Ladies and gentlemen, welcome to the media conference on the annual results today. You can see we've got operating profit growing to CHF 1.2 billion. Profit was increased to CHF 310 million. The portfolio rose by 5.4%, vacancies are down below 5%, revaluations are in the bandwidth as last year. Board of directors is proposing a payout of a dividend of CHF 3.80. We are proposing to elect Mrs. Nater-Bass to the board of directors. Colleague Klaus Wecken will not stand for re-election. On this, let me hand over to René Zahnd to be followed by Markus Meier.
Good morning. A warm welcome to the gentlemen from Credit Suisse. Warm welcome to you. First of all, I would like to excuse Luca Stäger, our CEO of Tertianum, who broke his foot on Sunday night and has to keep bed rest until the end of the week. I'm sure he's watching us from his couch. Now let's take a look at the figures. Financial year 2018 was a very positive business year. Here are the most important highlights. The property portfolio showed a growth of 5.4% to CHF 11.2 billion. The operating income was CHF 1.2 billion. Also here, the growth was just over 5%, 5.1%. It has been confirmed that these figures are correct, CHF 479 million, both in rental income and in EBIT. We had 2% increase in rental income and 1.7% increase of our EBIT.
Profits rose by almost 2% to CHF 311 million. The equity ratio was almost 44%. The earnings per share, just like last year, exactly the same, CHF 4.27. The net asset value also showed a slight growth by 1.3% to CHF 67.74. Please observe that the net asset value only contains our services segment as book values. Now, let's take a look at our events of last year. First of all, the successful capital increase of Swiss Prime Site, CHF 323 million on the 28th of September 2018. That's the date of the settlement. The third time, the CHF 221 million to purchase existing properties. That's CHF 550 million together. That was also in September 2018. We're currently working on the fourth issue, which is being carried out by the Swiss Prime Anlagestiftung. We have 190,000 square meters in terms of new and renewed leases.
That's almost the same as last year, where we achieved 195,000 square meters. That's five times the surface area of the Prime Tower. This accounts for rental income of about CHF 50 million in new leases or renewed leases in 2018. That is certainly a very positive result. Let's take a look at acquisitions. There were two acquisitions. One was the Iseli site in Regensdorf, which we acquired in January 2018, and an office building at Beethovenstrasse 33 in Zurich. They have a combined rental income of CHF 5.2 million per year. Another acquisition of 2018 was the Montet Tertianum project, which is scheduled to be completed in 2021. Another acquisition was the West-Log project in Zurich, Altstetten, which is expected to be completed in 2020 with annual rental income of CHF 4.6 million.
Another highlight of the year was the asset swap with Credit Suisse Asset Management. Another highlight was a divestment. That sounds negative, but it is not. These are mainly profits from sales, actually. These accounted to around CHF 34 million, 80% of which come from our development business. The remaining profit from sales came from a Bern property from our portfolio, but I will get back to that in just a moment. These were our highlights in the core business. I also have some pictures here. Beethovenstrasse in Zurich on the left-hand side, which is a very flexible building, which we just restructured, and we have very interesting rental structure here. On the right-hand side, it is the Iseli site.
It is a development site that anyone would dream of. It already has a net yield of 4.5%. At the moment, we are doing what everybody loves doing most. We are not doing anything. We are happy with the 4.5% net yield. We are waiting for the Regensdorf municipality to launch another development plan, maybe in collaboration with us so that we can then rezone the site and start development. This is a land reserve for the future. Here are the projects that we acquired. On the left-hand side, the West-Log in Zurich, Altstetten, with a rental ratio of 85%, with Elektro-Material as a tenant. We are expecting them to also rent the rest of the building once it is finished. It is very interesting.
There is a lot of connection with e-commerce. The more e-commerce sales are generated, the more the large logistics companies are going to move into urban areas. Or rather, right on the edge of the towns, where hubs are created for transport of these e-commerce products. Maybe in the future, this will also be self-driving vehicles. The last miles are then done into the city. On the right-hand side, you can see the Tertianum residential and care center in Monthey. Let me talk about the asset swap together with Credit Suisse Asset Management. This is an image of Sihlcity. What were the reasons for this asset swap? We were not the sole property for two properties. One was in Laufen, where we held 49%, and Credit Suisse held 51%. Here in Sihlcity, our share was 24.2%, and the rest belonged to Credit Suisse.
We always knew that we wanted to be 100% owner of the property. We, therefore, suggested the asset swap and were able to complete it successfully. That means that we do not have the 24.2% co-ownership anymore. Not because Sihlcity did not work, but simply because we did not want to be a minority owner. The retail share in our overall portfolio was more than 30% in 2018. We are now below 30%, and that was always also a reason why we were in favor of reducing our retail areas. In turn, for the 24.2%, we received the Müllerstrasse in Zurich, very close to the main train station. At the moment, Swisscom is a tenant of this building, but they are going to move out. That is an excellent opportunity that we are going to seize. We have some excellent ideas because sometimes a tenant leaving is an opportunity.
The Giesshübel site near Sihlcity in Zurich was the other property that we received, and this is the Swisscom headquarters. Last year, we were able to extend the rental contract by 10 years with an option for another 5 years. That was a reason why we didn't just want to own 49%, but 100% of the property. This asset swap certainly made sense from that perspective, too. 80% of our profit from sales came from sites under development. On the left side, you can see the Weltpostpark in Bern. This is a residential development. That is why we were sure right from the start that we were going to sell it. Now we are looking at selling the construction permits. That's a typical thing for Bern. The other aspect is the POC method sales profit over the next few years.
On the right-hand side, you can see the only sale from our existing portfolio worth mentioning. It's a small building directly on the Bahnhofplatz, the main station square in Bern, with a net price of 2.2 net yield. That was so interesting that we decided to sell it. In summary, this is the portfolio. The revaluation gains was similar to last year, around CHF 86 million. A net yield slightly below last year, 3.6%, and the real discount rates was also lower than last year, 3.22. How did these positive revaluations come from? Well, from existing CHF 38.7 million on investment properties and CHF 28.9 million were on development. Last year, we had 5.2% of vacancies. We're going to drop it down below 5%. We're now at 4.8%, and we're now still level here, and we can expect our vacancies to remain below 5%.
Let's take a look at the services segment results. I was already able to read in your reports that this is a disappointment, but I beg to differ. The question is how this was budgeted. They all were within budget, and therefore not a disappointment. Let's start with Swiss Prime Site Solutions at the bottom of the slide. Here we had assets under management increase of CHF 1.6 billion at the end of the year. We now have CHF 1.9 billion assets under management. There was a major transaction over Christmas, New Year, which wasn't closed until the 3rd of January. The 3rd of January can't be booked for 2018, obviously. That's going to be shown in 2019. We are already almost at a level of CHF 1.9 billion assets under management. That shows that the fourth issue is going to be successful.
Last year, we also had the opportunity to exchange the team here, and we're more than happy with the results. Tertianum. Today, we have 77 sites in total. Around 3,200 care beds and 1,800 apartments. In addition to the 77 sites, we also have 15 sites under development for assisted living. If you now take the number of care beds and new apartments, including developments, that's going to bring us up to 3,800 care beds and around 2,500 apartments. What are we planning for 2019? There are going to be two new openings, one in Chiasso and another one in Liestal. What else did we do at Tertianum? We invested a lot into the new ERP system by SAP. It is now fully set up in German-speaking Switzerland and Ticino. The care documentation, care.coach was also introduced in those regions.
The next challenge is to introduce these new software applications in French-speaking Switzerland, so that the entire Tertianum Switzerland is equipped with the software. Jelmoli, well, you've heard about the minus CHF 2.6 million EBIT. We missed the budget, but we knew that we would refurbish a major property, that was ZARA's shop, that was closed for 2 months, and there were 2 rental incomes that were missed for 2 months. That is why the result is not as positive as it was in 2017, but we are on budget. What's new at Jelmoli? This afternoon, we're going to announce, or tomorrow at the latest, that Pallas Kliniken are going to be included, 7,500 sq m. Pallas Kliniken are going to offer dermatology, aesthetic medicine, medical cosmetics, hair transplants. Pallas Kliniken are also well-known as an eye clinic.
It's important to create such centers. It's no longer just a shopping center or a shopping mall. It's not just the house of brands either. We are going to open the 11th restaurant within Jelmoli this year and Pallas Kliniken. Franco Savastano tested it yesterday. He said, "Well, you can now offer Botox to go at Jelmoli instead of coffee to go." I thought that was a very nice image, that's why I'm mentioning it here. We're also going to open the location at Zurich Airport, hopefully in the summer of 2020. We are still on track here. We are expecting to be able to keep the schedule. Both on the air side and in the circle.
Wincasa showed an increase to CHF 68 billion with a number of new contracts with new customers, but we're also able to renew contracts with existing customers. We are working hard on digital transformation. Of course, it's not enough just to create a website. The entire IP infrastructure needs to be changed, and that requires investment and time. That is why the EBIT margin has dropped a little, but it's still 13%, and 13% is still excellent. This was planned because the transformation process, this technological upgrade, is something that we want to invest in. The outlook for this year is going to be clearly over CHF 50 million in services. It's currently CHF 47.6 million in 2018. That was 10% of the EBIT, and we're expecting a clear increase. We're also expecting around CHF 50 million from Tertianum and Wincasa alone for 2019.
If you compare that with the CHF 55 million that I once set as a target for 2020, that shows you that we're on course. I'm going to hand over to Markus for more details on the figures.
Ladies and gentlemen, let me take you through the essential components of the 2018 financial statements. For the highlights, we had growth in the core business of real estate, for rental income and sales proceeds. I'm sorry? The tie is not fitting well, is it? Anyway, we had growth in real estate, in the core business for rental income and sale of real estate developments. There was growth with Wincasa from construction and property management fees. We planned for strong growth in the field of assisted living with Tertianum, given the newly opened care and residential centers, and Jelmoli, compared to peers, did very well in a demanding retail setting. Let's get started with the main source of income, rental income, of course, and the details. There is an increase of 2%, CHF 9.5 million up to CHF 479 million, CHF 15.5 million stemming from sale and completion of projects.
For the acquisitions, of course, this is mainly focused on the asset swap with Credit Suisse investment vehicles. On the left-hand side, you can see the minus of CHF 3 million of sales. That is basically attributable to our 24% share in Sihlcity. Add to this, the Swisscom office building at Worblaufen, where we had a 49% share, which we increased to 100% as a result of this transaction, putting us in the driver's seat. There are two well-located office buildings in Zurich with potential at Giesshübelstrasse and Müllerstrasse. Furthermore, in the summer, we acquired a top-level CBD office property in Zurich, well let at Beethovenstrasse. We also have a long-term development project with a 4.5% yield already on the books, and this is property with potential for further development located at Regensdorf. That is the Iseli site.
As far as the concluded end real estate investments are concerned, it is primarily Motel One in Zurich, the hotel we opened, plus a mixed-use property of Riambosson in Meyrin near Geneva. Like for like growth on various investment properties amounted to a net of CHF 4.9 million due to higher lettings or relettings and discontinuation of rental discounts. Let me also mention the Messe Tower in Basel, which is a hotel, and the Stücki Business Park on the Stücki site, as well as the Media Park here in Zurich. There is another major property near Petit-Lancy, near Geneva in Petit-Lancy. We temporarily lost CHF 8.6 million due to substantial modernization and refurbishment, first and foremost, at the Stücki Mall in Basel and the A1 shopping center that was reconverted to a DIY market.
Also there is an OVS property, which as a result of the bankruptcy of OVS last summer, was given up by OVS, and we are going to convert it on behalf of a financial services provider in Basel. Add to this CHF 0.7 million from assisted living. That is income from additionally leased properties. This is EBIT. On the left, you have top-line growth up to the CHF 1.2 billion. In dark, we have the real estate segment that contributed to growth, primarily due to the POC accounting. We have higher POC income that we achieved due to growth I just outlined for rental income. We have CHF 73 million of POC income on the books and expenditure of CHF 57 million. The increase in the segment of services of CHF 36 million or 5% is primarily attributable to strong growth in the field of assisted living.
Taking a look at the center chart, EBIT composition, there's a trend for it to increase. Services account for 10% of EBIT already. This is the breakdown for services. Tertianum posts strong growth, which has not yet had a major impact on EBIT. The reason being that the various projects and care centers being built up, that will take some time for them to be up and running. The ramp-ups are having their effect temporarily on our margin. Wincasa, top-line growth, and a slight decrease in EBIT for the transformation efforts that I mentioned before, and also due to income from the transaction business in 2017. We have an excellent year as far as the transaction business is concerned, and in 2018, a major transaction was only concluded at the end of the year. The situation is stable.
Jelmoli is on track as far as budget is concerned. This has been mentioned before. Menswear did well, accessories did well, as well as food and restaurants. We had decreases in sales, especially for ladies' wear and the ladies' world. Swiss Prime Site Solutions, where we had reorganization and a delay in the closing of the transaction that will lead to higher income in 2019 only. The group income statement with operating income of CHF 1.2 billion. Then revaluations of investment properties, slight increase over the previous year. Strong performance for prime properties, such as the one here at Maag, the Maag site, or retail locations in Geneva and Zurich, and high-quality office space in Bern and Zug. CHF 29 million from real estate development.
Espace Tourbillon at Geneva, where three buildings are being built and that we will take home to our portfolio. Stücki Park at Basel, the additional Finger Docks that we are going to build with mixed use between lab, med tech, and office space will also lead to high income. The market-weighted average discount rate decreased by 13 basis points to 3.22%, down from 3.35%. In nominal terms, it's 3.75%. Sales proceeds. The two components, the actual sales proceeds for the property at Bahnhofplatz 9 in Bern and the residential building called Weltpostpark in Bern, which will be posted in our POC accounting in the summer. We sold the land and the project. We've got a total of CHF 34 million of sales proceed, 80% of them are from real estate developments. Operating expenses increased considerably by CHF 71 million, up to CHF 823 million.
Primarily attributable to expenses resulting from real estate development and growth in the field of assisted living. Tertianum, the newly opened establishmentsEspecially triggering personnel cost and depreciation, and rental expenditure for additionally leased properties. Headcount rose from 4,900 FTEs at the end of the previous year to 5,100 FTEs. Financial expenses were lowered. We benefited from the low interest rate setting. Tax expenses considerably rose as a result of the sales of properties and the asset swap. This leads to an increase in profit to CHF 310.9 million and profit before evaluation gains and all deferred taxes of CHF 287.8 million. The development of the real estate portfolio from a purely financial point of view. The market value of the real estate portfolio rose by CHF 571 million of 5.4% to CHF 11.2 billion.
This reflects the situation of rental income, strong increase as a result of the purchases, this is the real estate swap, the asset swap, and the acquisition of West-Log in Zurich and Beethoven-Straße, the top level CBD property, and two more projects in the field of assisted living, one at Montet and the other one at Richterswil. On the left, you have the divestments, primarily due to the sale of Sihlcity, and the smaller share is accounted for the Bahnhofstrasse 9 building in Bern. Value increases of investment properties contributed to around CHF 122 million, strongly driven by the prime properties on our portfolio.
For refurbishments and modifications, an increase in CHF 320 million, Schönburg in Bern, primarily the former World Post Bank and the Plan-les-Ouates site that we mentioned before, as well as Beau-Rivage and the Stücki Mall and the Finger Docks, as well as the Yond project here in Zurich, which is going to be completed in the autumn of this year, and we'll be ready for tenants to move in. Moving on to shareholders. Equity ratio is 44%, which is within our guidance bandwidth. We carried out a successful capital increase of CHF 323 million, and we feel very comfortable in this situation. Moving on to financing structure, there's a slight shift towards capital market funding. At the beginning of the year, we issued a convertible bond, CHF 300 million convertible bond at a coupon of 0.325%.
It's an innovative issuance, giving us the right as the issuer to choose the amount of cash or bearer shares of Swiss Prime Site, we would want to complete conversion. This gives us a great degree of flexibility. In the summer, we issued a six-year straight bond at a coupon of 1%. The average volume weighted interest rate is 1.4% and amounts to an average residual term of 4.3 years. The loan-to-value, LTV, is also within our guidance bandwidth at around 45%. Much on the financial key ratios. Let me hand it back to René Zahnd at this point.
Take a look at our project pipeline. In summary, I think this is a very clear slide. It shows what the developments are. We still have 2.2 net yield for fully rented retail properties, so it's not very attractive for buyers. Our development pipeline gives us the opportunity to achieve higher rents to get revaluations just like last year when we achieved the CHF 29 million. There is also the option of achieving or generating sales profits from selling properties. There are lots of synergies between the development business and modernization of existing properties. Also here we have the lever for sustainability, and that is closely tied in with innovation. We can ask our partners to be compatible with our values, and this allows us to set up the 3D model, which makes construction easier and also has benefits in terms of facility management.
Here are our 15 projects across Switzerland. Those of you who have been paying attention will know our project pipeline, the CHF 200 million are still part of the reserve. They're not in this development yet. They haven't disappeared, they're just not on this slide. The focus of development is Zurich, Geneva, and Basel, a major development in Bern, and the small dots are Olten and Ticino. These are developments for Tertianum, for assisted living. Here are the properties under construction, and I'll show you this slide here so that you can get an idea what it looks like. Let's start with Yond in Zurich. We now have 40% contracts under negotiation, or actually signed contracts. And we are expecting that by the end of 2019, we will have rented out more than two-thirds of this surface area.
This is going to enter our portfolio at the beginning of the fourth quarter 2019. By that time, we will have rented out two-thirds. In the middle is another property that is going to enter the portfolio in the fourth quarter this year. This is the Schönburg in Bern. The hotel has already been rented out to the Prizeotel, and there is going to be a Coop, 800 square meters, and there is also going to be a gym and 240 apartments, of which only 20 have not been rented out yet. Start of contracts on the 1st of November. I think I'm not being too optimistic when I say that they're all going to be rented out. Another project is the West-Log in Zurich. Here we have already rented out 85%.
More properties under construction is the Plan-les-Ouates, another logistics center, which looks a little more like an office, but it is a logistics center in a very similar location to Altstetten in Zurich, right at the gates of the city, near the motorway, and so easily accessible for trucks who park underground here for reloading. Five of these buildings have already been sold to Hans Wilsdorf Foundation. This is a bit of a correction of what Markus Meier just said. Not three buildings, but only two are going to be added to our portfolio because we are planning to sell building A, the smallest building on the corner here. That's very interesting because this is going to be sale to commercial clients floor by floor. I don't know whether we invented the concept, but these commercial operators are now operating their commercial enterprise here.
They know that the entire site is going to be modernized, and that's why we're swamped with interest, not just by companies wanting to rent, but also by companies wanting to buy, because they want to be committed in the long term. In conclusion, we are expecting that five of these buildings, two have been sold, one more is going to be sold, and so two are going to be in the portfolio. Yond in Zurich at the center of the slide here. This is the former NZZ site, so that you know what I'm talking about. We have already rented out 75% of existing buildings. There is still potential for a new build, too. 75% of the existing building has already been rented out. On the right-hand side, these are the Finger Docks that Markus Meier just mentioned.
Two are under construction as we speak, we are expecting to have rented out by the end of the year. That means that we can start construction of the third and the fourth building. Let's take a look at the projects in planning. Well, the four projects at the bottom are all assisted living projects in Ticino, Montet, Richterswil, and Olten, projected for completion in 2021. This is what it looks like. This is Olten. The building you can see here already exists. That's our building. That's not going to be the assisted living building, but the two new builds on the left and on the right is going to be for Tertianum on the left and other tenants on the right on the same site. The yield is going to be markedly above 4%. I've said this before, let me say it again.
The yield for Tertianum's properties are between 4% and 5% net. This is a good thing because all of these Tertianum buildings could also be converted into normal, regular apartments. These are not healthcare facilities with specific intentions. This is simply a different form of living with care beds, and that is why the yield of around 5% is to be judged as to be positive. Here's a project in Lugano. It's a building that's practically on the lake, in the lake almost. Of course, that kind of building is not cheap, and that's why it is going to be a residence luxury living, and we have several residences. These are buildings where our tenants pay between CHF 10,000 and CHF 15,000 per month. This is going to be the 14th residence in Lugano.
We already have a great deal of interest, not so much from Ticino, but from Northern Italy, Milan and Torino. Here, the investment is high, CHF 70 million, and that has to do with the building being on stilts in the water. Here is the Alto Pont-Rouge at Hardbrücke two. I don't have to repeat what Peter Lehmann said, but let me tell you, we have filed to get the building permit, which we are expecting to get by the autumn of this year. If all goes well, we can start construction at the end of this year, certainly no later than next spring. The yield is going to be clearly above 4%. We are currently expecting 4.6% net yield. This used to be lower, but we then revised the entire project, particularly the inside, creating more gross space, and thus boosting the yield.
As soon as we know what the authorities want us to do, then we will start putting this into practice with a general contractor. We are expecting to be able to save on the building costs that we have calculated so far, that we've budgeted for. The Maag site is a great success. Of course, you know it well. This is potential terrace for smaller apartments. I think these apartments would be a good fit here. This was one of the questions of the newspapers, whether this is necessary that it's absolutely a must for cultural events to keep taking place here on the site. We are not the direct tenant of the Tonhalle, but as far as we see things, the new build could be implemented and it would not be a problem with the adjacent Tonhalle.
That's going to be out of our hands, but it's going to work. We can build, and this is not going to prevent cultural events from taking place on this site here, and I think that's a message that you should take home today.
Moving on to the outlook for 2019. Beginning on the left-hand side, with the economy in general, we believe that 2019 is going to be slightly dampened compared to 2018, which is due primarily to geopolitical risks such as the shutdown in the U.S. or Brexit, nobody really knows where Brexit is standing at the moment. All problems in Italy, fundamental problems in the neighboring European Union countries, which means that economic forecasts have been brought down a little bit, but are still positive for Switzerland. The outlook is positive, and specifically for our two main segments, the office space market. On the one hand, we had an excellent year in 2018 for office space. A lot of office space was re-let or newly let. The economy is doing well.
There is a lot of demand for office space in prime locations, the ones that we're having on our portfolio. We assume that this momentum is going to be maintained in 2019 for office space. There is green light for office space. Of course, it's always a matter of the micro locations. When you're located in Zurich West, it's not the same as Zurich North. We do believe in the airport, but everything in between Oerlikon and the airport will be suffering. CBD and Zurich West or Geneva with the new subcenters certainly include great potential. The question, of course, always is how will the working landscape change? Co-working spaces are on the rise. Where do we stand? Let me refer to the JLL report. We are at 0.9% of office space, that is co-working space today. What about the international picture?
Amsterdam has more than 5% of co-working space, perhaps in Switzerland, we will get there to 5%. This is 5% of the entire office space market in Switzerland. In other words, co-working space is absolutely interesting, but it's not a solution to all your problems. If you have a location that is not all that good, co-working will not help you. It works in good locations, but there may be limited growth, and growth limited to those 5%. Maybe office space has to be very flexible. That's another point. With high rooms, for instance, that give you the freedom to respond to new needs. Office space is okay. For the retail market, we've got increasingly bad news coming up. We're trying to tackle that inside Jelmoli. Thanks to Jelmoli, I believe we understand the retail business.
The event centers that we're building up, which are a blend of traditional shopping plus restaurants and other segments such as the Pallas Kliniken, I mentioned earlier on. The Stücki conversion will be similar. I didn't mention this because it's not a development project, but the reconversion of the mall is at 75% of letting at the moment, and it's going to be up to 100%. There is a blend of a gym, and health, and a cinema. It's a new design. The former shopping malls, if you like to use that concept, is certainly something that we are changing. It's a success story. There will be brick-and-mortar retail in the future. You just have to implement it properly. A lot of small stores and shops are closing down. The OVS group went into bankruptcy.
We had eight locations that we re-let at higher rental income on aggregate compared to before. Here's the point, only one of those locations is still operating in the same segment as OVS. Only one of eight is still working in the field of fashion. Shopping is moving away from fashion. We've done this in Jelmoli. We've clearly decreased the share of fashion in recent years. A good prime site in a city center remains a prime site, but it will no longer be OVS, but maybe a Basler Kantonalbank that gets established in this good location. There's a great deal of potential. But inner cities are changing, of course. Ground floor things are changing. Let's take Zurich, for instance. Here in Zurich, you can see there's a lot more restaurants at Bahnhofstrasse. We Café Bar 45, relaunch of Café Zurich, Confiserie Bachmann.
You've got co-working space or showroom surface area. This transformation is taking place. But if the location, the micro location is right, if you can offer a good surface area, then you will be doing well. Maybe for other purposes. For our retail portfolio, I would say we're on track as well, and the light is green as well. Before I move on to technology, let me say a few words about the capital markets. We believe that interest rates will remain low. We've got business representatives or economic representatives here. The NZZ am Sonntag newspaper said we're going to have negative interest rates by the end of 2020. Finanz und Wirtschaft, your newspaper wrote that we're a far cry from a change of the situation as far as euro interest rates are concerned. We would be ill-advised if we didn't trust those two publications.
We believe there's not going to be change to the interest rate setting for 2019, and maybe even beyond it. As far as technology is concerned, technological change certainly is something that is keeping us on our toes. That's why we have invested heavily. Let's stay with the buildings, for instance. There are two things. Either you build a building with little technology or a fully technologically equipped building. You need to know your customer's needs. The question about technology also is whether you can have a self-sufficient building, maybe a building as a powerhouse that feeds itself with power and energy. New things that technology enables. Building information modeling is certainly also be a cost-reducing component with an impact on the construction industry, a positive one. Today, you may have seen this picture. A house planned and constructed digitally.
This is done at Dübendorf in a test lab. It was built by robots and 3D printers. All these are forms of technology that we have to be interested in. For Tertianum, it's robotics, of course. That plays an important role. Support of care coaches or rental platforms, interconnection of clients. I think technology opens up many new opportunities, and we have a positive view of it, as we are seeing more opportunities than risks. Finally, a word about politics. With a smile on our faces, we're happy that the initiative has been clearly turned down on settlements and development in Switzerland. In May, we're going to have the vote on tax revision related to social security system. This will have a direct and indirect impact on the real estate business, but not only on the real estate business.
We're actually in close contact with politics and the pressure exerted by regulation. Last but not least, for our guidance. We're presenting it in a different fashion now. We've got two points on the core business, then for segments, one bullet point, and summing the final bullet point for the group. Let me begin with the core business on the left-hand side. This is a medium term piece of guidance. Development pipeline, that's the additional rental income. You see how rental income is going to evolve. The CHF 479 million that you've got in your documentation. Here, unfortunately, we only have an additional CHF 2.5 million from development business. That's the Yond and Schönburg projects that will only get onto the portfolio in Q4 2019. We are going to have nice increases, plus CHF 14 million, plus CHF 14 million, plus CHF 24 million, plus CHF 27 million.
Interesting increases for the most important figure, income from the development pipeline. Those of you familiar with the old presentation, if you add all this up, you get up to around CHF 83 million. We once referred to CHF 92 million, we haven't lost CHF 9 million. The last project will be terminated by 2025 and is not shown here. We're still talking about the same figure. By 2023, we're looking at a total of CHF 83 million of additional rental income. This includes, and that's important, we assume that the third building will be sold as condominiums. Let's be precise here. For the Plan-les-Ouates projects, the two buildings that will go onto the portfolio and the third one is going to be sold. Please take that home as a message. We are very confident of achieving those values.
Of course, there's a risk in the development business, a risk related to approvals, to timing, when we get approvals. Those under construction do not come with a risk. We'll be, in due course, building them. Anything that requires approval comes with a certain risk. You can keep an eye on that. As I mentioned already, in the core business, the vacancy rate is going to be maintained at 5% or lower. We're at 4.8% currently. For the services segment, we said, well, let's specifically focus on Tertianum. Tertianum is going to achieve CHF 500 million of sales for the first time this year, composed of two packages, one being the actual income from assisted living and the other part being rental income. That's CHF 500 million, we are expecting EBIT of more than CHF 30 million from Tertianum.
The EBIT margin will be a little more than 6% at the end of the day. If you then were to show it on a like-to-like basis with the establishments opened in 2019, then we would be around 6.5% of EBIT margin in a peer comparison, and we'll have introduced the SAP ERP, we'll have introduced the care.coach across the territory of Switzerland. We're very proud with the results to be expected for 2019. Finally, at group level, we want to uphold an appealing payout policy for Swiss Prime Site. That's all information on my behalf, and let me hand it over at this point to the Chairman for questions.
Thank you very much for your presentations, dear colleagues. We're now open for questions. Thank you very much. The first question is for Peter Lehmann. It refers to Yond. What concessions did you make for the first 40% of rental contracts, or in other words, what's the average price per square meter? What are you expecting for the next 10% as of mid-2018?
On the first point, we don't make any concessions. We set the rental price about six months ago, and that's what we're asking for now. It's a mixed price, CHF 260 per square meter.
Okay. For the surface area, CHF 160 for the upper floors. That is also the basis for the rental contracts that we're going to be signing between now and the end of the year. Let me just add to what René said, I would not be happy with two-thirds by the end of the year, but I'm expecting more than that. Thank you, Peter. I'm happy to hear that. Next question to Peter Lehmann. Espace Tourbillon, what price per square meter are you trying to achieve in a sale? Well, these are going to be market prices comparable with similar properties in Geneva, between CHF 4,500 and CHF 5,000. Thank you. The next question to Mr. Markus Meier for me. You spoke about investments at Wincasa. What size are they? I heard that the EBIT margin is going to be increased.
What's the objective for 2019 in terms of EBIT margin? The investments are in the platforms and also suppliers and tenants are investing here. Customer expectations vary quite a lot, both in terms of the tenants and the owners. This is quite a complex issue. We're also working on workflows, such as central recording of rental contracts and checking creditworthiness of applicants, et cetera. These are relatively complex processes, and we're developing them to be agile. The investments are going to be several million CHF over the next few years. The 30% margin is excellent, and we're going to try and keep that up. A follow-up question. The costs for the ERP system for Tertianum are probably special expenses. How high are those?
It's an SAP system for operations, but also in combination with a care.coach, which records services rendered and care class attribution of patients. That's all part of the package, similar to Wincasa. The last question to Dr. Wehrli. If you're using a title, then you should do it properly. No, sorry, just joking. You're Austrian, and the Austrians love their titles, don't they? You don't need to call me by my title. The name is certainly sufficient. Quite a while ago, you spoke about strategic options for Tertianum and how they were going to be reviewed. How is that process going on? How much longer is it going to take? Can you give us some insights into this long-term strategy review? I could be rude and say no insight.
We said we have an objective of CHF 500 million in terms of sales, 190 sites and CHF 19 million EBIT, we are striving to boosting the added value. We're always talking about options inside. Of course, that's what we do for a living. That's our daily business. You would be surprised at all the options that we check every day. That's part of our job. That's our obligation, just like digitalization of Wincasa. Just to give you an example, we check more than 400 new companies to see whether they would be interesting for us to invest in. We're not just building contractors. We really try to shape this world, and that plays into our work at Tertianum, at Wincasa, et cetera. You'll hear from us when the time is right, but we want to treat all of our shareholders the same. Mr. Frey. I was fearing that.
Thank you very much, Mr. Wehrli, for letting me speak. What's the maturity profile of contracts up for renewal in 2019 and 2020, and renewed contracts? Maybe you could just also insert that into your annual report. Another question about something you haven't mentioned. You spoke about the net yield of the purchases or sales, but I would like to know what the figures were for Beethoven-Straße and West-Log, because you didn't mention those. On maturity or rentals, contracts up for renewal, the figure is about 13% for the next 12 months. One third of them are parking spaces, et cetera. That's important. Just like in the past, we don't want to sign contracts as soon as possible. We have learned that sometimes time works in our favor and helps us to bring up prices. We're going to try and find the right time to sign the contracts.
The Zurich and Geneva markets are very interesting for rental properties. Rest assured that we are going to be able to have a vacancy rate of far below 12%. In 2029, we have no contracts up for renewal that would worry us. Let me also add that the average maturity of the remaining rental contract time is 6.4 years at the moment. Most of our rental contracts are long-term contracts. The net yields, an additional question. The cost of modernization. For example, OVS or Stücki. That must be quite a setback, having to invest so much in these properties to be able to rent them out again. Can you maybe comment on that? Well, the investment costs that are necessary to repurpose these properties are already contained in our 2018 budget. They're not going to create any pain.
If you have the impression that we bought something that was too expensive a year ago, let me tell you, it was good that we bought them a year ago because it was 2.6%-2.7%, and today we have 2.2%-2.3% yield. The yields are going down, and that is why we feel that all of the acquisitions that were made were wise. West-Log, here we have yields of between 3.6%-4%.
What about logistics properties?
Logistics is very much on vogue. I asked the question about OVS in order to get an idea of what we can expect when other new properties are modernized. What percentage of the original building costs do you have to calculate? Well, that's always different.
We always work out, for example, if we plan to repurpose from commercial to residential, we have to look at where the risk is higher. Building apartments is much more expensive and rental income is not necessarily higher, and that is why it may be better to create offices. That is a decision that we take for each individual property. In most cases, we are going to be far below the 40% of construction costs.
A follow-up question on investments in your IT systems and care.coach. Amortization charges have risen to CHF 7.3 million, excuse me, by CHF 4.5 million. Is it going to stay on that level?
Well, we are not going to start write-off until we've concluded the project. Yes, it's going to increase. Yes. Over the next few years. Usually write-off period is five years. That depends on the service life.
You said that in the medium term, you are expecting a 6% margin for Tertianum. Now you're at 7%. Why that drop?
We have several operations that are still being ramped up, and that has an effect on EBIT. Of course, here we have the staff, we have all the operations are running, but the projected rental rate is not quite achieved yet. This is ramp-up phase. It's going to take a while. Once we're better known and the local market has absorbed it, we are going to be able to boost those margins.
Final question. On the transaction market, I saw that you re-qualified some assets for sale. What do you expect for this and next year? If everything remains the same, are you going to proceed to divestments from your portfolio? We are keeping a close eye on our portfolio, and there may be sales coming up. If we divest, then it's always a matter of reducing retail space. It would be, for instance, a great opportunity to test the market and to see at what price we could sell.
We are keeping an eye on that, as I said, but we are very careful, and it's got to be a strategic fit. A 1, by the way, is the Oftringen property, for those of you who haven't understood which one we're talking about. It's the reconversion to the DIY market, where creative investors are saying, they could build a highly creative place and turn it into a very valuable center for Switzerland. There's a lot of creativity in Oftringen, if you keep an eye on that. Mr. Frey. No microphone being used. The interpreter can't hear. You showed the chart with the rising rental income, and in small print it says, "Without divestment." What are you expecting to get from divestments? A little every year?
From the development pipeline, we expect the rental income and, of course, sales proceeds in the amount of around CHF 20 million per annum. In parallel, that's why I was referring to the third building at Plan-les-Ouates, which we were thinking of selling. The asterisk is there. We didn't really look into it, but of the four Finger Docks at Stücki, theoretically, one might sell one. The rental income would then decrease as one building less would go on to the portfolio. Below the line, you've got to have the two things, increase in rental income and maintenance of the profit potential. You saw CHF 30 million from divestments of projects, and I would assume that this is going to remain more or less the same in future years. Around CHF 30 million of sales proceeds on investment properties at further increase of rental income. Yes, please.
Wait for the microphone, please. I have a follow-up question to Peter Lehmann. It's about the maturity profile of 2019 and 2020. You said you didn't want to renew contracts early on, but maybe you can give us some indication as to where current rents are standing with regard to maturities in 2019 and 2020 compared to the current market level. What can you expect on a like-for-like basis on the current portfolio? Why don't you assume that we will have a percentage in the range we had in 2018, around 1%, Markus. Wouldn't that be realistic across the entire portfolio? In the CBD, of course, it would be higher, but then we may have B sites where it will be lower, but it's going to be around 1% on a like-for-like basis. Question to Mr. Savastano, perhaps.
I've been hearing different information from various people on rental agreements with the Zurich Airport. Can you give us some detailed information about terms and conditions for the new retail space in Zurich Airport, and explain what exactly The Circle concept is going to be, and how retail investors, retail customers are to be drawn there?
On your second question, we're going to go to the airport because the airport is close to Zurich, but is a town in itself, more or less. At the airside center, we're going to occupy 430 sq m and 700 sq m of gym, and 750 sq m of lifestyle in The Circle. We are expecting to sell the best from the head office, from the main house. We are very flexible in our design, and the store there will be very flexible.
In The Circle, there's going to be a congress center, two hotels, the University Hospital and Dufry. Dufry is known for cosmetics and traffic building products and interesting restaurants. We hope to gain new customers, especially weekends are going to be important in The Circle, and we're going to have a lot of business driven during the week. With 30 million passengers per annum, we have a great density of high spenders. We're doing this for three reasons. We would like to reinforce the brand internationally. Internationally means the airport. We want to achieve economies of scale for our head office, for our main operation. We're going to get brands we haven't had before because they're interested to be at the airport. There will be more brand awareness for the Jelmoli brand.
We're going to get new brands who want to be there, desperately want to be there. As far as the terms are concerned, of course, I cannot give you any information. Let me add that the University Hospital concept should not be underestimated. University Hospital is going to outsource parts of its services to the airport, they're going to close some segments down at the Zurich center and bring it to the airport. There's going to be traffic of people, patients are going to go there as the hospital is reorganizing. It's not an emergency ward. It's going to be a hospital for day-to-day cases. You will have seen that the [Wülfrath Hospital] has discovered this already and is opening or has already opened a site at the Zurich Airport. You have to see everything in the context.
It's not only passengers crossing the bridge to The Circle, and it's open seven days a week. Jelmoli is open seven days a week at the airport and it's not closed on weekends as in the city. You shouldn't underestimate in the current market setting and competition, we've got brands at airside that we can position and that we can offer at the airport. Apart from Geneva, Zurich is the ultimate location in Switzerland, and you can forget about the others for certain brands. There's only Zurich and Geneva. Of course, there's competitors who don't like this, but they won't be at the airport anymore. Let me add at this point about the surface areas. We're talking about 2,750 additional to the 23,000 here. There's not going to be a second Jelmoli in its true scope. The airport has been growing sensationally.
Look at the recent years, it's the place to be. I'm personally convinced. We talked about office space a minute ago. These offices will be filled, and this will mean not only holiday passenger traffic coming from Zurich North, but traffic generated directly by everything that's going to happen in the Circle. This is why we're going to be focusing on sports and be very close to health. The health issue, the health theme, which we're doing with the Pallas Clinic at the fourth level, where sports will also be located. Yes, please. The lady there. I'd be interested in the roofs. Do you have requests coming in for 5G aerials? Yes, clearly so. How appealing is this business? It's not unappealing, I would say. What about solar panels? That's less appealing, I would say. The aerials are more appealing. No, let's be serious.
There's three potentials to roofs. The aerials for one, power production, second, and third, climate regulation with green spaces on the roofs. The challenge is how can you use photovoltaics on roofs and have green spaces as well as to counteract the rise in temperature in city centers. To combine the two things, that's the current and future challenge. The aerials are easily located. I'd be pleased to take this up. We're very close to the sustainability issue. I haven't mentioned it as it is too complex on the entire portfolio. We are on a path of decreasing climate change, of guaranteeing the rise in temperature to be contained. This is from the point of view of sustainability. We're thinking about solar panels or self-sufficient buildings or buildings that can even feed power back to the grid.
The other question about the aerials, that's a business-driven question, not so much focused on sustainability. It's a difficult comparison. We are trying to play the two instruments, the roof continues to be underestimated. Architects call it the fifth façade. The roof has to be used today in one way or another, we are trying to do that. If you look towards Höngg here, you can see so much space that could be used in a much smarter fashion. There is a great deal of potential, unfortunately, there's a lot of regulations that disables a lot for aesthetic reasons. There is a big trend of making active use of the roofs. Look around Denmark, where roofs are actively used for sports or other purposes, which is not possible currently in Zurich. That's interesting from an economic point of view. Okay, further questions?
No more questions. Mr. Frey, no more questions. Completely overwhelmed you seem to be, if everyone's overwhelmed, of course, following your comments this morning, we were overwhelmed in the first place. Thank you very much for your attention. As usual, we are going to move one floor up to higher levels. Thank you for coming and wish you a nice summer.