example, Zurich, Schlieren, and Basel, and Mulhouse, and also the Stücki Park in Basel, the Finger Docks.
This is not the mall, but the Finger Docks that are currently under construction, which have a very positive effect on our revaluation results. A sales success, CHF 20.8 million in total. These are sales of yield properties, and we also have to add the POC gains, almost CHF 17 million. In terms of POCs, we are going to be able to show more gains over time. Operating expenses have increased considerably by 4% to CHF 856 million, very much driven by the planned growth in assisted living at Tertianum. The personnel expenses, in particular, come into play here, and also the depreciations that are part of growth. Tertianum Assisted Living centers around people. This concerns both the guests and the personnel, and that shows that it is very personnel-intensive business.
Of the CHF 568 million, CHF 287 million are accountable to personnel expenses at Tertianum. It's also a major operator of properties. This also is quite a large expense item. Now that we are selling Tertianum, this will halve our operating expenses. This is going to have a strong effect on our results and also, of course, on our headcount. We've seen a growth of 5,100- 5,400 FTEs between 2018 and 2019. The deconsolidation of Tertianum is now going to reduce this number to 1,400 FTEs, mainly at Wincasa and Jelmoli. Financial expenses, we have been able to have optimized financing in a low interest environment and a similar maturity structure to previously. A very special figure, the tax expense is actually positive, CHF 50 million.
This is the STAF effect, the effect of the tax reform and old age dependence pension insurance, which was accepted by a referendum on the 19th of March 2019 and is going to be introduced here this year. This has led to reduced corporate rates in many cantons, and this has had a very important effect for us, particularly Basel-Stadt, Geneva and Zurich. We have been able to release our CHF 173 million of deferred tax reserves, and we still have deferred tax reserves of CHF 1.1 billion in our accounts, just to put things into perspective. This has led to a doubling of profits on it per end of year to CHF 609 million before. In terms of profit before revaluation effects, this is an increase of 10% of CHF 315.7 million. This is the development of the real estate portfolio, financially speaking.
The main growth driver is the growth from development. It accounts for CHF 316 million, it shows that we are able to develop and we are able to sell at much higher yields than with our existing properties. This is very positive indeed. We are able to be very active in the value-generating part of the business and show some considerable growth here. The main developments have already been mentioned. We also have value increases on existing properties. These account for CHF 291 million, also include revaluation gains of CHF 218 million. We also saw some acquisitions, worth CHF 67 million to properties with development potential for the future. The one in Rue Croiseau in Geneva and in Augst. This all adds to bring us to the CHF 67. We also sold certain properties, nine in total, for CHF 140.
One was a very valuable property on Rue de la Croix-d'Or in Geneva and eight other properties in B locations, with predominantly banks as tenants and retail as tenants. We have been able to concentrate the high-quality properties in our portfolio. The divestment of Tertianum is not going to have any considerable effect on our real estate portfolio. We still own assisted living properties. We feel that this is an area with long-term rental income and allows us to diversify our real estate portfolio. It's going to continue to be part of our investment policy. Let's take a look at equity development. We can see the payout of CHF 290 million and the annual profit, which is driven by the revaluation gains, the one-time effect due to the release of deferred tax reserves. This leads to a very solid equity ratio of 44.4%.
The Tertianum effect here, you probably know that this leads to recycling of goodwill as part of deconsolidation. CHF 300 million are going to be able to be added to the goodwill, that's going to strengthen our equity bases. We will be able to show you the profit from the transaction in six months' time, which will also help to strengthen our equity position. We're also going to lose some assets which will lead to a reduction in equity in a middle two-digit million area. We have continued to optimize our financing structure. We are doing this very calmly. We optimize and update our structure all the time. Last year, we issued CHF 350 million in the spring and CHF 170 million in the autumn to extend the duration, also the CHF 200 million bond, which was matured at the end of the year, was refinanced prematurely.
The maturity structure is still very well balanced, and the average interest rate is 1.2%, and the average maturity is 4.2 years. The loan-to-value ratio of our properties is 45.7%, and this is going to be reduced to below 45% due to the Tertianum divestment. That's the finances. Now back over to René Zahnd.
Thank you, Markus. Moving on to the outlook and expectations for 2020. Well, when we go through the media, even a week ago, compared to a week ago, things are changing fast. I would want to touch upon that, but also talk about the positive outlook with regard to our portfolio, beginning with the capital market here in this chart. Well, this is no rocket science. You're all familiar with that. We're continuing to assume a policy of negative interest rates. The Swiss National Bank has confirmed its expansionary policy.
In terms of politics, it was gratifying to see that the referendum on more affordable homes, what the outcome was, and we only have 1% of apartments on our portfolio, so one might say, "Well, okay, that's not too bad." It's important for our customers, managed by Wincasa, for instance, or the large clients treated by Swiss Prime Site Solutions with a 50% of residential share. It was, of course, essential for this referendum not to go through. Another point would have been important for us, I always warned about the pre-purchase right for the federation and the municipalities, which would not have only been hampering project development but would have had a major impact on the transaction market.
You know that the pre-purchase right, according to Swiss law, means that you will have to find an agreement with a buyer and then have three months' time to find someone who would enter at the price. This period of time, the whole thing is now off the table with the decline of this referendum. As far as population development is concerned, I won't want to make a statement. Over on the left-hand side about the economy, I have corrected this part three times and revised it downward without exaggerating. It's really not fair to say that the current situation with regard to coronavirus will not have an impact. We were looking at GDP growth in Switzerland, which is closely related, of course, to international competitions such as the Olympic Games in Tokyo. You're aware that a lot of money would be channeled back to Switzerland.
Now, whether they're going to take place, we'll see. Expectations, of course, have been revised downward compared to what was communicated at the beginning of the year. This is to do with the current situation, of course, is the question of the coronavirus is that we are strongly dependent on China. The question is how fast is China going to recover to ensure supplies to the world? I think it will probably take more time than we might be imagining. This is an increased risk. In parallel to this, we have a risk that is always there in years where we have an election in the United States of America. We're going to see what's going to happen from now to November. Is this going to have an impact on our portfolio? No, I don't think so.
We are confident that the apartments that we're building will certainly be absorbed by the market. Schönbühl in Bern is the proof of the pudding. If the site is good, you have no problems, neither for residential nor for office or logistics or other fields. We remain guardedly optimistic also for this year, and we have seen that the rental income that we were able to demand from prime site office sites in Zurich has gone up, so there is potential there. Much for an outlook on 2020. I would say we're guardedly optimistic, but certainly slightly muted due to coronavirus. It would be good for the press to write about sustainability, for instance. Why am I showing this slide? This chart shows many things. I'll take you through it. You've got this hatched line. That's the current residential population in Switzerland. Let's say it's 8.5 million.
You have the time axis here on the horizontal axis, beginning in 1950 and going as far as 2050. That's CO2 zero. That's the government's objective. Where do we stand today? Go to this bar. We are at 6.5 equivalent ton emissions per capita per year, 6.5 tons. If you see the composition of it, then our industry accounts for around one third. That's building technology and buildings as such. If you want to take this down to zero two three by 2050, you can see the wall here. The wall means you have to begin to respond today. When you construct today, the buildings will be there for another 60 years. If you don't build in an energy-efficient manner, this slide is never going to be any better. This clearly shows you where our efforts have to be.
The question is, how do you respond to this as a business? There are companies that purchase buy-in certificates. I'm not in favor of that. I don't think this is a good avenue to embark on. We need to work on our own possibilities. That is why we developed our reduction pathway, CO2 reduction pathway. We took the entire portfolio. That's about 1.6 million square meters of space. We looked at it and said, "Let's take heat, thermal energy, for instance. What's the first step we would do in the portfolio regarding thermal energy? We're going to perhaps take out all the oil heatings from the portfolio. That's step 1. You end up with natural gas for better. The second step is not to have any fossil energy anymore, but remote heat, for instance, or a share of renewable energies of 40%.
The third step would be to double the share of renewable energies inside our own portfolio. That's for thermal energy only. For electric energy or power, we're going to use hydropower or solar power to adjust there. So much for energy. It would be absolutely stupid once you've settled the energy part, you have buildings that cannot store this energy. That would be bad. That's why we're investing in refurbishing the building shells. That's about CHF 150 million for 30 years. That's CHF 20 million of investment in building shells. If you want to top that off, you cannot only build zero energy buildings as with the project of JED at Schlieren, but you can use the buildings as power stations. The buildings would produce a plus of energy.
We're not that far yet, but if we then managed, not we Swiss Prime Site, but we as technology providers, if we manage to save or store the power we produce and then use it when you need it, we will have taken a major step. That's our CO2 reduction pathway. If we do all this, we will be on CO2 emission free by 2040, 10 years early on. It doesn't cost any more. The question is just whether you invest in the right thing at the right point in time. If you tackle it early on, that is to say now, you can make it. We will have made a significant contribution. We have an impact on this gray bar. We will have made a significant contribution to eliminating this gray bar. Much on the CO2 reduction pathway. Moving on to guidance.
Beginning on the right, the guidance for 2020. We've already mentioned that we're going for a vacancy rate, despite the new projects that we're going to take on the portfolio of below 5%. Profit expectation, Markus Meier already commented on. We expect a significant increase in profit prior or before revaluation and deferred taxes due to the sale of the business of Tertianum. We believe that we can continue to be able to have an attractive, appealing dividend policy. This chart, we keep updating it. That's the current pipeline. We have a total of CHF 84 million of additional rental income by 2025. This is rental income from those products or projects under construction or being developed. What is not included here is potential rental income from reserves, the CHF 500 million of reserves that we have. Why so?
Well, we don't even know what we're going to do with these reserves, so we cannot c alculate potential rental income. That will be additional rental income. These are from projects under construction and in development. The area hatched in red includes rental income that we won't have anymore from Tertianum, but we will present this to ensure you can have a like-for-like basis for comparison with and without Tertianum. If you add all this up, rental income of 2020, the additional ones by 2022, you will come up to CHF 30 million and CHF 75 million. CHF 320 million, CHF 75 million are like-for-like without having to readjust any other screws and thus, compensating for the loss of Tertianum. Let's move on to the question-and-answer session, and let me hand over to Hans Peter at this point.
Thank you for your presentation, and I'm now happy to take your questions.
Thank you very much. From Zürcher Kantonalbank. I have three questions, if I may. The first one about the maturity profile of rental contracts. What I would expect between 2020 and 2022, are you expecting any increases or decreases in rents? What's the vacancy rate that you're expecting?
Okay. Peter?
There's nothing unusual. Just like every year, 65% of rental contracts are going to be up for renewal and already have been negotiated. It's quite clear, our top locations are showing an upwards trend. We're going to generate more rental income, particularly due to the scarcity of good office properties. We are also seeing a similar trend in Geneva and partly also in Basel. Renewing rental contracts always are an opportunity to help us generate more rent. Between one- and two-digit percentage points, but there's definitely an upwards trend. You had another question?
Yes. On the vacancy rates, PSP. The competition had 5.7% compared with 3.5%, and your guidance is 3.5%. Why is there such a change in positioning compared with the competition?
Well, I can't say anything about PSP's figures. I can't comment on those. You can see that we have a continuous decline of vacancy figures, and whether it's 3.0% or 4.0%, it's not really that relevant. We have to just generate what's optimal from our properties. If you have rental contracts that are too low in terms of rent, you can also lose money. We are generally comfortable with the drop in vacancies. Sorry.
May I add another couple of points? Of course, it's true what Peter said. You shouldn't forget that our project development pipeline brings out a lot of projects, and usually, we don't have 100% rental. This is covered by the below 5% vacancy. We always see a vacancy as an opportunity. A vacancy in a good location can be sold well, or you can just keep it in your portfolio and wait for a good opportunity to come up. That's our philosophy, and I think it's been successful. We're not going to comment on our competitors, we could achieve 1.82 easily if we had a different policy here.
Okay. My third question and last question is concerning Jelmoli. You have a certain track record of losses from operations. Following the sale of Globus, the situation may become even more difficult. You're trying to attract top brands, but the new owners of Globus are well-positioned to attract those top brands, maybe even better than Jelmoli. What's your strategic response to these developments? Maybe you should just sell the activities as a whole.
Okay, I'll make the stupid comment, and you can make the clever one. No. This is a competitive situation. You know that it will take some time to consolidate. Our market contracts are medium-term contracts, there is potential and there is pressure. We'll have to wait and see. Not rush things, because retail always talks and complains until it really does get bad. This is a negative spiral. If you believe, I think there is still a great deal of potential in offline retail. We believe in it, of course, it is our task to check all of our options and to reassess them again and again. That's our job.
Well, let me add. Well, the annual rental income is CHF 27.5 million from Jelmoli. Jelmoli is interesting for us because we do earn well off Jelmoli. It's still the most important property in our portfolio. In operative terms, I believe that the city of Zurich has room for two good shopping malls. Globus only had 9,000 square meters, and we have 23,000 square meters. I think having the right brands in the right place does give us an opportunity to be successful in the market. We also are part of the luxury brand, so that means What does that mean for home living? What does that mean for fashion and for sports? I think that there is room for everyone. I am glad that we, and Globus, also has that solution because it keeps our inner city attractive.
At the back.
Thank you. Pascal Froger of Vontobel Bank. A question about the outlook. You were optimistic at the semi-annual reviews, now you are just talking about CHF 16 million for 2020. What's changed?
Who's euphoric? Everyone's euphoric, but you're talking about shifts, but I think you always have to see the entire period. The outlook 2020 says 32, at the half-year conference, it was almost CHF 16 million. Oh, that's slide 32. We just update it all the time. It depends on when you get construction permits, when the building is finished. This always shifts a little. These are always our best guesses, our best estimates. More than CHF 80 million additional rental income are going to be added to our portfolio over the next few years. The exact time may change. This is an important point. The time factor is never fully under control. Just one complaint can lead to 4 months delay in construction, for example.
Another question on valuations. We saw CHF 40 million negative valuation adjustments. Maybe you can comment on those.
These are projects from retail, where we need to be active. We made some adjustments and downward adjustments. Stücki was a large part of that. Currently, we are able to say, from all we know, we should now have found some solid ground here. For the other shopping centers, we also made these adjustments, and this is based on the current situation.
One last question on the EBIT of the asset management. Of course, also some new acquisitions are very profitable. What are you expecting for the next three years in terms of the EBIT contribution of the foundation?
You should rephrase the question. It's the EBIT of solutions. You talk about Swiss Prime Site Solutions, which does the assets management. We expect that the EBIT will grow again from 2021 onwards and will be relatively level in 2020. As you said, there are a lot of acquisitions which had an effect here. One was closed on the third or fourth of January, which maybe should have been accounting for 2018. It's always about a date. This is level, but the foundation is continuing to grow. We have 1.35 in terms of transactions. This is, of course, in steps of CHF 50 million, CHF 100 million. It's approximately CHF 110 million. We can certainly expect a further positive development. Maybe we can open another vessel in the near future.
We are certainly looking into this. We are open for new opportunities here, that, of course, would be additional new EBIT. What's important is that's not our solutions, it's us. The foundation is not us. We are working with vessels that we manage ourselves, that's important for the future of solutions.
Mr. Frey, wait for the microphone, please.
As far as vacancy is concerned, you mentioned the development properties. Can you give us a figure on how much they account for? How much is actually missing due to this development? You said it was positive, but this also gives you an idea of how much is missing.
Would you like to take that?
Well, we present it in relatively simple terms. If a property is fully refurbished and cannot be used at all, then we take it out from the income calculations, and once it's completed, then the rest that is not let yet will be part of the vacancy rate. Yond, for instance, is a vacancy of 10%, because 90% was let. In 2019, Yond was under construction as a project. It didn't account for vacancy. Well, the thing is, you have 85% at the end of the year. You didn't have the rental income throughout the year. The question is, if I multiplied everything by 12, how much have I got in there? Of course, you could show how you restated it or how you accounted for that. I do understand your system. Actually, you would be presenting a better situation.
Well, the rental income increases slowly and gradually, and you can only make one cut. Either it's too late or too early or at the right point in time, and we make it when the property is ready for tenants to move in.
Any further questions? Over there, please. No, over here.
How important is cultural engagement for you, like on the Maag site?
Well, a town developer once told me we have a cultural mission, but let's be serious. I think it is essential for us to always be in a position to develop space, not only buildings. Number two, we are carrying out an architectural contest at the moment. You will have read about this. A daily newspaper in Zurich described it in detail, and the time axis that was described there applies. We're not going to comment on that today. Thirdly, just as a sideline, a personal note I would like to make is if the city and the mayor keeps addressing me like she did recently, and that's one thing, but the city itself ought to take a decision and make a commitment to this subject matter.
It cannot be up to us to come up with a blueprint of operating some sort of building or old former factory, but the city would have to take the lead. They commissioned a study. We're all familiar with this. My personal opinion is that the city could perhaps take the lead in this regard for a change, because otherwise, we're a real estate company, and it's not our mission to develop a blueprint for a cultural program. I think you share my opinion.
Yes, absolutely. We're not focused on what the Tonhalle is going to do, but on what we're going to do with the Maag site. We're going to make the best possible use of what's available by maximizing the value of the site. Whether this includes more or less culture, that's a different question. That's really only a means to achieve an end. We focus on the quality of the entire site. Culture, of course, contributes to increasing the value or the quality of a site, but a third party needs to come up with a blueprint for it. You cannot always keep asking the same questions for two years and carry out studies. Now, this may be a mean comment.
Yes, please. There's someone at the back.
On Jelmoli, it was said here in the past that you were incurring a loss due to the launch at the airport. If you assume that Jelmoli would have to come up with breakeven or a positive EBIT within two years, well, does this still apply?
I can still confirm this, breakeven by 2022. We said it was going to be one year earlier once, then things shifted backward. The opening of the Circle was delayed by half a year, we have made investments, especially in the Circle, that we incurred, some of it in 2019 and certainly in 2020, in view of the opening in September. That's one thing, the other thing is the relaunch of the online shop that we're financing at the same time. The relaunch of the online shop will occur in Q4 2020, requiring investment. Until all this has a positive impact on the books, we will be in 2022, I can confirm this.
Last year, you said that certain retail properties were sold. Do you think you have streamlined the portfolio by now, or can we expect more sales of such properties?
No. Well, the portfolio is never finished being streamlined. Otherwise, we wouldn't be doing our job. We decide on a case-by-case basis on what the market opportunities are for properties that may be problem-ridden. When we see opportunities, we will grasp them and sell the properties. We will do that from a very calm point of view and grasp the opportunities. We will certainly continue along the pathway of continuously reducing the retail share. Within five years, we have reduced it by around 10%. It will not be the same steep curve in the years to come. We will rather decrease it than increase it.
Next question I have, the technical one. You yourself said, next year, we can expect relatively high one-off gain from the sale of Tertianum. The incentive plan of the management is based on EPS. It's driven by EPS. Revaluation and deferred taxes are not used for calculating the incentive plan. What about the one-off gain from Tertianum? Will that have an impact on the long-term incentive plan or not?
Well, Lukas Steger will benefit from all of this. No, seriously, René, Markus, who would like to take that?
Well, at the end of the day, it's a decision by the board of directors. It's management compensation, and this has not been decided yet. We haven't taken a decision yet. It's still open. Could go either way. Well, open means it's open.
Yes, please.
Just a quick question on solutions. You said that growth is driven by new vehicles. How about the pace, and what pace can we expect, and what's the strategic thrust for these new vehicles? Are you planning for organic or for buying in?
Well, we don't buy a vehicle. The vehicle is owned by the foundation. We don't buy the vehicle. Well, just to be precise again, we're looking into further growth through other vehicles. There are various options. There is no specific plan. If there was a plan, I would certainly not reveal it at this point. We are in this phase of looking into the matter. We're pleased to manage this Investment Foundation, what else can you do with solutions? Of course, you may extend the area of activity of it.
Quick question on Wincasa. How about the CS Asset Management contract? Where do you stand in this regard?
Well, would you like to take this?
No.
I can answer this. We've got this agreement. It expired at the end of 2020, or will expire at the end of 2020. It's been prolonged by the end of 2021, and we have also taken up negotiations for the new contract at the moment. It will be continued on a like-for-like basis until or by the end of 2021. Maybe you can give more precise information.
Well, no, I have a final question. Peter Lehmann announced that he would step down. Will he be replaced in his capacity?
Well, we'll communicate about this in the course of the year.
Thank you very much. More questions? Yes, please. Wait for the microphone.
Thank you. If I understood properly, Swiss Prime Site Solutions and for the investment foundation purchased a Migros portfolio, including properties, including retail. Why do you think this is appealing and not in other places?
Well, that's Migros food. Well, that's a small detail that you need to take into account. It's food. More than 85% that we bought of was food, several buildings in excellent locations that also provide room for development. Well, let me talk about retail again. Well, it's a matter of site location. If you have high street location, even A or good B locations, it's not a problem. If you're then in food or near food, it's not a problem either. Retail is not retail. You shouldn't put them all in the same basket. If we have reduced, it was C locations, and you called it fast fashion, like OVS, for instance, that's the business that we will continue to probably rather decrease than increase. Other retail spaces, particularly in food, keep growing. We don't think this is a problem.
What then is your decision-making process? Why do you buy something for this portfolio but you are not so much interested in that in other places?
We have our own acquisition and sales unit. That's where all the portfolios come in with Swiss Prime Site Solutions, and the managing director looks at the files and decides which ones are going to be pursued, and if it goes one step further, then the board of trustees decides about investment. The investment foundation has a managing director. We're not the managing director of the investment foundation. That's important to know. In terms of size, that's not the buildings we buy. There is a residential share, so that's not our objective. What is important is that in terms of corporate governance, we are entirely separated units. This portfolio is not part of Peter Lehmann's business.
It came in with Solutions. That's why we didn't submit a quotation. If we were interested ourselves, then there's only one good way. Both of us would submit a quotation, the client would then pick their choice. Certainly, what we never do would to make an agreement between the two units, we didn't even receive this file. It went to Solutions, that's why they took it on.
Okay, fair enough.
Yes, please.
Matteo Lindauer of Vontobel. I have a specific question on Stücki and the cause of the down valuation and lease incentives. Six months was required, I heard, with Atmos to be successful in rental income. What do you think about this? What's your sentiment?
Well, for Stücki, in the process of construction work or deconstruction, certain technical defaults have been detected, which had to be remedied, and they couldn't be detected a year and a half ago, and that's why this additional demand was caused. Second question, what was that again? Rent holidays that you have to grant. Rent-free periods. Well, we have become very guarded doing that because, A, it's really a malpractice in the market. You just grant fringe benefits, although it perhaps wouldn't be necessary.
I'm convinced that if a building has its quality, tenants will accept it, no matter whether they have two, three, or four months of rent-free period. At Stücki, we still have 7,500 sq m of shopping that is not let. We are consciously doing that because we wait until the cinema is opened. Only when the axis works, we will then be able to rent or to let the surfaces and for good prices, not for dumping prices at cheap interest rate. We prefer to keep waiting for another half year or a full year to get the best possible price.
Any more questions? No more questions.
Okay. I would like to thank you for your attention. I was really wondering that one subject matter didn't give rise to any questions, I believe it ought to be taken really seriously, and that's seeing the total cost of ownership as a building. I think this is the biggest challenge that we're going to have as a property company. We need to adopt a long-term view to secure profitability. Everyone can do it in the short term, but securing it in the long term and complying with increasing legal demands and perhaps even being proactive in this regard, that would be the biggest challenge. I would like to thank you very much for your attention and invite you to the Apéro riche upstairs, and have a good time.