PSP Swiss Property AG (PSPN) Earnings Call Transcript & Summary

Good morning, and welcome to our meeting. We're going to be talking about sustainability today. First one in our history, certainly not the last, but definitely an important day for us. We look forward to providing with some insights into our activities with regard to sustainability. I'd like to start with our quarterly results. And after that, I'll provide you with an overview as to what we're going to cover today. After that, I'll introduce you to our employees. Today's highlights will be a number of presentations. But of course, at lunch time, you'll have the time to talk to employees focusing on sustainability. After my introduction, and after explaining why we are presenting this green frame -- or this Green Bond framework today, Reto Grunder our CIO is going to explain more about our daily business, what we are doing on the asset side capital. Patrick Thäler, our Head Capital Markets and Treasury will tell us more about the framework, about the Green Bond framework. On the Q&A, I was asked if this was a simple process and it wasn't. It was rather complicated. But because we had a clear goal we could be successful. And I'd like to thank anyone that supported us in this. Patrik Schmid and Moritz Menges and Robert Radmilovic are also here today. They're going to be presenting the ESG rating on behalf of the Wüest Partner, which is a core element of our framework. And with Federico Pezzolato, we have an Italian just like me today in the building. He comes from ISS Corporate Solutions and is going to be presenting the second-party opinion. As you can see, we have two, one from ISS and one from Wüest, and Federico is going to be presenting the ISS approach today. Agathe Bolli who is responsible for sustainability and communications. It's going to bring us back to the scenes. It's going to tell more about transparency and materiality. After lunch, we're going to have a case study presented by Thomas Kraft. One of the more senior asset managers. He's going to be telling us more about the Hürlimann site. He will explain the history and what we do today. We're going to be doing a property tour on a tram. During this tram ride, we'll see more about the properties and we intend to finish at 3:30. But let's start off with the figures. When I compiled the slide for the first -- well, during Q1, we were critical as to Basel. And in summer, we had the feeling, well, it's getting difficult in Basel. And Peter Merian we have vacancies. And until a few weeks ago, we realized that the traction is simply not there all of a sudden the demands for Peter Merian now demand is back compared to Zurich and Geneva. Basel still remains a slightly weaker market. We have a backlog of others. We can see but it doesn't have the traction of the center of Geneva and Zurich. We are having discussions for all of our properties, vacancies. Well, the buildings are quite modern. Now the second thing, which is also very interesting, it's the transaction market. Here we have no evidence the demand for prime assets remains intact how this pans out in the midterm remains to be seen. Now as for the key figures. Top line growth of 2.3%, if we take out the COVID effect of last year, which was negative this year and positive this year. If we look at this on a like-for-like, we have a growth 0.5%. Well, last year, we basically had no inflation indexation. So half of the 0.5% like-for-like as indexation, the other half is rental to, I think the quality of the income has substantially improved over the last years. Also looking at next year, I'm optimistic that we'll have a solid top line. And despite the vacancies in some buildings will be able to show positive top line. Now as for assessment profits have gone down [indiscernible]. Now, we are focusing primarily on the operative [indiscernible]. This is important to have a contribution from rental, but most of the ratings comes from the transaction business. On the cost side, we have high discipline. We see a lot of stability in the course of the year. Our goal is to having EBITDA margin of 80%. We are about 80% to 83%. We saw this in the Green Bond framework too. Now one figure that has developed positively as a financial cost, of course, financial costs are going to increase if interests continue this way. Now with regards to the top line, we have catch-up, so it's nothing worth worrying about. But of course, this directly affects the bottom line. As for the EPS. I think we're confident that we'll be able to carry on with this trend despite increasing the interest. We do not believe we won't be able to continue with this [ CHF 0.05 ] increase. We are optimistic about this trend. What's pleasing for us is a 3.1% vacancy in Q3. I think this is some [ errors with ] the quality of the portfolio and activities that have been successful in the course the last quarter. Q2, of course, we are focusing on this vacancy figure which can be 4% or 4.5%. It was hard to know exactly how this pans out. Like I said, this year, went 3.1%. Next, we'll have maturity with primary town Zurich. There's already a follow-up contract. Interpreters would kindly ask if we could have -- if we could see the image of the speakers. It's very hard for us to interpret without seeing the image. Would that be possible? Thank you very much. Once again the request is the interpreters are requesting to see image to be able to see the speaker and the slides. Now the biggest vacancies. Well when you look at the whole thing, this whole vacancy is pretty relevant. We are very active when it comes to bigger vacancies. The most difficult. There is [indiscernible] set of assets. Of course, the assets are fairly good. The quality of assets is good. But nevertheless, in this area there's a lot of offer because it was difficult because the rents -- tenants do not need a lot of space. CHF 1000 of rent a year. Nevertheless, we are 14 to 15 months in advance. This requires time in the organization, and that's the advantage we saw this over the last year. We have a very compact team with [indiscernible] staff. We have a unit that deals with eventual support. So we are very close to these maturities. But of course, we already know that tenants are going to be moving out and that we'll need to find new tenants. What we observe on the rental side. If we have an object in the center, which we can renovate then of course, we have the potential to increase rents. The potential with [indiscernible] investments tends to be difficult which is why like-for-like next year is going to be mainly driven by indexation by inflation as well as by renovations and new builds. We can really substantially increase the rents. Now some valuations, nothing in the third quarter, but we have discussed this internally. We are currently discussing quarterly results according to the market, we have to have the portfolio fully assessed early quarter. More than 10 years ago, we had a waiver in Q1 and Q3, we do not have to have a full assessment. Basically makes no sense. But what we do is that we look property for property with regards to rental activities, whether this property could lead to a valuation, the range of plus or minus CHF 5 million, we did this, this year too. We had two rental contracts that were prolonged, which in this context too, I wasn't clear whether this was a valuation difference of more than CHF 5 million, which is why in the quarter, there was no valuation difference at these individual properties and they going to be observed in the full year review. But should there be any bigger changes on the CapEx side, we'd have to let the valuators know and they will then undertake the assessment. So now evaluation differences in Q3. Now effectively, we're concentrating on the operative income and take this as a basis also for the disbursement of dividends. Now moving on quickly. Let's have a look at the balance sheet and then we'll move on with the framework. Having a look [indiscernible] shape for us. The key figures on the unitholder equities, but also [indiscernible] value, which is being very short systems. Secondly, the ITR is the low interest rate which will at 2, which is extremely shock resilient now having the life at the [indiscernible], which is newly decreasing, used to have a duration of rather 2.5, 3 years, and we look at this option from affordability perspective. We have a strong adjustments and strong balance sheet, let's have a look how the interest rates are going to involve the next maturity, would be next September. But duration might go down within the next month or so. Now let's have a look at 7, 8 and 9, with low interest rates, we have duration. Just to give you an overview on what the balance sheet, how it's evolving. Let's move on to the framework. And before I hand over to Peter. I'd like to ask one question. Why are we going to talk about our Green Bond Framework today? An issue that we were facing that I was also facing personally. Mr. [indiscernible] used to work in a very structured way with or with our own funds and then repurposed on commercial bonds to have -- because we didn't have any normal or green bonds, but we always received ourselves as a sustainable company. And when we work with asset managers with construction companies, we all share the same sustainable mindset. So we always try to shape our company in a more sustainable way. We try to bring some things to [indiscernible] it's time to deliver a strong message on the corporate and sustainability side. On the asset side, we are pioneers in many areas -- just think about the Grosspeter Tower that already raises renewable energy solar power. But it's been a challenge to include in the corporate framework because the green bond framework is very much aligned with certificates and deliberately opted not for certificates, but rather to focus on reusing [indiscernible]. We did appear [indiscernible] review comparison [indiscernible] elaborating a framework adjacent to [indiscernible] rather the [indiscernible], and it was revolution that we wanted to adopt in Switzerland too. So we opted to adopt the green bond framework to reflect our mindset, a sustainable approach. In our sustainability report we already committed to sustainability deliver, and our employees, they don't change their approach, they just carry on what they always used to do just in a more committed way. So we want to be first at corporate green company. But basically, it's a mindset, always approached in our work. Our portfolio is further focused in city centers. That was our main idea so that anyone investing in PSP knows that they invest in a sustainable association. We want to be perceived as a sustainable company. That's the whole idea behind it. So what we did today, we'll leave room for questions. So if you'd like to address your questions -- if you'd like to ask any questions to the speakers, you're free to ask them. There you go. There's a question. Unfortunately, the speaker is off mic. So the interpreter cannot hear what the person is saying.

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[Foreign Language] We already have insight in the cash flow and operations management and the interest rates went up. Is this something that we should count with what PSP that not much contribution will be delivered by the team?

Indexation and in a lower interest rate, we'll face a different situation next year. Possibly we'll have less yields coming from sales. Costs will remain on a stable level on a larger funding between CHF 6 million to CHF 8 million. So Bloomberg [indiscernible] a spread of between 60% and 70%. See how we'll deal with the properties in the [indiscernible]. [indiscernible] just say all that is not going to be repeated.

May I ask you something in relation to the debts. Could you give an indication on how costly costs are going to go up now with the increased interest rates?

So the negative interest rates. We were secured on the bank side. Now we are possibly more exposed in the next [indiscernible] will come out next year September, with around about CHF 3 million. The bank side, I'll just have a look at the situation. And now let's focus on the Capital Market because of the negative interest rates that we used to have will compensate. Now when we have a look at the five years prospect within the next five years. You can say between 30, 40, 50 now. And now we are at probably [ 360 ]. And then 30 and 40 and then we have a top line growth with its growth, which is still expected.

Regarding the transaction market, and there any larger portfolios that will be offered? In Germany, for example, many companies, which we just know portfolios but it's not possible. What about larger portfolios in Switzerland. What's the situation like?

We haven't seen any larger portfolios. We heard about a private seller who might be selling private portfolio, it might be one, more remark on ESG. But at the moment, we are not offering any larger portfolios. But maybe my colleague will go into more detail regarding the current market situation. All right. Thank you very much. I'll be available if you have more questions later on also on a one-to-one level. And I'll hand over to my colleague. Thank you.

Thank you very much. And welcome all, welcome from my side to [indiscernible] to be able to send out sustainability asset portfolio strategy today. Generally, it's already, generally we're not doing anything differently, but we rather carry on with what we used to do in the last year. My colleague will go on later regarding on green bond framework. To start with, I'd like to stress that we have a high-quality portfolio with a great infrastructure, a very well connected. And with many commercial properties in the city centers The portfolio profile is a profile that we worked on in the last 10 years. All of our properties are located in urban areas and are based on sustainability and criteria. Usually we [indiscernible] try to avoid fossil fuel based heating procedures. What else can we mentioned regarding our sustainability strategies, we focus on measures that work [indiscernible] portfolio benefits from in the long run, when an example has already been mentioned, the Hürlimann area building complex where the entire energy supply [indiscernible] transformed to make sure that this building complex will reduce the CO2 emissions significantly. After the lunch break. My colleague will give you some in regarding this example. Then we are working with -- we work with the building certificates as Giacomo already mentioned. We were convinced that we should not only focus on the certificates but they're now out of the regulation. When we have a look at Grosspeter Tower. We deliberately did not opt for a certification even without certification. It's a very sustainable building, thanks to the renewable energy systems and photovoltaic system used that's installed five years ago. That also is a very important point for us only a property as well used can also be a sustainable property. Now with the new ESG rating of the first partner, which Patrik Schmid is going to be presenting to us later on. We now have a tool, a path in order to ensure that our portfolio is subject to regular and all-encompassing sustainability audits. Well, the weaknesses and the strength of the properties, thereby become visible and with targeted measures, we can then work on improving anything that requires improvement. You can currently see the disclaimer. That doesn't apply to me. I simply thought that present without slides because I think we'll be seeing sufficient slides today anyway. But perhaps you could change the image away from this disclaimer. I would like to now speak about one of the most important elements in our sustainability strategy. And that's, of course, CO2 reduction. If we take a look at the buildings in Switzerland, they are generally speaking, responsible for 40% of the energy consumption and whatever source you want to believe they are responsible for about 1/3 of quarter of CO2 emission. And if we want to achieve the overarching climate goals then it is clear that the real estate sector will also have to contribute towards achieving these targets. And at the PSP, we have known this for a while now since launching sustainability program in 2010. We have consistently worked on making our buildings more environmentally friendly as much as possible, of course. At a portfolio level, the two elements we focus on. On the one hand, the reduction of CO2 emissions. And on the other hand, of course, being careful when using our resources. If we look back PSP between 2010 and 2021, halved CO2 emissions from 21 kilos plus square meter to 10.5 kilo per square meter rental space. That in itself is remarkable reduction, and we will continue reducing until 2035. We want to go down to 6 kilograms per square meter rental space by 2035. And how do we achieve this goal? Generally speaking, we're replacing fossil coal and gas heatings with alternative heating systems. This could be wood or also heat pumps, an example that come into use, then we're also buying or producing our sales renewable electricity. We undertook great efforts in this area. And over the next years, we want to increase the capacity of our PV parks from 2-megawatt peak to over 4 megawatts peak, for this, we created a new pipeline. And then thirdly, we're increasing energy efficiency through building measures for example, by improving technology or by improving the insulations of the buildings. Of course, in the city center, this is not always easy to do with properties, especially when it comes to listed properties but we have a lot of experience, and we know what measures create what effects and this afternoon during the tram tour, we will see that there are listed buildings in the city center that are sustainable. And then lastly, we're also becoming more efficient in our business itself. We started a campaign this summer, and of course, the best way to reduce CO2 emissions is simply to consume less of it or to optimize consumption at least. I think CO2 reduction is a central element in our sustainability strategy. And for this, we also have modernization, measures oriented on the life cycle of buildings. That is, of course, also dependent on the majority of rental contracts. So we do not simply want to implement measures without considering the rental situation. It is important to do this in a way that is beneficial for all of our stakeholders, and we found a good path for this. So in summary, it can be said that with regards to our operations. We now have a clear view as to what is the state of affairs with regards to our reduction journey and what path will be going down over the next years. Of course, we also have the Green Bond Framework, which will be extremely important in this context. Allow me to say something about another topic. The built in CO2 emissions they two are important, of course, because in a building cycle, it is clear that this is where the most emissions are being produced, where most of the CO2 emission ensues, of course, when building, an actual building. And here too, I think we have an advantage of our existing portfolio. Our buildings have often been direct for over 100 years. It can be said that a large part of the CO2 emissions has been amortized, therefore. But of course, in our modernization efforts, we try our utmost to build environmentally friendly, to pick the right building materials. As with work in Basel, for example, we try to recycle building elements, of course, the key word here is the circular economy. When it comes to our new builds, this year, we analyzed the built-in the Scope 3 emissions. We will do an evaluation here. And I'm sure that we're going to communicate about this in due time. But they are not that -- all that many new builds so the impact will be somewhat limited. That would be -- it with regards to our sustainability strategy on an asset level. And. I'd like to add one1 further point in order to achieve all these goals. One thing that's important and that is that we need internal and external intelligence. It is important to come together, to work together on our assets and rental. I think our staff is an enormous advantage for ours. We have a diverse team of real estate experts that are in touch with each other on a daily basis. And that, of course, offers a certain degree. A certainty that we will be able to find the best mid- and long-term solutions for every property, be it for the tenants, be it for the investor, but of course, also for the environment. So do use today's opportunity to talk to each other. Ask any questions you may have. Feel free to get in touch with me, too. I am available to answer any of your questions. And without further ado, I'd like to now move on to the actual topic of today's meeting, and that is the Green Bond Framework. And I'd like to wish all of you much fun at today's event.

Now I too would like to welcome you to today's Sustainability Capital Markets Day here in Zurich. I'm Patrick Thäler, and at PSP, I'm responsible for treasury and capital markets. Now in this context, over the last months, I had the pleasure to accompany the Green Bond Framework here at PSP and the center of this project is, of course, as the name suggests, the Green Bond Framework. In the course of the next minutes, I will briefly summarize the framework. I'll summarize quite a few months of work in 10 minutes. But I'm sure you will be able to handle it. I'm not going to be talking about the overall PSP sustainability strategy. I'll really be focusing on the few important points of the Green Bond Framework. Right, we're not the first ones in Switzerland, nor the first ones in the real estate industry to enter the market with a Green Bond Framework, which is why I assume that most of you know the basic idea of such a framework. We created this framework together with the Green Bond principles, which is why I want to be insisting on every individual point as Giacomo already mentioned. In the past, of course, we observed developments in the capital market. And we realized that investor interest is becoming greater and greater to invest into green instruments and products. As that has already been mentioned, we do not want to have different bonds, ones which are green, others which are brown or purple or whatever. For us, the product or the instrument, green bonds offered the possibility together with the already mentioned green investments from the past to actually pursue this entire transition. Now the three main points that to be seen on the slide, which I would like to delve into. That is the use of proceeds, the green asset portfolio approach, and lastly, the green bond report. Now to the proceeds. For me, of course, this is a central element of this framework because that is what our funds are being used for, and that's how the funds are being mapped. In our framework, we decided to go for the category green buildings according to the green bond principles. I'd like to mention -- but this doesn't mean that we aren't undertaking any efforts in area of biodiversity or energy efficiency or renewables. We, of course, do so. But we decided put assets at the center of this framework in our portfolio, and that is why we decided to go for this. And then we have three subsections within it. Can be seen on the slide. These are the return properties, renovation properties and new builds. These categories relate to the categories of the EU taxonomy. It didn't set up our framework exactly as a taxonomy, but there are similarities and some other points. Right, for our properties, so that they are classified as green buildings, we defined two criteria. On the one hand, the ESG rating and as we've already heard today, our Wüest Partner is providing this for us. Here, we've determined for 3.5. I'm not going to speak about this rating methodology in detail because later, Patrik Schmid is going to be providing us details directly. Now the second criteria is the CO2 emission within our operations. That's extremely important to achieve our goals and the goals set in Paris. As you can see, we measure these limits in CO2 emission per square meter per year until 2035. And as you can see, we are becoming more and more ambitious. This ensures that the portfolio of green assets becomes more and more sustainable during the duration and we managed to achieve our goals. Now in practice this may lead to one property, which is below 12, still remains in the portfolio but then we'll be leading the portfolio in 2025 or 2030. And when we invest in sustainability, they might come back. So there can be dynamic changes here. Small side comment on new builds, we, of course, already have a more ambitious goal today. 5 kilogram per square meter is the limit we set ourselves. Now of course, if a property is finished and if there's a reclassification, this ambitious criteria continue to exist. Now these two criteria and/ or criteria, we decided that every property must fulfill the ESG rating goal as well as a CO2 emission criterion. So both have to be fulfilled. That would be it with regards to green building, first of all. When it comes to the green asset portfolio approach, it works as follows: the individual green buildings are added together [indiscernible] intervention that's for innovations of market adjustments aren't considered only every added front that is invested into a property. There's no role with Swiss franc was invested this year five years ago. What matters, but it was spent on reducing emissions. In the Green Bond Framework we also didn't mention any emitted look back period. Now on this table, you can see an overview. What it says that today we know pretty much exactly what property is going to be entering this portfolio and which were not preliminarily because unless this is only going to be published next year. And Ernst & Young is also going to be auditing this, which is why it says provisionally here. This afternoon, we'll have an opportunity to look at one or the other property, which will most likely be entering this portfolio. Nevertheless, an overview. 3 billion green assets is what we have at the moment. And then we have a green bond portfolio of 1.8 billion. Over the next few years, the goal is for this green asset portfolio to be bigger than the green bond portfolio. That's going to be tested on a yearly basis by an internal community with each new emission. We know that this approach isn't new at a European comparison level, but it definitely is in Switzerland, which is why McKinsey to provide us with a legal opinion. I told us that this reclassification can be done. [indiscernible], the bank with whom we partnered this morning with the official communication. We're going to hear more about this later on [indiscernible]. Another representative is still inside and will be [indiscernible] I already mentioned the green bond framework. It's a fundamental component of bank, it consists of the allocation report and [indiscernible] have seen on the last table on green assets and outstanding green bonds [indiscernible] published, a new property that is included in the green bond strategy. It will also give information and quarters supply and green bond energies with renewable properties and more information will be published. As we only have limited time, I'd like to mention that this is only an overview. If you'd like to have more detailed information. You can have our website looking for the Green Bond Framework. And you can also process and the audience with is over the web. You can also ask your questions online and if I have the time, I'll be glad to answer your questions. [indiscernible] is what you can expect at our next publication in 2023, which is new green bond report. Now I am very much closed forward to your questions and to [indiscernible] exchange and I'd to thank -- say thank you to our internal and external partners and for your support throughout the last month on. There was one question here. We'll just hand over the microphone.

I have two questions. [indiscernible] Did I understood this correctly that all green assets will be allocated to bonds which are green have all private placements with the allocated to the less sustainable assets. I just want to make sure I understood this correctly?

I cannot give you any information on the cost structure regarding the second question, correct the green [indiscernible] are met on the [indiscernible] bonds. We still have some time left and within the next months, we'll also see how all the other points can be shaped in a more sustainable way.

[Unfortunately, the speaker is off mic and the interpreter cannot hear the voice]. [Unfortunately, the speaker is still off mic. Thank you for your understanding].

[indiscernible] that was just published is that a correct that is not property or that an overall total amount is mentioned there. [indiscernible] used to proceed in the last years to our revision department will conduct [indiscernible] our single properties will be listed. And are not relevant with this case either.

One question [indiscernible] regarding the emissions and the remaining portfolio will not be unveiled. Are there any accessible information regarding the rest of the portfolio?

[Unfortunately, the speaker is off mic and the interpreter does not have any sound.] [Unfortunately, this speaker is still off mic and the sound is insufficient for interpretation. Thank you for understanding.] [I'll try to wrap up again as soon as the speaker is using the mic again. Thank your understanding. The interpreters are connected remotely and do not have sufficient sound for interpretation. Thank you for your understanding.]

When [indiscernible] use of proceeds [indiscernible] green bonds, future green bonds, will not be linked to the green bonds or those yields that were already distributed?

From a technical perspective, they are adopted thanks to the use from proceeds and from practical [indiscernible] met. And the Green Bond Framework, we have a funding and also a refunding which mean that if we refund green bonds in the future, we don't have that many funds for future investment, but they're rather met with the bonds within portfolio. We try to make sure our portfolio is becoming more and more sustainable.

How can you make sure that you are being efficient because your investments in sustainable energy and with them those investors in the [indiscernible] how do you [indiscernible]?

[indiscernible] Internally we have a team of experts to manage our efficiencies within asset management and also we cooperate with external partners.

One more question. Some owners include in the letting contracts for you make sure that the use of energy becomes more sustainable?

Our intention was to have a green lease with one of our partners. And we'd like to make sure that this strategy is also implemented with other tenants, too. All right. There are no more questions.

I now have the pleasure to hand over to Ralph Caluori from ZKB. Thank you.

Good morning. My name is Ralph Caluori [indiscernible] capital markets with ZKB and I have the pleasure to present the [indiscernible] green bond strategy. Within the next minutes, I'd like to talk about the following points. I'd like to give insights on the green bond market, which is [indiscernible]. I'd like to talk about the reclassification of green bond portfolios in the capital market. What the impacts are for the Swiss capital markets. You can see it on the slide on the left-hand side, [indiscernible] new wave of sustainability capital markets in Europe and in Switzerland, it took a little bit longer to be launched. And in the last two or three years, we try to shape our bonds in sustainable way. Our sustainable bonds gained momentum, there was much more demand. We ask themselves what sustainable strategy could look like and how we included [indiscernible], we are now in '22 where already every 10 bond offers some sustainability level. So there is a shift and the sustainability topic has gained momentum within the best capital markets. We try to communicate our efforts in our sustainable strategy. So PSP together with us tried to decide to meet the team in the investor bonds, but it includes a whole entire portfolio within the green bond strategy. And what's important here is there'll reclassification or requalification, that's not new [indiscernible] mentioned through an example also with them three other European adapters to opted for this approach quite a new innovative tool that was already and assessed successfully. But as Patrick Thäler mentioned, this approach was then introduced in Switzerland with the reclassification that took place the first time. Now how do we approach? It's all of note a shift of the used yield, a reclassification of yields [indiscernible] not much just of any sort of investor rights/ So we can approach that investor family. As published this morning on the stock market the reclassification reviews was communicated which means that legally reclassification is already has already advised, completed. [indiscernible] to offer the green bond and sustainability slight in green bond and we expect this data to be included within the next days. This brings me to the last point already. Now what does this mean for the capital market in Switzerland? It's exciting to see that we have a new big green bond debtor in Switzerland was CHF 3 billion. Now that with PSP that's what the list looks like [indiscernible]. Now the property markets has been affirmed, embedded. Now we have more than 2/3, 8% in an all of a sudden, all the available green bonds can be invested with more than 20%, which are good news for the Swiss capital market. So much from my side, I'd now like to hand over to Patrik Schmid from Wüest Partner would be here for any question. Feel free to let me know, and I'll be glad to answer them.

Thank you. Good morning, ladies and gentlemen. It is my pleasure to present the ESG portfolio reporting and to go a bit deeper than what we've heard the two, how does this rating work and what are the most important parameters. I'll need about 30 minutes, I'll present what sustainability means for us at Wüest Partner and I'll now speak more about the method which we applied. And then I'll talk about reporting, which we've heard more about before. And then, of course, any extensions we plan in the area of sustainability. Let me commence by saying the following: which is pleasing. And we've had it before that things are happening in the area of sustainability, and we're very pleased that PSP and other real estate investors and that the whole industry knows that something has to happen. And we, as Wüest Partner believe that we must contribute towards this too. And with our combination, we have consulting, we have evaluations, and we have our data. And with that, we believe that we can contribute towards making the real estate industry more sustainable and therewith generate sustainable added value. At Wüest Partner, we have 350 experts in our house and 50 of them focusing on sustainability. For 14, 15 years, we've been dealing intensely with matters relating to sustainability, more about that later. Perhaps in ours from ratings. We are involved in PSP ratings, where we also do data and market analysis. And you can, of course, ask me more later on when we discuss market development. We just set a hitherto. When it comes to sustainability, well, about 10 years ago, sustainability also became measurable in real estate ratings. And with regards to different aspects, we also decided to introduce sustainability more deeply. We are a member of [ PRE ], the principles of sustainable investing in German. We are a member of the ECO initiative, as you know it, in Germany, various investors came together in order to take a next step and to together set up a framework as to how ECO sustainability can be measured. And I'm sure you have us and your companies, too, and it's also the case at PSP. Well, a service offering itself is also becoming more and more sustainable that's our commitment. We are also obliged to also explain to our customers how to become more sustainable, but we can also make the real estate industry more sustainable. And this also includes training our employees because we believe that in the future, every employee has to have the possibility to offer consulting in the area of sustainability. And what this means full ratings or for market analysis. If we take a look at our product and services, we have four pillars. Starting on the left-hand side, these are the performance measures that exist. We have GEAK in Switzerland or GEAK Plus, which goes even a bit deeper. Minergieis also known and other labels with it. So energy labels that exist with regards to buildings that is something we offer and, of course do. Different funds are GEAK certified in Switzerland. Another step is Grey Energy. We heard it today. That's a further point that is added to this. That is something we offer, and we do this with our daughter or sister, partner. So we have certificates for individual properties. And here, there are different certificates and ratings that are available. I'll say more about that later. As an extension all the way to larger areas. And here too, of course, will be able to offer certificates. The next topic is CO2 and climate protection. We have a CO2 calculator, which we also used for the ESG rating now where portfolios can be observed in order to see how this is going to develop over the next years until, of course, the portfolio becomes CO2 neutral but other topics also natural dangers as well as climate risks, which have an increasing effect on the portfolios and properties. And then the last thing is we also reporting or analysis for our customers. Three success stories, if I may present. These, which are also the basis for the further development of ESG ratings for BAFU for the Federal Ministry for Environment, we conducted a study as to how to deal with an existing portfolio of properties. That's important because we have no ratings or any aspects with regards to how it is going to work with the circular economy. I know it's definitely going to be one of the next topics, and we were able to look at this together with the ministry as to what the effect is here. Another topic that is very important for our future. The urban heat maps. How is this going to develop over the next years. If it becomes hotter in our cities, and this is going to be important for PSP too, and of course, is going to influence ratings cities, especially in the central areas are going to developed. That's going to be heat spots. So they are going to be harder than can be seen here in the future. And then we also have PACTA. This is among tool CO2 emission calculation. Here, one million buildings, and this is being done every two years. Well, this is a model to see how much is emitted in the building sector in order to then see how this is going to affect the future and what can be done in this area. Then I'd like to move on and speak about the method I'm going to show you our approach now. If you take a look at traditional ESG ratings, you can see that there's two possibilities to tackle this. On the one hand, you have the building perspective. You could say that in Switzerland, this is the GEAK approach or the Minergie approach where you go very deep. In BREEAM, for example this is responsible for a lot of aspects were not has to be fulfilled and assembled, but it's also an individual property. And then you have the portfolio view on the other side. This is more of a high-level approach, where perhaps you only measure, a few aspects and have a model-based approach. And that's always the first aspect you have to consider. The second topic is the availability of data. With other words, do you have data to match our sustainability, you have data, you can look at to see what the improvements are generated and the right data also measured. And we heard it before over the last months, we worked on this project. We worked on developing a rating, and this can take a lot of time. But at the end of the day, it should also be reasonable. And that's why we're also ensuring as much data as possible is measured automatically or that already available data can also be used in this context. A very important point of standardization. In Europe we have an EU framework in different countries and have different initiatives. And till date there's no standardized ESG rating at a global scale or at a Swiss or European scale, which is why this framework must be set up in such a way that its future proof and can be adjusted to any changes that will ensue and these will ensue. And then the last point relates to transparency. At the end of the day, it is important to understand how ratings work, what aspects are being considered. This is important for the investors on the one hand, but it's also important for the real estate owner in this case, PSP, it is important for you to understand at what factors you can work on to make your portfolio more sustainable and to improve your rating. And we believe at our ESG fulfills these conditions. So we located between the overarching portfolio, viewpoint as well as the individual property viewpoint, somewhere in the middle. If I look at the goals on our end, well, we try to be transparent when we examine the portfolio with regard to sustainability. And we also try to have a compact databased catalog of criteria. And then the second thing, controlling instruments on the 1 hand at a strategic level, but also at an operative level, I said this beforehand to ensure that the owners can know where can I do something? Where am I actually going to have an effect but this is as important to quantify the risks and the possibilities. And at the end of the day, we ensure that as much data that is available can be used, not only now but also in the future to ensure that there is not a huge effort required every time to undertake this rating, but that instead, this is a seamless process because the data is already available. In order to do this, we took a look at different providers and offers in order to see, okay, how can they be collide into one rating can share that as many criteria as fulfilled as possible, how do we do this? Well, we optimized all of us at first and ratings indicators were such based on our in-house analysis. We try to have an objective overarching view with a different weighting of indicators that all of these are also in the public eye. You can read up on this, what indicators are used at what wage and then we also try to automize the whole thing as much as possible to ensure it also becomes usable in the future but can also be adjusted if need be. Briefly speaking, this is the ESG rating? Of course, this can be locked that more detail, but starting on the right-hand side 3/4 of the data is collected quantitatively. With data scaling of the results ranging from 1 to 5. I think this is important, too. In all of the ratings we use, we have a scale of 1 to 5. One is the lowest scale and five is the best value that can be achieved. That allows us to be comparable to other ratings. And if you take a look at the weighting, the three topics, ESG, well, the E, so the environment has a 40% weighting, this is also linked to the fact that we can simply see impact. But the impact on the property on the value is still highest when it comes to the environment and the social and government areas are perhaps a little less heavy and waiting. Of course, we are CO2. We have renewable energies here. And then we have the overall consumption. On the government side, we have the business process. So for example, what do the processes look like? And perhaps the life cycle cost as a part of this and then where is the property located? What's the usage and what about health and security. At the end of the day, we have 10 criteria, and I'll say more about what this means. We have 23 indicators and 76 parameters we measure in order to get to this ESG rating. Let's move on to the catalog of criteria. For you to be able to understand this better, we have SDG goals, the sustainable development goals of UN. You perhaps know the 17 goals that have been set here grouped into the three ESG topics, so environment, social and governance. And on top of that, further goals have been added to this, and that is the consumption of resources, social integration as well as transparency and participation. And here, we can see what aspects should be measured in order to be able to do the ESG rating. And you can see that on the environmental side, there are many topics with regards to energy, materials matter, water consumption, but also mobility and transport topics are important here. The city climate plays a role here. Then we have social integration. So infrastructure, how easily it is to reach the building and the usage flexibility that is provided by a building and then also the external area. And last but not least, the building fulfills all of the health and security requirements. For example, you won't have to fall down from stairs and then there's the covenant issues to which have to do with the provider themselves. But it also relates to what is being done in it. Trade possibilities, possibilities to rent it the place, all of these topics related to governance. That's what it looks like if we divide this up. And you can see the three topics on the 10 criteria contained herein, and then we move down to the sub criteria. If I take environment as an example, we take the greenhouse gases and then we have the CO2 consumption. We have energy topics here. For example, the energy demand of the building. And then we have the share of renewable energies. And we have the consumption. We have, on the one hand, the density, the usage density contained within it, but as well water consumption, i.e., how much water consumption applies to a specific property. And then, of course, the question is also can this be proven. This is even being measured and these are topics which, of course, needs to be observed in the future too, perhaps some of them are being measured yet today. And we have the social aspects here, PSP with its central locations, certainly. On the right hand, we have the social economical structure, i.e. are diverse is all of us, how many different offers are there then we have the usage, that's accessibility of a property on the one hand and the flexibility within it. And then we also have the internal and exterior areas. What possibilities exist to meet? And then well-being and safety that too is an important area. These are the external emissions to transport, for example, how loud is a certain location? Then we have internal security and then, of course, all matters relating to the environment, a play an important role here. Now with regards to government, we look at the company processes. Let me take a look at what is happening within the buildings. With the service again are being conducted you ensure that sustainability is done together with the tenant. All of these two are topics that play a role here and then regional economy also plays a role in this context. So life cycle cost, for example or the tradability of a property. We heard this beforehand. But an object that is tradable and isn't vacant, we'll also have a positive aspect on sustainability. And then last but not least, the site location is also a topic here. And we have environmental factors. Let's take a look at both of the some of these criteria. This is only [indiscernible] on the left-hand side and we have CO2 emissions are going to evolve until 2050. Regarding the different entities of oil, gas and [indiscernible] and how the portfolio is going to evolve in the future and something is going to create importance such as the project fact we also have a chance to compare your portfolio with arable other portfolio to see how you are confirming. And we have a look at the heating the heat map. This is something that the owner can have an impact on, for example, we have seen area on the roof. We can have green [indiscernible] and if such measures improve the situation, of course, is also influences the rating. Now another material public transport, how long they have to work, get to the next bus stop to reach, offer such as car sharing, e-mobility and then exterior with green roofs, for example rooftops. This is a property not with PSP. Roof, which is not green, but with green areas that surround the building, which also has an impact on the rating, of course. You just figure out how the point [indiscernible] Now location, a very important criteria the micro and macro location. First of all, were is that located within Switzerland, which municipality and then micro location within the municipality. Is it located centrally. On one hand, we see how the living quality perform for all related to PSP on the right-hand side, which stands for obvious years. More [indiscernible] the better quality performs, which also has an impact on the rating. Then the topic of wellbeing and safety, the road and rail noise, day and night for example. And distance antennas and power lines or radon with environment hazards, traffic noise. For one example, which is from our data, a hazard because of the things that may occur in special areas, something that may not observed very frequently with earthquakes flooding and so on and so on. In the Netherlands, for example, the situation of course is much different -- differently and when you know you are below sea level, the hazards are a lot different than when you compare with Switzerland. And then the corporate process, which is an extract here from a survey that was conducted by PSP, so mostly affects that were already -- that already existed. Our aim was not to have different ratings but to have an interface of following of the different criteria. Now this is what the reporting looks like. We have a scale from on 1, very bad to 5, which would be excellent with the property in Bahnhofplatz, for example, very centrally located. And there was a fundamental renovation that took place and then we made a conclusion of the results, and we concluded, compared it with the overall portfolio and also we compared with selected KPIs to know what the performance looks like in comparison with portfolios. Now let's have a look at the report. A property that's caught 3.8 and we have an average portfolio grade of 3.6 which means that we performed above average here, which is also for a criteria of PSP properties. You may ask yourselves 3.6 or 3.8, is a good result. Does it mean that the property is sustainable? Yes, indeed. FI would be the very best property in a very best location and the most sustainable property, which means that everything should be very green. The building, surroundings and it should not have any noise pollution at all. And being at the main station in 2 minutes-walk . So it's really a challenge to compare different properties here. So this is why even a 3.8 or 3.6 scoring is an excellent score. Now we'll see that this property received a 5.0 for a very modern heating system, scoring very well. On the other hand, in the city centers, were -- are under-preservation order. It's also a challenge when you renovate such properties. So not every property is allowed to use water from a lake or to use district heating or to use a water pump or to use solar energy. So there are different challenges involved here. And we also included the topic of water efficiency and it's very difficult to be measured. So it's difficult to have evidence-based results there. And you can see that we have properties with excellent scoring, some criteria that we involved could still be improved and some criteria cannot be met because of the location because of preservation, monument preservation, historic preservation regulations. I'll wrap up now. And if you have any questions, I'll be glad to answer them later on. But of course, my colleague will be able to give so much more detailed insights on the topic. The property landscape is still changing with regards to sustainability, more topics are being included, such as EU taxonomy, the harmonization within the EU taxonomy or conformity with EU taxonomy. Then Scope 3 such as green, gray energy carbon emissions. And such properties do not see any ratings anymore like stranded asset analysis and the required diversity and reporting and circular construction. We know that the market is ever evolving, and we try to make sure that, that we are still able to compete in the future. So even if the rating has a future perspective, it's rather a sample rating, where some aspects included that can be still improved in the future. Let me conclude with a few references. It's not the first rating that we conducted there regarding this scope and also regarding standardization. We conducted such ratings with other portfolios, too, on the -- to focus on the important client in Germany. The rating that we conduct will be used more frequently in the future as you have heard in Switzerland on very sustainable properties in many places. We appear on news. Switzerland's still lagging is -- in -- it's regarding the ESG report. So the stuff that we took and that PSP took was a very important one to shape the future. So thank you very much from my side. If you have any questions, feel free to ask them now.

[Speaker off mic] Now what about the Green Bond Framework? I think it's a bit strange that environmental topic only reflect a 40% of the whole framework. Shouldn't it be a higher percentage?

[Unfortunately, the other speaker is off mic again. Please, apologize] Wrapping up, we need much more commitment and transparency in the future. [Unfortunately, the sound is too poor to be interpreted. The interpreter apologizes. Thank you for your understanding.] The general problem of many ESG systems with the average usually goes south, because properties improve. Which means that let's say that the average is at 3 at the moment. It will probably go up in the next years. Or are there any measures to make sure that the average will remain at 3?

I mean, nowadays in Switzerland, no one has -- none of companies offer any average properties any anymore. How can we deal with these 2 aspects at best?

There are properties that do not meet those criteria even though it may not be communicated very openly. But it's true that competitors evolve and something that's standard today will not remain a standard 2 years from now. You can see this with the example on the CO2. a few years ago, the properties wouldn't have met today's standards. So we wanted to make that those scorings were independent. So we assessed the CO2 performance and PSP on their side, also thought about how to improve their [ petroleum ]. When you talk about sustainability, we should use the state-of-the-art heating as long as they still function. If I have a heating that may still work for another 3 years, but that's not classified as sustainable, this is a question of gray energy and an aspect that has to be taken into account. Though from a sustainable approach you might you'd like to take off the heating and when you have a holistic approach, you rather want to make heating run as long as it is still functioning. It will not use more resources than needed.

The average value of more properties included in the ESG, how do they perform? Do you have any -- try to give, kindly working on the benchmark systems also in relation to the property prices.

It's something that cannot be answered yet. We have a lot of data that score around 3 in average and the portfolios are very dynamic. So when we go out with e-mobility from 52 tap, 100%, many of the properties just score much better than they actually do at the moment. And when we compare PSP portfolio with the rest of the properties in Switzerland, we usually have very good location, which is an important criteria -- criterion in relation to sustainability. We made important investments in the last years. So as in the portfolio, our portfolio scored much better in terms of sustainability compared to other portfolios. So with the location being a very important factor here. In that case, I'd like to say thank you very much. And [ be ] with you soon.

Good morning, everyone. Well, almost good afternoon for the British standards. But thank you very much for having me here today. Just looking to go to the right slide. Okay, here we are. So thank you very much for having me here. My name is Federico Pezzolato. I'm responsible for the business development of ICS, sustainable finance services in the EMEA and APAC region. We had the pleasure to work with the PSP team on the -- for the provision of the second-party opinion on their Green Bond Framework. And indeed, just a few overview of our organization, I represent your ISS Corporate Solutions. We have a very strict separation between the sales activity in -- of advisory services and our second-part opinion services from the execution of the mandates. Indeed, the team in charge of delivering second-party opinion is beyond the firewall, the internal firewall, working for ISS ESG, where we have all the ESG expertise. We were born as an ESG rating agency almost 30 years ago. It's still common that we acquired -- that was an independent ESG rating agency that we acquired in 2018, and now it's part of ISS. And from the ESG rating expertise, with the development of the green bond market in 2014 after the publication of the ICMA Green Bond Principles, we started to develop also the SPO practice. At the moment, we have a team of about 30 people around the world in different locations with different expertise, and so far, indeed, we delivered more than 500 second-party opinions. There is, for clear historical reasons, a very strong legacy and presence in the DACH region and in the Continental Europe in general, but we diversified also thanks to the growth of the market as we have seen in the previous presentations. Especially in the last couple of years, we enlarged our activity to a number of other countries and in many other sectors, indeed, this diversification is mainly due to the appearance on the market of the sustainability-linked structure. But our expertise, if you wanted the track record, reflects, still, very well the market -- the distribution of green and social bonds in the market with financial institutions, utility and real estate companies, being the most important issuers on the market until so far. So in terms of credentials, you have still here some names of the companies and institutions with which we work, including also the Swiss Confederation. We recently provided an SPO during the summer also to the Swiss confederation for their Green Bond Framework. And in many cases, we implemented also the new taxonomy depending on the requirements, the new Green Bond standard, depending on the request of the issuer. Indeed, we are in a market, as you know very well, where there is not yet a recognized international standard. There are very good practices that are described, at least at governance level by the ICMA principles. And then there are different criteria, different approaches. And our role indeed is to provide independent views and assessment the sustainability credentials of the issuers' framework and specifically on the selection criteria of the different user proceeds categories considered by the issuer green bond or social bond framework. And therefore, our analysis are mandated by issuers, but the main beneficiaries are probably investors that read our second-party opinions in order to get your information and having -- building there in order to build their informed view on the eligibility of the bond according to their own selection investment criteria. Now the final objective, clearly, is to mitigate as much as possible the greenwashing risk, and we try to serve the market, delivering reports that are structured around 3 different sections. The first one is about the assessment of the framework itself. So the alignment with the international principles and we are referencing here, clearly, the ICMA Green Bond principles. But it's possible, so there are some issues that are already touching the European green bond standard. Even if it's still a draft, we'll see something more like next year probably on this. The second -- so this is a very, if you want, governance assessment on the respect of the market standards and the market expectations. The second section of the SPO is about the user proceeds in this case, currently, regarding the quality of the eligible user proceeds categories, so the selection process, the selection criteria, and effectively the due diligence that is carried out by the issuer in order to identify the eligible assets in their portfolio or to finance future assets to be included in their portfolio. And the final element, again, this is a matter of consistency and a sort of reality check on the robustness of the framework. We provide also an analysis of the ESG approach of the issuer itself. So we analyze the link between the rational of the framework and the overall strategy of the issuer. Regarding the first part, clearly, we have already seen, in the presentation of Patrick some references to the structure of the document. Clearly, this is about the first part. So we analyze the description of the user proceeds, especially the criteria for the selection of the eligible assets and then also the other commitments that are required by the ICMA principles, namely the management of proceeds and more and more important, the reporting commitments. Indeed, we see there is an increasing interest from investors, not just about the selection criteria, so the construction of the portfolio, but also the ability, the capacity of the issuer to report regularly regarding the composition of its portfolio, not only in terms of allocation of the proceeds, but also, I would say, first of all, in terms of impact generated by the investments. And we have seen these increasing interest coming from investors reflected also in the increasing demands that we receive from issuers, to which now we provide also post issuance verification. So it's not just -- the SPO typically an ex ante, so a preliminary analysis on the commitments of the issuer, but we see that there are more and more issuers coming to the market, requesting also post issuance services in order to demonstrate effectively that the portfolio is aligned with initial commitments of their framework. Now regarding the PSP SPO that we provided, as you see here, the valuation is positive, definitely. Our evaluation is just qualitative, because since we work on basically on companies belonging to all sectors and the market guidance, at the moment, is very high level because the -- we know that the ICMA principles do not provide any clear indication at the moment regarding the criteria to be selected, to be adopted by the issuers in order to identify the eligible assets, there is still flexibility in the market to develop a specific -- an issuer-specific approaches as indeed PSP did. So our analysis in this science is to check if the framework is aligned with the market standards and with the good market practices as it is in this case, the quality overall of the eligibility criteria adopted by the issuer and then also the consistency between the rationale of the framework and the overall strategy of the issuer as an organization. And this is the overall assessment and you will find you will find more details in the SPOs that is public now. And regarding the SDG assessment based on our own evaluation or our own methodology, clearly, we have been able to analyze the different criteria in the context of the overall PSP approach to sustainability, identifying a positive link with the UN SDGs 7 and 13. We know that, clearly, the UN SDGs have been developed in order to provide a sort of overarching framework for sovereigns, but they are commonly used also in the corporate domain in order to describe the different impacts of the corporate activity. And this has been incorporated also in our own assessment. And you see here the evaluation according to our own methodology. And secondly, the specific topics that we consider in the assessment when it comes to green buildings. So there are at least, of specific KPIs that we analyze, subjects that we, according to our methodology, are significant for green buildings user proceeds and there are site selection, health and safety, the environmental aspects of construction, which were used -- safety of users and conservation and biodiversity management. And we analyze these elements considering a variety of different sources, clearly, first of all, the framework of the issuers, but then also the corporate policies, so all the information that the company has in terms of environmental and ESG management systems, more in general, but also nation legislation. So this is also a useful reference, when available, to incorporate also this kind of information. And we combine all these elements in order to issue our -- to analyze the framework of the issuer to issue our SPO. Regarding the process, well, this is -- the process that is described here is the, I would say, the standard one. Regarding PSP, it was a bit longer, because we were in the middle of the summer. So there were some delays in the process. But typically, yes, it takes about 4 weeks starting from the initial evaluation of the framework. So we provide our initial comments. In some cases, there are also some preliminary discussions before the official launch of the mandate. So we receive the framework, we provide our comments, we request some additional information. So in this case, clearly, we went through the methodology developed by BSP with Wüest Partners. And we exchanged continuously information. The objective is to deliver the draft SPO usually in 3 weeks' time and then discuss about the content of the documents to clarify further elements and finalize it in the following 1 or 2 weeks. So this is the -- I say, the standard process. In this case, it was a bit longer, but typically, this is what is doable for user proceeds structure. So I hope that I have provided you with an overview of the process and the content of the SPO. You will find more details in the SPO that is public, as I said, both on the PSP website and our website. And in case of any questions, you can ask now or you have also my contracts here, no problem for that.

A warm welcome from my side too. I can tell you're already hungry so I'm trying to speak slowly. I'm speaking here on behalf of the request management of in terms of sustainability. So I'd like to share with you some of the conflicts that arose within this topic. Many of these questions have already discussed. Now we are wondering how can we -- how we can manage to reduce our ecological footprint you use less resources to reduce energy consumption. How can we make sure that our employees have what [ wears ] in this sector, also beyond language barriers. Now the company have determined with the one drive climate target, which is becoming much more difficult to reach. We have to become more resilient regarding future impact of climate change. How can we improve biodiversity. These are topics that are more priority. This is what we provide our data from. This is just a small selection of the questions. Though some rating agencies and governments have delved in this topic. These topics were not part of EU regulation. So you can see that some of the topics overlap. The best investment regarding energy efficiencies on our properties and have generated data, where we cooperate with other partners in order to generate data. We do not work with [ VCs ]. [indiscernible] based on risk criteria. Also, we produce special waste, which has not been part of our data yet. Because the question is that if we can influence the sector which is why the -- we opted to be without for the moment. Then rating agencies on the topic of human rights, sustainability of report and the courage [ against ] disparity. When [ you ] look into it, you might see that there's still room for improvement. And then data of minority. So the question is do we actually want to gather this data. We want to face these challenges, but with regard to currency, I'm sometimes wondering whether we'd really be able to focus on what's important. Taking 1 step back, what's important regarding our impact on environment and sustainable and besides, what could also have an impact on us financially. We sometimes wonder about the efficiency of this data, but it really gives you the insights that you need. Despite of this, we do a lot of bench growth benchmark and rating work. We are also part of the new initiatives. We've created benchmark based on common criteria property portfolios. This is an important KPI we're free to call the golden standard. Years ago, we carried out different analysis. We are also part of those initiatives to know how we perform in comparison to others and where we can still improve in the discussions of the sustainability task for us. We will need to get better. We also -- we are aware of the limits of such benchmarks and ratings. I better also say there's pressure regarding the [ mass ] stability. How can I compare with other peers. We performed a lot better. At waste management, there's still room for improvement. We accept this, and we also think that within the years, the rating we have is very useful tool at hand in order to analyze the portfolio in a better way. And as this has been conducted by an external partner, this is also a strong message that we send. Next year, we will probably continue to deal with this rating. As my colleague already explained, we tried to reduce our CO2 emissions, investing in heating, more sustainable and our affordable-type systems. We will probably focus on Scope 3 which require diversity as a topic that's becoming increasingly important, involving our tenants in our efforts, be it thanks to more exchange with them. In May, we will receive the green bond report that will probably create more transparency. I am starting to get really hungry so I'd like to conclude now. I don't know if we have any time for questions now or if you'd like to start.

Thank you. By the way, we all seem to be starving so -- [The speaker is off mic. Unfortunately, the interpreter is not receiving any sound.] I think we managed to give the importance to the topic that it has to be preserved, something that we've been striving for over the years. On the construction side, in the view regarding our partners, we have to embed this topic as a tool to make sure that we approach it in the right manner. Evolve further -- evolve this rating, we committed to reduce emissions. But as I mentioned, this is something that we've always been working on. So what we achieved today is important stuff involving our employees and we have transparency here. So you'd be able to ask questions to our employees, if you like. We are very transparent here. But it's not only by our impact on the materials. I'd like to mention the employees, mostly we see [ their ] faces. So please use the next hours to engage with them if you like. I'd also like to say thank you to my colleague, Mr. [ Corazon ] to celebrate his support. So it's great to have this operation of trust. So much impact. Management, I think, are very familiar with the topic and has been encouraged for many years. Mr. [ Schürmann ], [ Markus Schteckel ], Mr. [indiscernible] from Energy and Facility Management, of Zürich, Zürich-West, [ Marco West ]. We had discussed management and we had the Great Place to Work survey, and then the Head of Energy and Facility Management, the driver of this company, Stefan Kaufmann, Business Development, in charge of letting and the communication with the tenants, a stickler asset manager. Ae deployed a kind of asset management in Geneva. And we have an [ astute ] asset manager, Ben Seidler, Head of [ Leiter Rechnungswesen und ] Controlling. And we have a construction work, anything related to construction work. The [ Marcus ] [indiscernible], the successor of Mr. Perez, based in [indiscernible] and Head of Marketing and Charts, Head of Transaction; [indiscernible]. Then the asset manager, Mr. [indiscernible], who's been working in construction management for many years. So we'll meet back here at 1:30 sharp because we have to be at the tram station at 2:20. We are offering Italian food today. And only if you'd like, we will, outside, during the kind of tour. Marcus [indiscernible], I did all right. So thank you very much for your attention. I am very much looking to the craft presentation. I hope that we'll be able to cope with all the able found [indiscernible]. Thank you. [Break's]

So let's have a look at an example of brewery. Back then they try to use the CO -- reduced CO2 emission rules. The well that was used was not suitable for distillery purposes. The location became very famous due to the excellent water quality and many people used to go there to get water. When you step through the architecture national museum, to the architecture there are two chimneys and what they saw was a very successful and sustainable company. On the left-hand side of the brewery's building, you could see how the beer was produced and the company was running well. 1999, the design plan became legal and [indiscernible] doorstep again -- in concert with intelligent repurposed measures was a historic building in a different unit in the hospitality sector. They stared doing it and converted into a hotel and subsequently, they converted into a [ remote ] spa. One criterium suppressed with a combination of the newer and old approaches and sustainable services. Even now actually, students like to visit the location and of course, our aim to be appreciated by our tenants. And the former building is well adapted to the average use. A tenant can take a bath in the old building. They have a spa area under the roof. What's very important is to be close to our clients. We are very close to the main location, the main station, the central station, its [ approach ]. Our clients are very welcome with their clients. It's very well connected with transport. We do have a parking lot, but most of the people who get there come there by public transport or they just go and walk there. We also pooled our talents with this technology progress where [ Kawanis ], our important clients, and she wanted to build a roof over [Technical Difficulty] so we decided to support her in her vision and also to fund the project. We also installed photovoltaic installation on the roof. The client asked us whether we were fine with them this device that sends [ metapods ]. Absolutely fine. We wanted to make the better use of the roof. So now we can generate electricity that can be used by our tenants. Closely linked to energy consumption. Before, we mentioned an ability to close the meetings to energy consumption and [ energy use ]. Nowadays, we see that some monuments are being demolished and others who have contributed to negative climate development are being supported. Nowadays we have a commercial area, offices and the boiler house. So the purpose of this unit was changed. Nowadays, we predominantly heat in the development complex with gas. But this district heat in the pipeline that is distributed to buildings and we also have heat pumps that are integrated into the system. It makes the system one by environmental friendly. But it also makes it more vulnerable to technical problems. Until 2017, our CO2 emission rose significantly, which was because we had to change some of the pumps. Together with our technical team we were able to find some source of the areas to work out solutions. Since then, we have been having lower emissions. But of course, in 2020, the lower CO2 emissions were also due to corona pandemic. When you take 2019 advancements, you see that you have more or less 1,100 tonnes CO2 that were emitted. The [ Herlimanne Complex ] is approximately 20 years old and the heat supply grew significantly now that we're using heat boilers. We also have central cooling, cooling machinery, so they did play from time to time, the design, the plan on how to implement those measures. It was important to proceed in a coordinated manner to reach the net profit in this year in each of the buildings. So we elaborate the plan on how to heat with gas, but also using the groundwater or our creek water supplies to be bloated. If 5% of the heating is then provided by the environment, 45% comes from gas lines. Our target was to implement this measure because we like the idea of sustainability despite of the heavy investment that had to be made. When we started out these steps, we started working with the [ Sévelin ] sites, a great client, so together with the old people's home, which is the part of the client ensure a very high energy consumption. We try to optimize the energy consumption and we found a solution. Their contracts are signed often. And now we have different contents than the [ each ] set without going too far to be used to use what make or transport through the pipeline and we were able to control 90% of heating supply, 10% for the peaks will still be covered by gas. We could -- so we have excellent results here. The system is very simple. That's one provided [ EAW ] set. We have imported system in summer. We can use the water of the lake and guide it towards the buildings in order to reach cooling. And particularly with that heat rates buildings need more and more cooling even with those used to have optimal temperature. We have more and more tenants that ask for cooling systems because of climate change. Same time, energy prices are going to be much more affordable because we become less dependent on natural gas prices. We also wanted to make sure that our [ vessels ] for cooling systems for example for heat pumps and so on planned in the long run. To some extent, it's been very simple. We'll be able to deliver affordable energy and at the same time, become more environmentally friendly. Note that between 2002 and 2025 we'll be able to set the market to work and our cool public pool where probably CO2 emissions were up since the corona pandemic. We'd expect that we will use 90% green energy supplies also for heating. A further project I'd like to talk about are some of the rooftop project. We also already talked about monument preservation, monument under legal preservation measures. So now thanks to a new regulation, we are able to install photovoltaic systems, even on those at the historic building with more than 400-kilowatt peak with around about 200,000 kilowatt per year. As we have our own electricity channels, we can also sell the surplus energy to others, and we expect a surplus of 5% only for this project. That's what we respect (sic) [expect] in return. And we plan to implement this project next year in 2024. In places where energy can be produced very efficiently, we also make -- want to make sure that people benefit from just -- in the long, arduous procedure, we try to assess our systems and to improve the efficiency of the system. You see the [ zooms ] in red here in the graph where it's still the room for more efficiencies, and of course, it depends on the tenant. We plan to improve our systems in 2024. We also plan to renovate the whole building to implement those measures in a coordinated manner to make sure that the building can be used or is not too much time out of use. Thank you very much. You can already ask your questions now if you'd like or take the opportunity later on as you wish.

[ Unfortunately, the speaker is off-mic ]. [ Andy ], there's been a question regarding the rooftops of the buildings. On this [ probe ] here in the middle, There's not too much space left to install these systems for renewable energies unfortunately there were displayed last year and as you can see in the picture, there is some of the buildings that are historic buildings and where monument preservation [ graduated ] already come into force where no photovoltaic system can be installed. We expect to cover between 15% and 16% of the energy for photovoltaic systems.

Thank you very much before we proceed. [ Unfortunately, the speaker is off mic. The interpreter does not have any sound ]. It's important for us commit with us to our mission. It is very difficult at any time. There was one question that was raised regarding the cost, cost of the green bond framework of that between 800 -- round about 800,000 or 100 -- between 80,000 and 100,000. And this is very low percentage come with other projects. The appreciation of our employees' commitment for properties is a very close to our heart. We have round about prepared the assets and many of them are not part of the current portfolio yet. And according to the impact report, we want to make one of this 170 -- 180 [projects] in our portfolio are included. You can have the data virtually. We have drones that monitor our buildings in a picture. And on the corporate level, we like to include those later. And we want to make sure that this is a commitment to environment to our employees and we measured up. That is another measure. The staff [ et cetera ], they will present to you renovation project and [ output ]. This half -- this next half, I'd like to think all these properties that you can have a look at in person. [Foreign Language] So we have a tool as we, all the assets, all the renovation projects, [ lakes ]. Add more plans or the properties, more or less [ interestation ] and on the way back, we will stop at the [ Hardturmstrasse ] and then we will say goodbye to you and maybe indirectly, we already said goodbye to you now. We decided to listen to Thomas' presentation now to make sure that we have to move the properties and assets. If you have any questions, feel free to approach me or to approach any of my colleagues. Thank you very much to our team. We still have a few minutes left to grab a coffee and we need to start next the session at 2:20. So we'll meet them at 2:20 sharp. So thank you very much for your attention, and enjoy the rest of your day.