swiss prime as at 30 June 2008

Transcription

1 swiss prime report insightsemi-annual as at 30 June 2008

2 Contents 1 Swiss Prime Insight as at 30 June 2008 Summary of the key figures 2 Valuation expert s report 9 Financial commentary 15 Consolidated semi-annual report 19 Consolidated income statement 20 Consolidated balance sheet 21 Consolidated cash flow statement 22 Consolidated statement of changes in shareholders equity 23 Notes to the consolidated semi-annual report 24 Property details 69 Figures from the balance sheet and income statement 70/72/74/76 General property details 71/73/75/77 Property structure part 1, commercial properties 78/80/82/84 Property structure part 2, residential properties 79/81/83/85 Translation: The original of this semi-annual report is written in German. In the case of inconsistencies between the German original and this English translation, the German version shall prevail.

3 Summary of the key figures Selected key figures in Change in % Group Investment properties CHF m Rental income CHF m Earnings before interest, taxes, depreciation and amortisation (EBITDA) CHF m (33.5) Earnings before interest and taxes (EBIT) CHF m (33.5) Revaluation of investment properties (IAS 40) CHF m (65.2) Profit for the period CHF m (31.7) Shareholders equity before minority interests CHF m (8.6) Equity ratio % (11.8) Borrowed capital CHF m Borrowed capital ratio % ROE (weighted) % (27.0) ROIC (weighted) % (24.7) Cash flow from operating activities CHF m (23.7) Cash flow from investment activities CHF m (14.9) (24.2) (38.4) Cash flow from financing activities CHF m (16.3) (11.6) 40.5 Figures without revaluation effects* Earnings before interest and taxes (EBIT) CHF m EBIT margin % Profit for the period CHF m Earnings per share (weighted) CHF/share ROE (weighted) % * Revaluations (IAS 40) and deferred taxes

4 Summary of the key figures 2 3 Development of the Swiss Prime Site share (reinvested), total return Share price CHF Highest CHF Lowest CHF SPS SWX Real Estate Sector Index SPI Details of the share Share price ( ) CHF Highest CHF Lowest CHF Market capitalisation CHF m NAV before deferred taxes* CHF CHF Change (0.1%) NAV after deferred taxes* CHF CHF Change (0.5%) Earnings per share (weighted) CHF CHF 3.94 Change (24.6%) Share statistics Total registered shares Securities no ISIN no. CH SWX symbol SPSN First trading day * Any minority interests recognised in shareholders equity are not considered in the calculation of the NAV.

5 Summary of the key figures Portfolio split by type of use Basis: net rental income as at Basis: net rental income as at Other 3% Residential 2% Storage 6% Parking 5% Offices 57% Residential 2% Storage 6% Other 4% Parking 5% Offices 56% Cinemas/ restaurants 5% Cinemas/ restaurants 5% Retail 22% Retail 22% Portfolio split by region Basis: market value as at Basis: market value as at Geneva 9% Western Switzerland 1% Geneva 9% Western Switzerland 1% Southern Switzerland 0% Zurich 46% Southern Switzerland 0% Zurich 47% Berne 10% Berne 10% Northwestern Switzerland 19% Northwestern Switzerland 19% Central Switzerland 9% Eastern Switzerland 6% Central Switzerland 9% Eastern Switzerland 5% Portfolio split by lease expiry profile Basis: rental income as at end of contract in number of years % 12.6% 9 5.0% 0.9% % 1.9% 2.0% 3.1% 6 3.3% 2.5% 5 5.8% 15.1% % 12.0% % 14.2% % 11.9% % 13.4% 11.6% 14.1% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% as a percentage of net rental income

6 Summary of the key figures 4 5 Multi-year summary of the key figures in Key portfolio figures Investment properties (market value) CHF m Investment properties number Average property size CHF m Rental income CHF m Net return on property % Loss of earnings rate % Key financial figures EBITDA CHF m EBIT CHF m Net profit CHF m Shareholders equity (before minority interests) CHF m Equity ratio % Borrowed capital CHF m Borrowed capital ratio % Total shareholders equity and borrowed capital CHF m Average interest rate on borrowed capital % Average remaining maturity of interest-bearing borrowed capital years ROE (weighted) % ROIC (weighted) % Cash flow from operating activities* CHF m (35.8) 44.4 Cash flow from investment activities CHF m (14.9) (24.2) 3.2 (165.3) (29.2) Cash flow from financing activities* CHF m (16.3) (11.6) (32.1) (17.3) Key financial figures without revaluation effects** EBIT CHF m EBIT margin % Net profit CHF m ROE (weighted) % ROIC (weighted) % * Where the previous years figures have changed as a result of reclassification, the latest published figures are stated. ** Revaluations (IAS 40) and deferred taxes

7 Summary of the key figures Multi-year summary of the key figures in Key figures per share* Share price at end of period CHF Share price, highest CHF Share price, lowest CHF Earnings per share (weighted) CHF NAV before deferred taxes CHF NAV after deferred taxes CHF Distribution/ nominal value reduction CHF Cash yield (cash yield on closing price of the reporting period) % Share performance (TR) p.a. in the last 12 months % (7.6) Share performance (TR) p.a. in the last 3 years % Share performance (TR) p.a. in the last 5 years % n/a Premium/(discount) % (1.4) Market capitalisation CHF m Share statistics* Shares issued number Average treasury shares held number ( ) (8 426) (31 680) (20 724) (73 670) Average outstanding shares number Treasury shares held number ( ) (23 850) (9 225) (29 157) (22 800) Outstanding shares number * Adjusted for 1:5 share split on

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10 Valuation expert s report

11 Valuation expert s report Valuation expert s report by Wüest & Partner AG, Zurich The properties in the Swiss Prime Site AG (SPS) are valued by Wüest & Partner half-yearly at their current market value. The present valuation is valid as at Valuation method Generally, investment properties are valued by Wüest & Partner according to the discounted cash flow (DCF) method. This corresponds to international standards and is also used in business valuations. It is recognised within the framework of the general freedom of choice of method to be a best practice. Using the DCF method, the current market value of a property is established according to the sum of all net earnings (before interest, taxes, depreciation and amortisation = EBITDA) and considering investments and repair costs expected in the future and discounted to the present. The net proceeds (EBITDA) per property are individually discounted in the light of the relevant prospects and risks and depending on the market and an adjustment for risks. A detailed financial report per property reports all expected cash flows, thus creating the greatest degree of transparency possible. In the report, attention is drawn to substantial changes as compared with the previous valuation. Valuation standards and principles Wüest & Partner values the properties according to the principle of the fair value, i.e., the established market value is defined as the selling price most likely to be obtained on the free market under fair conditions at the time of the valuation between well-informed parties (IFRS/IAS 40). Extremely high and extremely low positions are thus eliminated. Properties under construction and development sites are valued at acquisition cost less any necessary depreciation (IFRS/IAS 16). The valuation guarantees a high degree of transparency, uniformity, relevance and completeness. The relevant legal regulations, as well as the specific national and international standards, are respected (regulations for property companies listed on the SWX, IFRS, etc.). In order to ensure an independent valuation and thus the highest possible level of objectivity, the business activity of Wüest & Partner excludes both trade and transactions on a commission basis, as well as the management of properties. The valuation is based on the most recent information available concerning the properties and the real estate market. The data and documents pertaining to the properties are made available by the owner. These documents are assumed to be correct. All property market data come from the continuously updated databases held by Wüest & Partner (Immo-Monitoring 2008). Valuation results as at * During the reporting period , the real estate portfolio of the Swiss Prime Site Group only changed insignificantly. Overall, in the period under review, six relatively small properties were sold as part of the portfolio restructuring. No purchases were made during the same period. As a result, the portfolio has been reduced by six properties to a new total of 113 properties. The overall portfolio comprises 106 existing investment properties, two plots of building land, the Maag development site in Zurich comprising three properties (Prime Tower, Platform and Maaghof & Event), the PostFinance Arena project in Berne and one industrial property (Grünfeldstrasse 25) in Jona. The following properties were sold: Sonnenplatz/ Gerliswilstrasse 74 und Gersagstrasse 13 (parking) in Emmenbrücke, Bärengasse 1 in Glarus, Klebenmatt (land) in Rickenbach as well as Dorfstrasse 21 and Dorfstrasse 27/Schmiedgasse 1 in Wangen bei Olten. The total selling prices for the six sold properties were 9.1% above total market value as at totaling CHF 13.3 million. The properties were sold under private contract at normal market conditions. Further progress was made with the development of the Maag site in Zurich, and it is valued at cost. The sustainability of the at-cost valuations was confirmed by an impairment test. In the reporting period, no transactions were concluded with related parties. As at , the market value of the entire portfolio of the SPS Group (total 113 properties) was valued at CHF million. The market value of the portfolio has increased by CHF 48.6 million compared to , i.e., the portfolio value grew by 1.3%. The increase comprises investments made in the new buildings PostFinance Arena in Berne (CHF 20.0 million) and Maag site in Zurich (CHF * Including the PostFinance Arena which is recognised in the balance sheet with CHF 52.7 million under «Other receivables» and for which the transfer of ownership will take place in September 2008 as contracted on

12 Valuation expert s report million), value changes (including renovations/ investments) in existing properties (CHF 36.2 million), as well as aforementioned sales (CHF 13.3 million). The value change in the existing properties compared to is therefore 1.0%. Of the 109 properties (excluding sales (six), development properties, Maag site and PostFinance Arena (four), total ten properties) 84 properties were valued higher than on , while 21 properties were valued lower and the value of four properties remained unchanged. investments carried out (renovations, tenants improvements) at property level are also responsible for the further increase in value. Last but not least, various individual rental successes or newly concluded contracts at a higher level and a more positive assessment in market rents in the commercial and office field led to the current market value development of the portfolio. The few impairment losses can be attributed primarily to changed rental potentials, turnover forecasts and vacancies or vacancy risks, as well as partially higher estimated costs for future medium-term maintenance work. The Swiss economy has continued its pleasing positive development, and the affiliated additional increase on the job market shows itself in a robust development in the demand for business space. Namely, in the market region Zurich and increasingly alongside Lake Geneva positive price developments on the office space market could be recorded. Another favourable development are the retail spaces in the supraregional centres here, in particular, the locations of the centres within the large cities benefit. The slight cooling down of the current interest rate environment is counteracted by the almost unchanged investors return expectations for monitored transactions. Significant value drivers of the portfolio are the increased actual revenues in the existing properties. This development is supported by a constant, low vacancy rate which contributed in an overall positive result. Various repair and maintenance The portfolio is particularly tried and tested through its stable income situation and an excellent spatial distribution of the properties. With the commencement of the construction of the Prime Tower on the Maag site in Zurich as well as the renovation and expansion of the PostFinance Arena in Berne there are two projects currently being realised which will make a substantial contribution towards the future sustained value of the portfolio. Zurich, Wüest & Partner AG Andreas Ammann Graduate architect ETH/SIA, partner Gino Fiorentin Graduate architect HTL/ MAS MTEC ETHZ, senior consultant

13 Valuation expert s report Notes: Valuation assumptions Valuation assumptions as at Further to the above comments on the valuation standards and methods, the main general valuation assumptions for the present valuations are set out below. Investment properties including building land These properties are principally valued on a going concern basis. The valuation is based on the current rental situation and the current condition of the property. On expiry of the existing rental agreements, the earnings forecast is based on the current market level. On the cost side, allowance is made for the repair and maintenance costs required to ensure sustainable income and to cover recurring facility management costs. In principle, Swiss Prime Site works on the basis of an average and clear facility management strategy. The specific circumstances of the owner are disregarded or taken into account only to the extent that specific agreements have been included in the rental contract or if they appear plausible and feasible to third parties or do not differ substantially as far as the resulting market value is concerned. Possible optimisation measures consistent with the market such as an improved rental situation in future are taken into account only insofar as they guarantee the continuation of the property on a going concern basis. Changes in use, repositioning, conversion work, conversion into condominium ownership, etc., are not included in the valuation. The specific indexing of the existing rental relationships is taken into account. On expiry of the contracts, an average indexing rate of 80% is used for the calculation, and rents are adjusted to the market level once every five years. Payments are generally assumed to be made monthly in advance on expiry of the rental agreements. On the operating cost (owner s costs) side, it is generally assumed that completely separate ancillary cost accounts are kept and that ancillary and operating costs are outsourced insofar as this is permitted by law. Maintenance costs (repair and maintenance costs) are determined on the basis of benchmarks and model calculations. The residual lifetime of the individual parts of buildings is determined on the basis of a rough estimate of their condition, the periodic renewal is modelled and the resulting annual income calculated accordingly. The values arrived at in this way are subjected to a plausibility check based on benchmarks set by Wüest & Partner and figures of comparable properties. Maintenance costs are included in full (100%) for the first ten years, while the earnings forecast takes account, where appropriate, of possible increases in rent. From the eleventh year, maintenance costs of 50 to 70% are allowed (value-preserving components only) without including possible rent increases. Costs for removing contaminated sites are not included in the individual valuations; they are considered separately by the principal. The discounting method used is based on constant monitoring of the property market and is derived from models with plausibility checks, on the basis of a real interest rate which is made up of the riskfree interest rate (long-term government bonds) plus general property risks plus property-specific supplements, and the risk is then adjusted for each individual property. The average real discount rate weighted by the market value applied to the investment properties for the purposes of the current valuation is 4.69%; if inflation of 1.0% is assumed, this rate equals a nominal discount rate of 5.74%. The lowest real discount rate used for a particular property is 3.80% and the highest is 6.00%. The valuation or calculation period (DCF method) runs for 100 years from the valuation date. A more detailed cash flow forecast is prepared for the first ten years, while approximate annualised assumptions are made for the residual term to maturity. The valuation implicitly assumes a current annual inflation rate of 1.0%; however, cash flow and discount rates are usually reported on a real basis. The valuations are based on the rental tables of the facility managers as at The valuations are based on the floor space data of the principal/ facility managers. The creditworthiness of the individual tenants is not explicitly taken into account in the valuation, as it is assumed that appropriate contractual safeguards were obtained. Properties under construction and development sites Properties under construction and development sites are also valued and carried at acquisition costs less any necessary impairments (IFRS/IAS 16). The planned or possible built-up space after completion is valued on the basis of the same assumptions used for the investment properties. To determine the current market value on the balance sheet date,

14 Valuation expert s report outstanding investment costs are deducted from the value of the building after completion. Information on projected construction work, timetable, building costs and future rentals are adopted from the principal insofar as they are available (building permits, plans, cost calculations/investment applications, etc.) or believed to be plausible. Disclaimer The valuations made by Wüest & Partner represent an economic assessment based on the available information, most of which was provided by the principal. Wüest & Partner did not themselves carry out or commission any legal, construction engineering or other specific studies. The information and documents obtained by Wüest & Partner are assumed to be accurate; however, no guarantee can be given in this respect. The value and price may deviate. Specific circumstances which influence the price cannot be taken into account when making a valuation. The valuation done on the reporting date is only valid at that specific point in time and may be influenced by subsequent or unknown events, in which case a new valuation would become necessary. As the accuracy of a valuation cannot be guaranteed by objective criteria, no liability can be derived from it for Wüest & Partner AG and/or for the author. Zurich,

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16 Financial commentary

17 Financial commentary Significant events and developments Swiss Prime Site in the first half of 2008 A good and solid result The subprime crisis continues to have a negative effect on the financial markets. There was a pleasing positive increase in the gross national product (GNP) and in the number of employees in the office sector. The number of office workers increased by about full-time equivalents or a rate of 2.8% within the first quarter of this year. These positive figures lead to a continued stable demand for first-class business areas. Swiss Prime Site could benefit from its range of properties on offer, which include large, conjoined areas with a good to perfect infrastructure and a high utilisation flexibility in qualitatively high-ranking properties in the most important economic locations. In the first six months of 2008, Swiss Prime Site increased rental income compared to the previous year s figures by 2.1% to CHF million [CHF million] and decreased the loss of earnings rate to under the 5% level. The net profit of CHF 69.1 million was 31.7% below last year s level which had been strongly influenced by revaluations. The property portfolio increased by CHF 48.6 million to CHF 3.73 billion (including the PostFinance Arena, which is entered into the balance sheet under other receivables). Construction on both major building sites, Prime Tower on the Maag site in Zurich West and the PostFinance Arena in Berne is proceeding according to plan. Swiss Prime Site remains unchanged positive for the 2008 financial year. The income quality is underlined by the high creditworthiness of the tenants. The ten biggest tenants are all prestigious companies which contribute around 54% to the total rental income. Around 44% of all the rental agreements have a residual term to maturity of four or more years. Proceeds of property sales In the context of streamlining the portfolio, six smaller properties with a total market value of CHF 13.3 million were sold because they were inconsistent with the corporate strategy. The resulting proceeds of sales were net CHF 0.7 million. As at balance sheet date nine properties with a market value of CHF 57.5 million are being reported in the balance sheet as properties held for sale. The property Obstmarkt 1 in Herisau, which was recognised in the balance sheet as at at a market value of CHF 14.8 million, could be sold after the balance sheet date at a price of CHF 17.0 million. Operating and net profit (before revaluation effects) were increased further The net profit of the first six months 2008 was CHF 69.1 million [CHF million]. The decline of CHF 32.0 million compared to the previous year s period is due to the lower revaluation profit (CHF 32.9 million compared to CHF 94.6 million in the comparison period). Net profit without revaluation effects (revaluation in terms of IAS 40 and deferred taxes) increased by 7.2% to CHF 47.5 million [CHF 44.3 million]. Rental income from investment properties In the first six months of the 2008 financial year, rental income from investment properties rose to CHF million [CHF million]. This equates to a year-on-year increase of 2.1%. The increase of CHF 2.1 million comprised the following changes: loss of rental income as a result of sale (CHF 1.0 million), rental income from new purchases (CHF +0.1 million), pro rata effect of Sihlcity in Zurich which opened its doors in the spring 2007 (CHF +2.3 million), lower income from the Maag site where building of the Prime Tower and the adjoining buildings commenced in 2008 (CHF 0.2 million), as well as various contract adjustments (CHF +0.9 million). The loss of earnings rate could be reduced by 0.2 percentage points to 4.9% [5.1%] with regard to the comparison period. It remains considerably lower than the estimated Swiss average vacancy rate of 8%. The net return of the property portfolio was 5.2% and was therefore unchanged compared to the value as at the end of Direct operating expenses increased due to higher disbursements for maintenance and repairs by around 10% or CHF 1.3 million to CHF 14.8 million [CHF 13.5 million]. Other operating expenses showed a decrease to the previous year of CHF 2.7 million to CHF 8.6 million [CHF 11.3 million]. This decline is primarily the result of one-off expenses in the previous year. Personnel costs at CHF 0.5 million remained unchanged compared to the same period in the previous year. As a result of this development of income and expenditure, the EBIT margin (without revaluation effects) could be increased by 2.2 percentage points to 77.1% [74.9%]. Revaluation of the property portfolio As at , Wüest & Partner AG valued the portfolio at CHF million [ : CHF million]. This revaluation led to a net upward revaluation of CHF 32.9 million [ : CHF 94.6 million] or around 0.9% of the portfolio value. The overall change of the portfolio of

18 Financial commentary CHF 48.6 million compared to comprises the investments made in the new buildings Post- Finance Arena in Berne (CHF 20.0 million) and Maag site in Zurich West (CHF 5.7 million), value changes (including renovations/investments) in existing properties (CHF 36.2 million), as well as sales (CHF 13.3 million). at was about 1.9 million shares (equals 7.4% of the shares issued) with a market value of about CHF million. Borrowed capital rose from CHF million to CHF million. This resulted in an equity ratio of 36.0% [35.7%] and a borrowed capital ratio of 64.0% [64.3%]. Return on equity (ROE, weighted) was 10.3% [14.6%]. Of the 109 existing properties (excluding projects and development sites), 84 were valued higher and 21 are valued lower. Four properties remained unchanged. The weighted average real discount rate applied to the investment properties is 4.69% and unchanged against the rate as at Assuming an inflation rate of 1.0%, this rate corresponds to a nominal discount rate of 5.74%. Prime Tower and PostFinance Arena are going according to plan Construction work for the building of the Prime Tower on the Maag site in Zurich West and the two adjoining buildings Cubus and Diagonal has been underway since February The project Platform will commence at the beginning of 2009; in the meantime, the legally valid building permit is at hand. The investment volume is about CHF 355 million. Currently in terms of income the four buildings are 45% let. The laying of the foundation stone for Prime Tower is scheduled for The ambitious renovation and expansion of the PostFinance Arena in Berne is going according to plan. The almost m 2 new office and service areas are, for the most part, rented by the Swiss Post which will initially locate their group divisions Swiss Post International and Strategic Customers and Solutions there. Altogether, almost 94% of the total space has been let. Despite the repeatedly slight increase in interest rates in the capital markets, the average interest rate on financial liabilities of 3% could be maintained at the low level of The average weighted residual term increased slightly to 4.3 years compared to [4.2 years]. Information on the share/distribution Swiss Prime Site s share developed very well in an extremely volatile market environment. The total return (price development and distribution) for the first six months was at 9.5% thus clearly surpassed the comparative index SWX Real Estate Sector Index (1.7%) and the SPI ( 15.4%). The share closed at CHF as at The net asset value (NAV) after deferred taxes was CHF as at and thus only insignificantly lower than the value of CHF ( 0.5%) as at The NAV before deferred taxes decreased by 0.1% from CHF to CHF The premium, as the difference between the stock market price of CHF and the NAV after deferred taxes of CHF 57.26, was 4.1% as at [ : 0.0%]. The nominal value reduction of CHF 3.40 [CHF 3.10] per share decided by the General Meeting of Shareholders on was paid out to the shareholders on Measured against the share price as at , the distribution corresponded to a cash yield of 5.9%. Financial situation The balance sheet relations have changed only marginally compared to the end of Shareholders equity increased by net CHF 30.1 million to CHF million [CHF million]. This net change comprises the profit for the period (CHF million), the nominal value reduction paid out on (CHF 80.7 million) and the profit from the sale of treasury shares (CHF million). The stock of treasury shares as Outlook In view of the deceleration in economic growth, significant rent price increases can no longer be banked on. Nevertheless, Swiss Prime Site considers the prevailing conditions for the year 2008 to be favourable as before. Swiss Prime Site therefore confirms the goals indicated in March 2008 (loss of earnings rate of about 5%, increase of net profit (before revaluation effects) of about 10% and a continued high EBIT margin).

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20 Consolidated semi-annual report

21 Consolidated semi-annual report Consolidated income statement in CHF Notes Rental income from investment properties Proceeds of property sales, net 3/ (187) Other operating income 3/ Operating income Direct operating expenses 4/19/ Revaluation of investment properties, net 5/19 (32 902) (94 602) Personnel costs 6/ Other operating expenses 7/ Operating expenses (9 055) (69 251) Operating profit (EBIT) Financial expenses Financial income Profit before income taxes Income taxes Profit for the period Of which minority interests Basic earnings per share, CHF Diluted earnings per share, CHF The explanations given in the notes form an integral part of the consolidated financial statements.

22 Consolidated semi-annual report Consolidated balance sheet in CHF Notes Assets Current assets Cash Securities Accounts receivable Other receivables 14/ Income taxes receivable Accrued income and prepaid expenses Properties held for sale Total current assets Fixed assets Long-term financial investments Investment properties including building land 19/ Properties under construction and development sites 19/ Deferred income tax assets Total fixed assets Total assets Liabilities and shareholders equity Short-term liabilities Accounts payable Short-term financial liabilities Other short-term liabilities Advance payments Current income tax liabilities Accrued expenses and deferred income Total short-term liabilities Long-term liabilities Long-term financial liabilities Deferred income tax liabilities Provisions Total long-term liabilities Total liabilities Shareholders equity Share capital Capital reserves Retained earnings Shareholders equity before minority interests Minority interests 25 Total shareholders equity Total liabilities and shareholders equity The explanations given in the notes form an integral part of the consolidated financial statements.

23 Consolidated semi-annual report Consolidated cash flow statement in CHF Notes Profit for the period Net proceeds of property sales 3 (727) 187 Revaluation of investment properties, net 5/19 (32 902) (94 602) Change in market value of securities (trading) 8/12 (4) Decrease in deferred income tax assets 9/ Amortisation cost of convertible bond 8/ Increase in deferred income tax liabilities 9/ Interest expenses Interest income 8 (154) (64) Income taxes 9 (354) Increase in accounts receivable 13 (6 791) (7 546) Decrease/increase in other receivables (4 600) Increase in accrued income and prepaid expenses 16 (2 884) (1 337) Increase in accounts payable Decrease/increase in other short-term liabilities and advance payments 21 (73) Decrease/increase in accrued expenses and deferred income 21 (3 929) Interest payments made 8 (34 462) (32 161) Interest payments received Income taxes payments 9 (4 278) (509) Cash flow from operating activities Investments in investment properties 19/29 (3 327) (31 795) Investments in properties under construction and development sites 19/29 (5 671) (2 202) Instalments for PostFinance Arena 14/19/29 (19 987) Divestments of investment properties 19/ Divestments of securities (trading) Divestments of long-term financial investments Cash flow from investment activities (14 862) (24 199) Increase in financial liabilities 21/ Repayment of financial liabilities 21/22 ( ) (83 000) Nominal value reduction 25 (87 222) Nominal value reduction of treasury shares Purchase of treasury shares 25 (1 765) Sale of treasury shares Cash flow from financing activities (16 297) (11 583) Net increase in cash Cash at beginning of the reporting period Cash at end of the reporting period The explanations given in the notes form an integral part of the consolidated financial statements.

24 Consolidated semi-annual report Consolidated statement of changes in shareholders equity Equity of share- in CHF Notes Capital Share reserves capital (premium) Retained earnings Minority interests holders of Swiss Prime Site AG Total shareholders equity As at * Profit for the period 10/ Profit distributions 25 Purchase of treasury shares 25 (1 765) (1 765) (1 765) Sale of treasury shares As at * Profit for the period 10/ Profit distributions 25 Nominal value reduction on (79 526) (79 526) (79 526) Nominal value reduction of treasury shares Share-based fee 25/ Purchase of treasury shares 25 ( ) ( ) ( ) Sale of treasury shares 25 As at Profit for the period 10/ Profit distributions 25 Nominal value reduction on (87 222) (87 222) (87 222) Nominal value reduction of treasury shares Sale of treasury shares As at * In the share capital, the nominal share capital is stated (previously until the dividend-entitled share capital). The changes as a result of trading with treasury shares and share-based basic fees were fully debited or credited to capital reserves. These changes were effective as per The first six months 2007 were adjusted accordingly. No gains or losses were recognised directly in shareholders equity. The explanations given in the notes form an integral part of the consolidated financial statements.

25 Notes to the consolidated semi-annual report 1 Business activity 1.1 Purpose The purpose of Swiss Prime Site AG is exclusively the acquisition, holding, management and disposal of investments in other companies. The purpose of SPS Immobilien AG, SPS Immobilien Residenz AG, Société Immobilière Rue Céard No. 14 and Maag Property Company AG is the development, acquisition, holding, administration and disposal of commercial properties located in Switzerland. properties with good development potential in the larger economic locations in Switzerland. The significant criteria applied for the selection of investments in commercial properties are, amongst others: quality of the location, economic development potential, development through traffic routes and public transport, architectural concept and finishing work, occupancy rate or occupancy potential, solvency and mix of tenants, utilisation flexibility of the building, expected return as well as existing potential for value and revenue increases. SPS Finance Limited was founded for the purpose of providing funds within the Group. 1.2 Business strategy Swiss Prime Site offers Swiss and foreign investors the opportunity to participate in a professionally managed Swiss property portfolio established according to strict investment criteria. Swiss Prime Site wants to indicate directions in the Swiss real estate market by means of a clearly communicated strategy. A foreign borrowing of 65% of the total investment properties is permitted in order to optimise revenue. Properties may be pleged to secure corresponding loans. The level of foreign borrowing is calculated from the interest-bearing borrowed capital measured against the market value of the property portfolio. The investment strategy and the investment regulations are regularly reviewed by the Board of Directors. Swiss Prime Site invests in Swiss properties at selected sites and offers its shareholders the opportunity to participate in the potential for value growth of an enterprise managed by experienced real estate specialists. In operational terms, Swiss Prime Site works together with reputable industry partners. 1.3 Investment strategy The investment regulations define the Company s investment strategy. When selecting investments, the Company primarily concentrates on business 1.4 Business activities The Company s business activities are primarily carried out via the subsidiaries. As a real estate investment company, the Company aims to minimise the staff level. Accordingly, the Company has transferred the management, the facility management of the properties and certain other services to Credit Suisse, Real Estate Asset Management. As at , the Company s own personnel level is two employees. 2 Summary of the main accounting principles 2.1 Principles of consolidated reporting The consolidated reporting of Swiss Prime Site was drawn up in compliance with the International Financial Reporting Standards (IFRS) and the accounting principles set out in the additional rules for the listing of real estate companies of the Swiss Exchange (SWX). Following the reorganisation of the IASB, the accounting standards published by this body since 2004 bear the abbreviation IFRS (International Financial Reporting Standards), while the standards published before that date continue to be referred to as IAS (International Accounting Standards). The consolidated financial statements are essentially based on the historical cost principle. Deviations from this principle are specifically mentioned in Notes 2.7 to This is the case with investment properties which are stated at market value in compliance with IAS 40 «Investment Property» and also applies to securities stated at traded market prices as at balance sheet date. The main accounting principles are explained below.

26 Notes to the consolidated semi-annual report The consolidated financial statements are drawn up in Swiss francs (CHF). All amounts, except for the figures per share, are rounded to CHF All Group companies keep their accounts in CHF. Therefore, there are no foreign currency translation conversions. Transactions in foreign currencies are insignificant. 2.2 Amendments of the IFRS accounting principles Apart from the changes described below, the accounting principles remain the same as last year. The following interpretations were newly introduced as at : These changes have no effect on the consolidated reporting. The following new and revised standards and interpretations have been adopted, but will not take effect until a later date and have not been applied in advance to the present consolidated financial statements. A systematic analysis of their impact on the consolidated financial statements of Swiss Prime Site has not yet been made; the anticipated effects, disclosed below, therefore represent no more than a first appraisal by Group Management. IFRIC 12 IFRIC 14 Service concession arrangements IAS 19 The limit on a defined benefit asset, minimum funding requirements and their interaction Standard/interpretation Impact Introduction Planned application by Swiss Prime Site IFRIC 13 Customer loyalty programmes * Financial year 2009 IFRIC 16 Hedges of a net investment in a foreign operation * Financial year 2009 IFRS 1 First-time adoption of International Financial Reporting Standards * Financial year 2009 IFRS 2 Share-based payment * Financial year 2009 IFRS 8 Operating segments * Financial year 2009 IAS 1 Presentation of financial statements * Financial year 2009 IAS 23 Borrowing costs ** Financial year 2009 IAS 27 Consolidated financial statements and accounting for investments in subsidiaries * Financial year 2009 IAS 32 Financial instruments: Presentation * Financial year 2009 IFRIC 15 Agreement for the construction of real estate * Financial year 2009 Improvements to IFRSs * Financial year 2009 IFRS 3 (rev. 2008) Business combinations * Financial year 2010 * No or no significant impact on the consolidated financial statements of Swiss Prime Site is anticipated. ** In particular, additional disclosures in the Group financial statements are expected.

27 Notes to the consolidated semi-annual report 2.3 Estimates and assumptions The preparation of the semi-annual and annual accounts in accordance with the IFRS accounting principles requires the use of estimates and assumptions that influence the amounts recorded under assets and liabilities and the disclosure of contingent assets and liabilities as at the balance sheet date and the recorded revenue and expenses during the reporting period. Although these appraisal values have been determined by Swiss Prime Site according to the best knowledge of the Management Board with respect to current events and possible future measures, the results actually achieved may differ from these appraisal values. The consolidation is based on the semi-annual reports as at , which have been prepared applying uniform accounting principles. Valuation assumptions as at Further to the above comments on the valuation standards and methods, the main general valuation assumptions for the present valuations are set out below. Investment properties including building land The properties are valued on a going concern basis. The valuation is based on the current rental situation and the current condition of the property. On expiry of the existing rental agreements, the earnings forecast is based on the current market level. On the cost side, allowance is made for the repair and maintenance costs required to ensure sustainable income and to cover recurring facility management costs. In principle, Swiss Prime Site works on the basis of an average and clear facility management strategy. The specific circumstances are disregarded or taken into account only to the extent that specific agreements have been included in the rental agreement or if they appear plausible and feasible to third parties or do not differ substantially as far as the resulting market value is concerned. Possible optimisation measures consistent with the market such as an improved rental situation in future are taken into account only insofar as they guarantee the continuation of the property on a going concern basis. Changes in use, repositioning, conversion work, conversion into condominium ownership, etc., are not included in the valuation. The valuation or calculation period (DCF method) runs for 100 years from the valuation date. A more detailed cash flow forecast is prepared for the first ten years, while approximate annualised assumptions are made for the residual term to maturity. The valuation implicitly assumes a current annual inflation rate of 1.0%; however, cash flow and discount rates are usually reported on a real basis. The specific indexing of the existing rental relationships is taken into account. On expiry of the contracts, an average indexing rate of 80% is used for the calculation and rents are adjusted to the market level once every five years. Payments are generally assumed to be made monthly in advance on expiry of the rental agreements. On the operating costs (owner s costs) side it is assumed that completely separate ancillary cost accounts are kept and that ancillary and operating costs are outsourced insofar as this is permitted by law. Maintenance costs (repair and maintenance costs) are determined on the basis of benchmarks and model calculations. On the basis of a rough estimation of the individual parts in terms of their residual life time, the regular renewal is modelled and the annual income calculated accordingly. The values arrived at are subjected to a plausibility check based on benchmarks set by Wüest & Partner and figures of comparable properties. Maintenance costs are included in full (100%) for the first ten years, while the earnings forecast takes account, where appropriate, of possible increases in rent. From the eleventh year, maintenance costs of 50 to 70% are allowed (value-preserving components only) without including possible rent increases. Costs for contaminated sites are not included in the individual valuations; they are considered separately. The applied discounting method is based on a real interest rate which is made up of the risk-free interest rate (long-term government bonds) plus general property risks plus property-specific supplements, and the risk adjusted for each individual property. The valuations are based on the rental tables and rented floor space. The creditworthiness of the individual tenants is not explicitly taken into account in the valuation, since, where necessary, appropriate contractual safeguards have been obtained. Properties under construction and development sites Properties under construction and development sites are stated at initial cost less any necessary impairments (IFRS/IAS 16) until completion of construction. On completion of construction, they are reclassified as investment properties. The planned or possible built-up space after completion is valued on the basis of the same assumptions used for the investment properties. To deter-

28 Notes to the consolidated semi-annual report mine the current market value on the balance sheet date, outstanding investment costs are deducted from the value of the building after completion. Information on projected built-up space, timetable, building costs and future rentals are considered as far as they are available (building authorisation, plans, cost calculations/investment applications, etc.) or as believed to be plausible. Deferred income taxes If the revaluation pursuant to the IFRS compared to tax values is due to depreciation which has been reversed, income taxes are reported and treated separately on an individual property basis. Upward revaluations not resulting from the reversal of previous depreciations are taxed using two different systems. In the case of cantons which do not levy any special taxes, the tax on the property gain is calculated at the current maximum income tax rates. The other cantons levy a separate property gains tax. In addition to the ordinary rate for property gains tax, they also contain speculation supplements or deductions relating to and depending on the length of ownership as at the date of the balance sheet. Accordingly, deferred income taxes are reduced in proportion to the duration of ownership of the property. Swiss Prime Site assumes ownership for a minimum period of two years, i.e., possible speculation supplements for the first two years are disregarded. 2.4 Scope of consolidation and consolidation methods The consolidated financial statements of Swiss Prime Site comprise Swiss Prime Site AG and all its subsidiaries controlled directly or indirectly via majority of votes or under a single management. These subsidiaries are fully consolidated. All significant transactions and material balances between the individual Group companies are eliminated. The scope of consolidation encompasses six [six] companies (including the holding company). Investments and joint ventures in which Swiss Prime Site exercises a decisive influence but that it does not control are valued according to the equity method. The fair value of the pro rata net assets is determined at the date of the acquisition. Equity interests in associated companies are recognised in the balance sheet in proportion to the share in the equity, including any goodwill, as investments in associated companies. In the periods following the acquisition, this value is adjusted by the Swiss Prime Site share in the additional capital generated or in the income earned. All material balances and transactions with associates and joint ventures valued according to the equity method are entered separately as items with associates. Companies in which Swiss Prime Site holds a stake of less than 20% are carried on the balance sheet at their market value (provided that this value can be reliably determined). In cantons with a separate tax, the positive market value adjustments incur a particularly high tax burden. Conversely, negative market value adjustments provide tax relief. Since 2007, devaluations beneath acquisition costs (losses) can also be taken into account due to the new practice of the Federal Court and the circulation letter 27 of regarding intercantonal loss offsettings. The practice provides for no more cut-off losses to occur. This now means that property cantons must take over losses from the headquarters or other cantons. Deferred income tax liabilities are calculated on the valuation difference between the book value of an asset or a liability for consolidation purposes and the value reported in the statutory or tax balance sheet. In principle, deferred income taxes are to be apportioned on all temporary differences at the current or future anticipated and full rate (balance sheet liability method). Of all losses brought forward, only deferred income tax assets arising from losses brought forward are capitalised, if they can in all probability be set off against future profits. An overview of the major subsidiaries is set out in Note 30 «Major subsidiaries». The accounts of the subsidiaries and associates are consolidated from the date on which control is acquired and deconsolidated from the date on which control is relinquished. These two dates are not necessarily identical to the date of acquisition or sale. 2.5 Capital consolidation This is effected using the purchase method. The difference between the purchase price of an acquired company and the fair value of the net assets acquired is entered on the balance sheet as goodwill from acquisitions. Goodwill is tested for impairment annually or at shorter intervals if there is any reason to suppose an impairment. 2.6 Comparative figures from the previous period The presentation of the comparative periods and figures is in accordance with IAS 1, «Presentation of the financial statements». The figures in the text for the comparative period are shown in square brackets [ ].

29 Notes to the consolidated semi-annual report 2.7 Cash Cash comprises cash in hand and sight deposits at banks. Cash also comprises fixed-term deposits at banks and short-term money market investments with an original term to maturity of maximum three months. They are valued at nominal value. 2.8 Securities Securities (trading) include tradable equities held on a short-term basis which are valued at fair value and term deposits with an original time to maturity of more than three months which are carried at nominal value. Unrealised and realised profits and earnings on securities are credited or debited to financial income. 2.9 Accounts receivable Accounts receivable are valued at nominal value less any necessary impairments for claims at risk. Accounts receivable are subject to an individual evaluation with strict creditworthiness guidelines Provision for bad and doubtful receivables To cover the debtor risk, at the end of the reporting period the open accounts receivable are evaluated by means of maturity lists and legal case reporting with respect to collectability, the necessary valuation adjustments are formed and valuation adjustments which are no longer necessary are released. The valuation adjustments are made on the basis of individual valuation adjustments. No lump-sum valuation adjustments are performed Accrued income and prepaid expenses This heading comprises accrued income and prepaid expenses for the next reporting period and income for the current reporting period which will not be received until a later date. (residual debt) less any impairments. Impairments are recognised in the income statement. The security for such loans is considered to be the tenants improvements. If necessary, loans secured with real security can also be granted, under the provision that the real security is located in Switzerland. The maximum collateral per object amounts to 70% of the market value. In the financial investments, free capital can also be invested in CHF and EUR. Investments in first-class, stock-exchange-listed shares, bonds with a minimum rating by a leading rating agency of «A» and money market paper are permitted Investment properties including building land Investment properties and building land are valued at estimated fair value. The principle of individual valuation applies, with the same valuation method being applied to all properties. The change in fair value is recognised in the income statement. Investment properties and building land are valued at least every six months by a neutral independent property evaluation expert (Wüest & Partner, Zurich) in accordance with the discounted cash flow method. The change in the new valuation is imputed permanently to the operating income. The deferred income tax liabilities or assets on such sums are charged or credited to the income statement as deferred income tax expense or revenue Properties under construction and development sites Properties under construction (new buildings) and development sites are reported in the balance sheet at acquisition costs, less any necessary impairments. Existing investment properties remain under this heading for the duration of the conversion or restructuring of investment properties Assets held for sale Assets held for sale are assets whose sale is intended and/or has been decided, but not yet implemented. These assets are stated at the lower of book value or market value, less disposal costs. Investment properties fall under IFRS 5 only in respect of their classification, but not for valuation purposes, and are therefore entered in the balance sheet at their fair value Other tangible fixed assets Other tangible fixed assets are carried on the balance sheet at acquisition or production costs less accumulated depreciation. Expenses on repairs and maintenance are charged directly to the income statement. Depreciation is applied on a straight-line basis over the estimated economic life: Years 2.13 Long-term financial investments Long-term financial investments comprise tenants loans with a residual term to maturity of more than one year and are stated at current nominal value Plant and machinery 4 Business equipment 4 Data-processing equipment (only hardware) 4 Vehicles 4

30 Notes to the consolidated semi-annual report Financial liabilities Financial liabilities comprise short-term financial liabilities which fall due for repayment within the year, and long-term financial liabilities with residual terms to maturity of more than 12 months. The financial liabilities comprise loans secured by mortgages and one convertible bond. All loans were granted to Swiss Prime Site in CHF. A maximum external financing quota of up to 65% of the market value of the entire investment properties is permitted. Loans are entered into the balance sheet at amortised costs (in absence of transaction costs, they conform to the nominal value) Advance payments received Payments received cover in particular payments by tenants for rent claims or advance payments for ancillary costs incurred. The payments are entered into the balance sheet at the nominal value Derivative financial instruments Derivative financial instruments can be used within the scope of ordinary business activities (e.g. hedging), but no such instruments were in use at the end of the reporting period. The derivative financial instruments are valued at their market value and the unrealised profits as well as the profits and losses realised from the sale are reported in the financial result Convertible bond A convertible bond is carried entirely as a liability. The issuing costs are set off against the convertible bond and amortised in the income statement on a straight-line basis over the time to maturity. If the convertible bond is issued on conditions which differ from a bond without conversion rights, it is divided into equity capital and borrowing components Provisions Provisions are raised for liabilities that are uncertain in terms of their due date or due amount. A provision is raised if a past event creates a legal or factual obligation and if the future outflows of resources can be reliably estimated. Provisions for legal disputes depend on the Management Board s assessment of the outcome of the dispute in view of all known facts at the balance sheet date according to the best knowledge Income taxes Income taxes consist of current and deferred income taxes Shareholders equity An equity ratio of 40% is aimed for. The Board of Directors may approve a preliminary shortfall of this quota. Viewed in the long term, a return on equity of 6 to 8% is aimed for. The shareholders equity is subdivided into share capital, capital reserves, retained earnings and minority interests. In the share capital, the nominal share capital is stated. Nominal value changes are entered in the share capital. Profits are credited to the retained earnings and a possible dividend payment is charged from the retained earnings. All other capital changes are recorded in the capital reserves. Current income taxes comprise the anticipated tax liability on the taxable profit calculated at the tax rates applicable on the balance sheet date, property gains taxes on property sales and the adjustments of tax liabilities or tax assets for previous years. Deferred income taxes are calculated on temporary valuation differences between the book value of an asset or a liability in the consolidated balance sheet and its tax value (balance sheet liability method). The measurement of the deferred income taxes takes the anticipated date of the adjustment of the temporary differences into account. The tax rates used are the ones applicable at the balance sheet date or already announced. Tax effects from losses brought forward and tax credits can be carried as deferred income tax assets if it seems likely that they can in future be set off against profits within the stipulated statutory periods Treasury shares Treasury shares are recognised in shareholders equity (capital reserves) at acquisition costs. Proceeds from the sale of treasury shares are credited directly to shareholders equity (capital reserves) Dividends In compliance with Swiss statutory provisions and the articles of association, the dividends are treated as an appropriation of profit in the financial year in which they were approved by the General Meeting of Shareholders and paid out. It is anticipated that, instead of a dividend, 60 to 80% of the profit before revaluation by means of nominal value reduction will be paid out.

31 Notes to the consolidated semi-annual report 2.26 Impairment of tangible and intangible assets including goodwill The value of tangible and intangible assets is always reviewed if changed circumstances or events indicate the possibility of an overvaluation in the book values. If the book value exceeds the realisable value (commercial value less disposal costs or utility value), an impairment is applied to reduce it to the value that appears collectible on the basis of the discounted expected future income. Goodwill is tested for impairment annually or at shorter intervals if there is any reason to suppose an impairment. Swiss Prime Site as lessee Contracts for the use of land for which ground rent or right of use interest must be paid, are considered to be operational leasing contracts. Rental/leasing contracts with third parties are entered into the balance sheet as financial leasing if all of the risks and benefits associated with ownership are essentially transferred to the lessee on entering into the contract. Such investments are entered into the balance sheet at the cash value of the minimum leasing payments or at the lower market value. The corresponding leasing obligations are recorded as financial liabilities. No financial leasings currently exist Operating income and realisation of income The operating income includes all revenue from the renting and sale of investment properties and other fixed assets and other operating income. Vacancy costs and collection losses (loss of income) are deducted directly from the target income from the rental of investment properties. Operating income is recorded upon maturity or upon provision of services. Profits from the sale of investments are entered net, taking into account all sales-incidental costs incurred Share plans and share-based payments Since , 50% of the fees of members of the Board of Directors are paid in the form of shares. A block is placed on the sale of these shares for a period of four years. The shares are allocated at the end of the financial year based on the market price at the beginning of the financial year less a discount of 10%. The claims, including the social insurance contributions payable thereon, are accounted for under personnel costs in compliance with IFRS 2 and compensated by means of treasury shares Interest Borrowed capital interest is recorded with an effect on net income on the basis of the effective interest rate method. Interest payable and interest received are apportioned as provided in the loan agreements and charged or credited to the financial result in the income statement Transactions with related parties The related parties are the Board of Directors, the Management Board, the subsidiaries, Credit Suisse Group and all its subsidiaries, the «Personalvorsorgestiftung der Arthur Frey AG», the «Ergänzungsstiftung der Arthur Frey AG» and AXA Winterthur Leben (until July 2007). All transactions in the reporting period were effected at market conditions (dealing at arm s length). In the notes to the consolidated reporting, transactions with related parties which affect the incomestatement are itemised in the individual notes, and the balances vis-à-vis related parties are stated separately in the balance sheet items Earnings/(loss) per share The basic earnings/(loss) per share are determined by dividing the consolidated profit/(loss) for the period by the average number of shares outstanding. The diluted earnings/(loss) per share are determined by recognising expenses in connection with the convertible bond such as interest, amortisation of the costs of the convertible bond and tax effects. The potential shares (options and the like) that might lead to a dilution of the number of shares must be taken into account when determining the average number of shares outstanding Leasing Swiss Prime Site as a lessor In real estate renting, it is a question of operational leasing contracts. Rental income is generally recorded in the income statement linearly over the duration of the contract.

32 Notes to the consolidated semi-annual report Operating income in CHF Target rental income from investment properties Increase of provision for bad and doubtful receivables (119) (200) Release of provision for bad and doubtful receivables Write-off of receivables (117) (607) Vacancies (5 262) (5 267) Net rental income from investment properties Proceeds of property sales, net 727 (187) Other operating income Total operating income The main business activities of Swiss Prime Site are renting investment properties. The rental net proceeds from investment properties totaled CHF million [CHF million], whereby CHF million [CHF million] were rental income (turnover-based rentals). Of the rental income, CHF million [CHF million] were from related parties. No turnover-based rental agreements existed either in the current or in the previous year with related parties. Rental income includes rental income from the time at which the individual properties were taken over or since [ ]. The rentals were earned in the reporting period on total useful floor space of m 2 [ m 2 ]. Loss of income (vacancies and non-payments) in the period under review totalled CHF million [CHF million], equivalent to a loss of earnings rate of 4.9% [5.1%]. The losses were deducted from gross rental income. Detailed information can be found under «Property details» starting on page 69. In addition to the ordinary operating income from the rental of investment properties and the proceeds of property sales, other operating income of CHF million [CHF million] was achieved. This was made up of various income from properties totalling CHF million [CHF million], ground rent income of CHF million [CHF million] and other income of CHF million [CHF million]. The floor space is subdivided into m 2 [ m 2 ] commercial space and m 2 [ m 2 ] residential space. As at , the following termination periods (based on future rental income) applied to the individual contractual relationships: End of contract share in % Future rental income in CHF share in % Future rental income in CHF Under 1 year* Over 1 year Over 2 years Over 3 years Over 4 years Over 5 years Over 6 years Over 7 years Over 8 years Over 9 years Over 10 years Total * Contains all unlimited rental relationships (residential properties, parking, commercial properties, etc.).

33 Notes to the consolidated semi-annual report At balance sheet date as at , the five largest groups of tenants accounted for 44.3% [44.2%] of future rental income. The individual tenants have a good creditworthiness. The following groups were involved: share in % share in % UBS AG 15.5 UBS AG 15.5 Credit Suisse Group 10.5 Credit Suisse Group 10.1 Swisscom 9.3 Swisscom 9.3 Coop 6.5 Coop 6.9 Pfister (home furnishing) 2.5 Pfister (home furnishing) 2.4 Under IAS 17, rental agreements represent leasing operations. The rental agreements are generally index-linked; in the case of retail premises, additional turnover-based rentals are sometimes agreed. Rental agreements are generally concluded for a term of five to ten years, often with a five-year extension option. 4 Direct operating expenses in CHF Property expenses Ground rents Expenses for third-party services Total direct operating expenses Property expenses included maintenance and repair costs of CHF million [CHF million], ancillary costs borne by the owner of CHF million [CHF million], property-related insurance costs and fees of CHF million [CHF million] and rent paid to third parties of CHF million [CHF million]. An amount of CHF million [CHF million] was spent on ground rents. These ground rents are explained in detail in Note 19 «Investment properties». million [CHF million] to third parties as a facility management fee. Overall, the average fee rate as at amounted to 2.9% [2.9%] of the net rental income. An additional CHF million [CHF million] were costs for the revaluation of the properties by Wüest & Partner and CHF million [CHF million] was rental expense and other administration costs for third parties. Mortgage and loan interest is explained in Note 8 «Financial expenses and financial income». Of the CHF million [CHF million] paid third-party services, CHF million [CHF million] went to the related Wincasa and CHF 0.773

34 Notes to the consolidated semi-annual report Revaluation of investment properties in CHF Increase in fair value of investment properties (40 834) (99 488) Decrease in fair value of investment properties Total revaluation of investment properties, net (32 902) (94 602) Under IAS 40, investment properties must be stated at fair value. During the reporting period, the entire portfolio underwent a net upward revaluation of CHF million [CHF million]. Further details can be found in Note 19 «Investment properties». the one hand, the ratio of the new fair value to the purchase costs plays a role; on the other hand, the duration of ownership must be taken into account accordingly. A revaluation may have an effect on the calculation of the deferred income tax liabilities. It does not have the same effect on all the properties. On 6 Personnel costs in CHF Wages and salaries 36 Fees to members of the Board of Directors and members of the Management Board Social security Leasing of personnel Expenses for personnel and Board of Directors Total personnel costs Number of employees (head counts) as at On , Swiss Prime Site employed two employees. Personnel costs showed fees to members of the Board of Directors and the Management Board, including the social security contributions on these fees, and salaries for the two employees of SPS Finance Limited, Jersey, and leasing of personnel from Credit Suisse, Real Estate Asset Management. Portfolio management for Swiss Prime Site has been entrusted to Credit Suisse, Real Estate Asset Management. The corresponding expenses are included under administration costs in Note 7 «Other operating expenses» and also explained in Note 29 «Transactions with related parties». Pension plan of the Maag Group No persons were insured as at anymore. Pension plan of Arthur Frey AG There are two independent foundations for retired employees from the former Arthur Frey AG, the Personalvorsorgestiftung der Arthur Frey AG and the Ergänzungsstiftung der Arthur Frey AG in Olten. The calculations for the «Personalvorsorgestiftung der Arthur Frey AG» cover 217 [229] retired employees, while those for the «Ergänzungsstiftung der Arthur Frey AG» cover 3 [3] retired employees. There are no active employees insured in either of the two foundations. These two plans are qualified as defined benefit plans according to IAS 19. The liabilities and costs are calculated and recorded using actuarial principles according to the regulations of IAS 19.

35 Notes to the consolidated semi-annual report «Personalvorsorgestiftung/Ergänzungsstiftung der Arthur Frey AG» The changes of the defined benefit obligations and assets were as follows: in CHF projected projected Changes in defined benefit obligations Present value of obligations as at the beginning of period Current employer service cost Interest cost Employee contributions Benefits paid (1 866) (1 926) Insurance premiums Actuarial (profit)/loss on obligations * * Present value of obligation as at the end of period, actual * * Present value of obligation as at end of period, projected Changes in plan assets Fair value of assets as at the beginning of period Expected return on plan assets Employer contributions Employee contributions Benefits paid (1 866) (1 926) Insurance premiums Actuarial (profit)/loss on assets * * Fair value of available plan assets as at the end of period, actual * * Fair value of available plan assets as at the end of period, projected Defined benefit obligations as at the beginning of period (7 656) (7 389) Defined benefit obligations as at the end of period (7 951) (7 709) * The actuarial gains or losses on the defined benefit obligations will only be known after the determination of the year end values and the benefit assets. The amounts entered in the foundations balance sheet were composed as follows: in CHF projected actual projected Present value of obligations Fair value of plan assets (40 064) (41 067) (42 617) Net pension assets (7 951) (7 656) (8 028) Unrecognised actuarial gain Unrecognised still to be stated service cost Unrecognised part of defined benefit assets Net pension obligations recognised in the balance sheet

36 Notes to the consolidated semi-annual report The expenses included in the foundations income statement were compared as follows: in CHF Current employer service cost Interest cost Expected return on plan assets (863) (826) Statement of actuarial (profit)/loss Net pension cost of the employer according to IAS 19 (295) (320) Unrecognised part of net employer pension income Net pension cost in the income statement of the employer The movements in the net pension obligations recorded in the balance sheet were composed as follows: in CHF Net pension obligations at the beginning of period Net pension cost of the employer Employer contributions Net pension obligations as at the end of period The experienced profits and losses were composed as follows: in CHF in % Actual return on assets Difference between expected and actual return on pension assets Experienced losses/gains on pension obligations The plan assets as at were composed as follows: Asset categories Asset structure in % Expected return in % p.a. Shares 24.7 Bonds 48.5 Real estate 19.4 Other 7.4 Total assets/weighted return

37 Notes to the consolidated semi-annual report The following assumptions were applied to the valuation of the benefit plans: in % p.a Discount rate Expected return on pension assets Future salary increases Expected future pension increases Expected long-term interest on defined retirement credits «Ergänzungsstiftung der Arthur Frey AG» With the acquisition of the Frey Group, an existing provision in the amount of CHF million was also acquired. In 2007, the provision could be reduced by CHF million to CHF million. Further information is available in Note 24 «Provisions». 7 Other operating expenses in CHF Room costs Maintenance and repair of other tangible fixed assets Non-life insurance, fees Capital taxes Administration costs Audit and consultancy costs Advertising Total other operating expenses Capital taxes were calculated using the effective tax rates on the basis of intercantonal tax allocation. Swiss Prime Site AG s capital taxes are reduced because of the tax privilege it enjoys as a holding company. SPS Finance Limited is not subject to any capital taxes. The administration costs showed primarily management fees net (after VAT deduction) for the management of the business by Credit Suisse of CHF million [CHF million]. The remainder represented reporting costs and other administrative costs. Transactions with related parties are explained in note 29 «Transactions with related parties». The audit and consultancy costs included consultancy fees of CHF million [CHF million] and audit fees of CHF million [CHF million].

38 Notes to the consolidated semi-annual report Financial expenses and financial income Financial expenses in CHF Mortgage and loan interest payments Interest expenses 2.0% convertible bond Bank interest and expenses Default interest 2 19 Subtotal of interest expenses Change in market value on financial investments (trading) affecting net income 1 4 Amortisation cost of convertible bond Other financial expenses 9 Total financial expenses The reported financial expenses were paid to related banks and to third parties. Market conditions were always applied (see also Notes 21 «Short-term liabilities» and 22 «Long-term financial liabilities»). Financial expenses included interest for mortgages and loans in the amount of CHF million [CHF million] and bank interest of CHF million [CHF million] paid to related parties. Financial income in CHF Bank interest 13 2 Interest income on loans Remuneration interest Subtotal of interest income Dividend income on financial investments (trading) 2 2 Change in market value on financial investments (trading) affecting net income 5 3 Total financial income The financial income was also earned in every case at market-compliant conditions for related and third parties (see Notes 11 «Cash», 12 «Securities» and 18 «Long-term financial investments»). The reported financial income includes bank interest of CHF million [CHF million] from related parties.

39 Notes to the consolidated semi-annual report 9 Income taxes in CHF Current income taxes for the reporting period Current income taxes for previous years (528) (2 036) Total current income taxes (354) Deferred income taxes on revaluation and depreciation Deferred income taxes on sale of investment properties (265) (282) Deferred income taxes from tax rate changes and reductions following deduction of ownership period (3 331) (1 973) Deferred income tax assets from future loss offsetting Total deferred income taxes Total income taxes The current income taxes were calculated at the effective maximum tax rates. Agreements with the appropriate tax authorities were included. Pursuant to IAS 12, the current income taxes were divided into current income taxes for the reporting period and current income taxes for previous years. The deferred income taxes were apportioned between deferred income taxes on revaluation and depreciation, deferred income taxes on the sale of investment properties and deferred income taxes resulting from tax rate changes and reductions following deduction of the ownership period. Deferred income tax assets on loss carry-forwards which can in all probability be set off against profits were capitalised. The deferred income taxes are subject to the risk of tax rate changes as well as changes in the cantonal tax regulations. However, revaluations have a greater effect on deferred income taxes. For revaluations, the discount rate is among the decisive factors. Further information in this regard is provided in the sensitivity analysis in Note 19 «Investment properties». Income taxes/reconciliation The calculation of income taxes applied the effective tax rates. Liabilities for current income taxes are entered in short-term liabilities as current income tax liabilities. In the reconciliation, expenses and income which accrue to Swiss Prime Site AG and are not relevant for tax purposes because of the holding privilege were eliminated; losses incurred by subsidiaries which led to losses brought forward were set off. The following tax reconciliation shows why the effective tax burden deviated from the average rate. in CHF Profit before taxes at an average tax rate of 23% Taxes at other rates (including property gains tax) (557) Income taxes for previous years (3 342) (1 568) Effect of profits earned by companies with loss carry-forwards (1 328) (1 517) Capitalisation of deferred income tax assets Tax-neutral income and expenses (5 041) (382) Total income taxes

40 Notes to the consolidated semi-annual report Deferred income taxes Where the upward revaluation according to IFRS as against the fiscal values was due to a reversal of depreciation, the income taxes have been allocated per property and taken into account separately. Tax rates of between 9.0% and 18.4% were applied. Upward revaluations not resulting from the reversal of previous depreciations are taxed using two different systems. Cantons which do not levy any special taxes calculate income taxes at the aforementioned rates. The other cantons levy a separate property gains tax using rates of between 12.2 and 60.0%. In addition to the ordinary amount reported, they also contain speculation supplements or deductions depending on the length of ownership. Accordingly, deferred income taxes are reduced in proportion to the duration of ownership of the property. Swiss Prime Site assumes ownership for a minimum period of two years, i.e., possible speculation supplements for the first two years are disregarded. The income statement was debited with a deferred income tax expense of CHF million [CHF million]. This was due to the fact that deferred income tax liabilities or assets respectively had to be taken into account for the upward revaluations and the effected depreciations required by commercial law. In cantons with a separate tax, the positive market value adjustments, as mentioned above, incurred a particularly high tax burden. Conversely, negative market value adjustments provided tax relief. Of all the deferred income tax assets loss on offsetting, only the deferred income tax assets which could in all probability be set off against future profits were capitalised. The other deferred income tax assets from loss carry-forwards were not capitalised, because of the insufficient likelihood of a future offset. Deferred income tax assets in CHF Taxable losses of subsidiaries carried forward Total unrecognised taxable losses from negative market value adjustments and loss carry-forwards Possible tax effect on unrecognised taxable losses from negative market value adjustments and loss carry-forwards at an average rate of 23% Loss carry-forwards which can in all probability be offset against future profits (12 236) (20 657) Total capitalised deferred income tax assets at an average rate of 23% (2 814) (4 751) Total deferred income tax assets not capitalised According to IAS 12 «Income taxes», deferred income tax assets (loss carry-forwards and tax credits) can only be stated as assets in the balance sheet if they can be set off. The capitalised deferred income tax assets from loss carry-forwards, which in all probability can be offset with future profits, could be reduced [increased] by CHF million [CHF million] to CHF million [CHF million]. The maturity of the taxable losses carried forward of the subsidiaries was as follows:

41 Notes to the consolidated semi-annual report Maturity of the taxable losses carried forward in CHF Under 1 year After 1 year After 2 years After 3 years After 4 years After 5 years After 6 years After 7 and more years Total maturity of taxable losses carried forward In previous years, instead of the maturity of the taxable losses carried forward the maturing deferred income tax assets on the unrecognised taxable losses carried forward were reflected here. The previous year was adjusted accordingly. 10 Earnings per share The profit used to calculate the basic earnings per share or the diluted earnings per share was the profit for the period reported by Swiss Prime Site. According to IAS 33, both the basic earnings per share and the diluted earnings per share must be reported. The average number of shares was: Number of shares Shares issued (180 days) Average stock of treasury shares (180 days) ( ) (8 426) Average weighted number of shares (180 days) The average weighted earnings per share in CHF amounted to: Earnings per share Diluted earnings per share When calculating diluted earnings per share the net profit of CHF million [CHF million] was corrected by the following effects as a result of the convertible bond: interest, proportional costs of the issue and tax effect. This resulted in a diluted profit of CHF million [CHF million]. The weighted number of shares of [ ] increased by the weighted number of the highest possible number of shares to be issued upon conversion of [ ] to [ ] shares. Based on the conversion price as at of CHF [CHF 63.40] per share and assuming a 100% conversion, [ ] new shares would be issued.

42 Notes to the consolidated semi-annual report Cash in CHF Sight deposits with third parties 8 6 Sight deposits with related parties Total cash The sight deposits held with related parties were invested exclusively with Credit Suisse Group in the reporting period and the previous period. The investments were effected at market conditions. 12 Securities in CHF Equities and similar securities Bonds Total securities The equities contained in the securities (trading) are held on a short-term basis. Securities were purchased for CHF million [CHF million] and securities worth CHF million [CHF million] were sold. Shares were stated at market value. Revaluations (net) of CHF million [CHF million] were reported as affecting net income. 13 Accounts receivable in CHF Accounts receivable from third parties Accounts receivable from related parties Total accounts receivable, gross Impairment (892) (945) Total accounts receivable, net The accounts receivable related for the most part to claims for rent and ancillary costs. The necessary impairments were recognised using the individual valuation method. On entering into the contract, the creditworthiness of the tenants was strictly checked and evaluated by the administration and subsequently examined on a continuous basis. The Management Board (Chief Financial Officer) monitors the outstanding receivables which are at risk and evaluated as being non-collectable by means of an efficient legal case reporting. Reminders are sent for receivables which are outstanding longer than 15 days. Receivables which are outstanding for more than three months are impaired unless the creditworthiness of the tenant is undoubted.

43 Notes to the consolidated semi-annual report Maturity of receivables in CHF Gross receivables Provision for bad and doubtful receivables Gross receivables Provision for bad and doubtful receivables Not yet due Due between 0 and 30 days Due between 31 and 90 days Due between 91 and 360 days Due for more than one year Total gross receivables and provision for bad and doubtful receivables Receivables not yet due are accrued ancillary costs in the current ancillary cost period in the volume of CHF million [CHF million] and receivables not yet due for ancillary costs of CHF million [CHF million] with a payment deadline of 30 days. For bad and doubtful receivable risks towards third parties, an amount of CHF million [CHF million] was considered. Development of the provision for bad and doubtful receivables in CHF Provision for bad and doubtful receivables at the beginning of period Increase in provision for bad and doubtful receivables Release of provision for bad and doubtful receivables (172) (715) Total provision for bad and doubtful receivables at the end of period Other receivables in CHF Current accounts with third parties Current accounts with related parties Subtotal current accounts Other receivables Withholding tax credits 5 2 VAT credits Total other receivables On a monthly basis, Wincasa, a Swiss Prime Siterelated party (facility manager), transfers the accrued property surpluses and respectively the current accounts to the company concerned. The amount outstanding as at was CHF million [CHF million]. Other receivables contain instalments for the Post- Finance Arena in Berne. The acquisition is not yet completed. The transfer of ownership will take place in September 2008 as contracted on For more information on the PostFinance Arena confer to Note 19 «Investment properties». The withholding tax credits of CHF million [CHF million] related to interest income for the years 2007 and 2008 [2007]. A refund of the credit balance for the previous years has been requested but not yet received.

44 Notes to the consolidated semi-annual report For the other receivables, the same principles apply with respect to credit risk as for the accounts receivable. 15 Income taxes receivable in CHF Income taxes receivable 17 Total income taxes receivable 17 Receivables from income taxes are accruals for prepaid income taxes. 16 Accrued income and prepaid expenses in CHF Accrued income and prepaid expenses Total accrued income and prepaid expenses The accrued income and prepaid expenses included accruals from the real estate accounts (essentially rents and ancillary costs) of CHF million [CHF million], capital taxes of CHF million [CHF million] and administrative costs and interest of CHF million [CHF million]. For accrued income and prepaid expenses, the same principles also apply regarding the credit risk as apply to accounts receivable. 17 Assets held for sale Pursuant to IFRS 5, assets held for sale must be reported separately in the balance sheet. in CHF Investment properties Total assets held for sale The investment properties held for sale at the end of the reporting period are the properties Nidaugasse 8 in Biel, Emmentalstrasse 14 in Burgdorf, Obstmarkt 1 in Herisau, Bahnhofstrasse 20 in Interlaken, Dorfstrasse in Wangen bei Olten, Klebenmatt in Wangen bei Olten, Rickenbacherfeld in Wangen bei Olten, Zentralstrasse 55 in Wohlen and Limmattalstrasse 180 in Zurich. The investment properties held for sale as at were the properties Bärengasse 1/ Gemeindehausplatz in Glarus, Klebenmatt in Rickenbach, Dorfstrasse 21 in Wangen bei Olten and Dorfstrasse 27/Schmiedgasse 1 in Wangen bei Olten. They were sold during the course of the first half of The investment properties held for sale are valued similarly to the investment properties stated in the fixed assets. On conclusion of the sale, the payment is secured by an irrevocable promise of payment of a major bank or an insurance company. The results of the disposal were reported under proceeds of property sales; see Note 3 «Operating income».

45 Notes to the consolidated semi-annual report 18 Long-term financial investments in CHF Long-term financial investments Total long-term financial investments The long-term financial investments are tenant loans with fixed interest. This item includes a loan to the canton of Zurich to finance finishing work at Dörflistrasse 120 in Zurich with a residual term to maturity until and a residual amount of CHF million [CHF million] which bears 5.0% interest and is repaid over the term of the rental agreement by means of an annuity, as well as a loan to F+F Design School for finishing work at Flurstrasse 89 in Zurich in the amount of CHF million [CHF million] with a residual term to maturity until The latter loan bears interest at 7.5% and is amortised by means of an annuity. The rental contract with the F+F Design School is entered into for a period of ten years. If the rental relationship is not extended, the outstanding loan balance will fall due for repayment at the end of the rental period. These loans were acquired through the integration of the Maag Group. The corresponding extensions serve as security. The same principles apply regarding the credit risk as apply to accounts receivable. 19 Investment properties in CHF Properties Investment properties including Properties under construction/ Total of development building land at held for sale at properties valued at sites at acquisition market value market value market value costs Overall total Portfolio as at Purchases Follow-up investments Transfer from investment properties to properties held for sale (15 878) Transfer from properties held for sale to investment properties (2 788) Transfer from properties under construction to investment properties ( ) Disposals (27 044) (1 138) (28 182) (28 182) Positive market value adjustments Negative market value adjustments (12 886) (12 886) (12 886) Balance of market value adjustments As at Instalments for PostFinance Arena As at including properties reported as other receivables Purchases Follow-up investments Transfer from investment properties to properties held for sale (44 664) Disposals (9 808) (3 536) (13 344) (13 344)

46 Notes to the consolidated semi-annual report in CHF Properties Investment properties including Properties under construction/ Total of development building land at held for sale at properties valued at sites at acquisition market value market value market value costs Overall total Positive market value adjustments Negative market value adjustments (7 750) (182) (7 932) (7 932) Balance of market value adjustments As at Instalments for PostFinance Arena Instalments for PostFinance Arena As at including properties reported as other receivables Fire insurance values* On On On * No building insurance values existed for buildings under construction. Appropriate construction insurance policies were contracted for the building projects. City, address Market value as at Market value as at Change in CHF in CHF in CHF Commercial properties without significant residential space, including building land Aarau, Bahnhofstrasse Baden, Bahnhofstrasse Baden, Weite Gasse 34, Basel, Aeschenvorstadt Basel, Barfüsserplatz Basel, Elisabethenstrasse Basel, Freie Strasse 26/Falknerstrasse Basel, Freie Strasse Basel, Henric Petri-Strasse 9/Elisabethenstrasse Basel, Messeplatz 12/Messeturm Basel, Peter Merian-Strasse (430) Belp, Aemmenmattstrasse (620) Berne, Bahnhofplatz Berne, Genfergasse 11, Berne, Schwarztorstrasse (120) Berne, Weltpoststrasse (780) Biel, Nidaugasse (9 988) Brig-Glis, Sebastianplatz 4/Matzenweg (46) Buchs, St. Gallerstrasse

47 Notes to the consolidated semi-annual report City, address Market value as at Market value as at Change in CHF in CHF in CHF Burgdorf, Emmentalstrasse (7 952) Cham, Dorfplatz Dietikon, Bahnhofplatz Dietikon, Kirchstrasse Dübendorf, Bahnhofstrasse Emmenbrücke, Gersagstrasse 13, parking places, sold - Emmenbrücke, Sonnenplatz/Gerliswilstrasse 74, sold (9 808) Geneva, Centre Rhône-Fusterie Geneva, Route de Meyrin Geneva, Rue Céard 14/Croix-d Or Glattbrugg, Schaffhauserstrasse Herisau, Obstmarkt (14 750) Horgen, Zugerstrasse 22, Jona, Grünfeldstrasse (160) Lachen, Seidenstrasse Lausanne, Avenue de Chailly Lucerne, Geissensteinring 45/Tribschenstrasse Lucerne, Schwanenplatz Lucerne, Tribschenstrasse (78) Lucerne, Tribschenstrasse 56, Lucerne, Weggisgasse 20, Lucerne, Weinberglistrasse 4/Tribschenstrasse (180) Mels, Grossfeldstrasse/Pizol-Center Neuchâtel, Avenue J.-J.-Rousseau (69) Olten, Bahnhofquai Olten, Bahnhofquai Olten, Baslerstrasse 37/Ringstrasse Olten, Froburgstrasse Petit-Lancy, Route de Chancy Rapperswil, Rathausstrasse Rorschach, Hauptstrasse (197) Rümlang, Hofwisenstrasse (970) Schwyz, Oberer Steisteg 18, Solothurn, Amthausplatz Solothurn, Lagerhausstrasse (266) Spreitenbach, Fegistrasse (700) Spreitenbach, Pfadackerstrasse 6/Limmatpark (50) St. Gallen, Poststrasse (74) St. Gallen, Spisergasse St. Gallen, Vadianstrasse Thalwil, Gotthardstrasse Thun, Bälliz Thun, Bälliz Uster, Poststrasse Vevey, Rue de la Clergère Villars-sur-Glâne, Route du Petit-Moncor 1, 1a, 1b Volketswil, Shopping Centre Volkiland Volketswil, Grabenwis-Strasse 1, 3, (90) Winterthur, Theaterstrasse Winterthur, Untertor Wohlen, Zentralstrasse (9 220) Worblaufen, Alte Tiefenaustrasse Zollikon, Bergstrasse 17, Zollikon, Forchstrasse

48 Notes to the consolidated semi-annual report City, address Market value as at Market value as at Change in CHF in CHF in CHF Zug, Zählerweg 4, 6/Dammstrasse 19/ Landis+Gyr-Strasse 3/Opus Zug, Zählerweg 8, 10/Dammstrasse 21, 23/Opus Zurich, Affolternstrasse 54, 56/Cityport (1 420) Zurich, Badenerstrasse Zurich, Bahnhofstrasse Zurich, Bahnhofstrasse Zurich, Brandschenkestrasse (420) Zurich, Dörflistrasse Zurich, Flurstrasse Zurich, Flurstrasse Zurich, Fraumünsterstrasse Zurich, Freilagerstrasse Zurich, Josefstrasse 53, Zurich, Kreuzstrasse Zurich, Limmattalstrasse (2 754) Zurich, Manessestrasse (10) Zurich, Parking Nordhaus (293) Zurich, Reitergasse 9, Zurich, Schaffhauserstrasse Zurich, Siewerdtstrasse Zurich, Sihlcity Zurich, Stadelhoferstrasse Zurich, Stadelhoferstrasse Zurich, Talacker 21, Total I (23 562) Commercial properties with some residential space Basel, Steinenvorstadt Geneva, Quai du Seujet Geneva, Route de Malagnou 6/Rue Michel-Chauvet Geneva, Rue de la Croix-d Or 7/Rue Neuve-du-Molard St. Gallen, Bohl 1/Goliathgasse St. Gallen, Spisergasse Zurich, Freischützgasse Zurich, Hönggerstrasse 40/Röschibachstrasse (330) Zurich, Schulstrasse 34, Zurich, Stauffacherstrasse 94, 96/Molkenstrasse 15, Total II Properties held for sale Biel, Nidaugasse Burgdorf, Emmentalstrasse Glarus, Bärengasse 1/Gemeindehausplatz, sold 511 (511) Herisau, Obstmarkt Interlaken, Bahnhofstrasse Rickenbach, Klebenmatt, sold 7 (7) Wangen bei Olten, Dorfstrasse 11, Wangen bei Olten, Dorfstrasse 21, sold (1 190) Wangen bei Olten, Dorfstrasse 27/Schmiedgasse 1, sold (1 828)

49 Notes to the consolidated semi-annual report City, address Market value or acquisition costs as at in CHF Market value or acquisition costs as at in CHF Change in CHF Wangen bei Olten, Klebenmatt Wangen bei Olten, Rickenbacherfeld Wohlen, Zentralstrasse Zurich, Limmattalstrasse Total III Total properties valued at market value Properties under construction and development sites Zurich, Hardstrasse 221/Prime Tower Zurich, Hardstrasse/Platform Zurich, Hardstrasse 219/Maaghof & Event Total IV properties valued at acquisition costs Overall total investment properties including building land and properties held for sale at market value and properties under construction and development sites at acquisition costs Berne, Mingerstrasse 12 18/PostFinance Arena, instalments (acquisition costs) Overall total including properties reported as other receivables The market value adjustments are made on the basis of a regular (semi-annual) fair-value appraisal by a renowned independent real estate expert (Wüest & Partner, Zurich) using the discounted cash flow method. At the time of reporting, nine [eight] investment properties were earmarked for sale. The acquisition of the PostFinance Arena is not yet completed. The transfer of ownership will take place in September 2008 as contracted on The instalments for the PostFinance Arena were recognised in the balance sheet under «Other receivables». Sensitivity of the market value* A change in the market value may result from changes in various market and property factors or several evaluation parameters: changes in the rental income, real estate costs and the discount rates (returns). With reference to potential changes in the market environment, the sensitivity is given in particular in relation to the discount rates. The change in market value, being dependent on the change in the discount rate, is presented as follows (average discount rate over the entire portfolio, approximate calculation): For information on the calculation of deferred income taxes on market value adjustments, see Notes 9 «Income taxes» and 23 «Deferred income tax liabilities». * Including PostFinance Arena for which the transfer of ownership will take place in September 2008 as contracted on

50 Notes to the consolidated semi-annual report Average discount rate Change in Change in market value market value Market value in % in CHF in CHF % (valuation as at ) % % % % (2.1) (78 390) % (4.1) ( ) % (6.1) ( ) % (7.9) ( ) % (9.7) ( ) An increase in the discount rate (return expectation) over the entire portfolio of more than 50 basis points within a short period of time appears to be highly improbable. The real estate yields are to a lesser degree subject to change than the nominal interest rates of bonds or mortgages. On the other hand, in the current field with still moderate yields for real estate in Switzerland, a discount rate more than 30 basis points lower over the entire portfolio is also quite improbable. The influence of changed rental income on the market value is also basically large, but substantial changes in the rental proceeds over the entire portfolio (with different uses and tenants), cumulatively and within a short period of time, are less probable, or higher repercussions on the portfolio would occur after a delay over a longer period of time. It can approximately be assumed that there is a linear relationship between rental proceeds and market values, whereby the rental income forecast in the evaluation is composed of several components such as the current contractually secured rents and market rent estimates on the expiry of the current contracts. If only one of these components changes, the influence on the market value occurs only weakly. For example, the market value drops by 4.5% with a reduction of the market rental potential of 4.0%. Change in market rental potential Change in Change in market value market value Market value in % in CHF in CHF % (valuation as at ) % % % (2.0%) (2.3) (85 856) (4.0%) (4.5) ( ) (6.0%) (6.8) ( ) (8.0%) (9.1) ( ) (10.0%) (11.4) ( ) The sensitivity of the market values in relation to the change in the current real estate costs for operation and ordinary maintenance is clearly lower than in relation to the above-mentioned factors. On the other hand, the influence of changed costs for restructurings and renovations or the building costs for projects can have substantial repercussions on the market value for the affected real estate. Because only a limited number of real estate properties are affected here over the entire portfolio, the sensitivity in this respect is put into perspective. As a whole, a change in the market value of the entire portfolio of more than 5% within the year is considered to be quite improbable.

51 Notes to the consolidated semi-annual report Current development and building projects City, address Additional information Berne, Mingerstrasse 12 18/ PostFinance Arena Date of acquisition: The transfer of ownership will take place in September 2008 as contracted on Project description: Renovation of the existing ice hall including affiliated restaurants. Expansion of VIP areas, lounges, service areas, a training hall and an ice hall. Establishment of additional office space as commercial services area (floor space about m 2 ). Project status: Building commenced in summer The shell of the training hall and the ice rink are finished. The excavation and the foundation for the office building are finished. The hall will be operational when the league starts in September Occupancy rate (income)*: around 94%. The service areas were let to the Swiss Post on a long-term basis. Completion: ice stadium with associated sections for the Ice Hockey World Championship 2009: autumn 2008; entire construction: autumn 2009 Zurich, Hardstrasse 219/ Maag site Project description: Site construction for mixed use (total usable floor space around m 2, of which approx m 2 residential space). New constructions and conversions realisable in different stages. The first building phase will be the 126 m high Prime Tower with its two adjoining buildings Cubus and Diagonal with a usable area of m 2 as well as the service building Platform with about m 2 rental space. Project status: The legally valid building permit is now at hand for all four buildings, including the building Platform. In spring 2008, demolition work began for the Prime Tower and both its adjoining buildings. The building permit for the service building Platform attained legal force in June Demolition work will commence early Occupancy rate (income)*: around 45% Completion: Prime Tower and adjoining buildings as well as Platform: spring 2011 * The occupancy rate details (income) are valid as at Swiss Prime Site as building right holder In terms of IAS 17, a building right is operational leasing. Swiss Prime Site acts as building right holder for the following properties: City, address Additional information Basel, Messeplatz 12/ Messeturm Building right area: 860 m 2 and m 2 Term of contract: The building right has been granted until Extension option: possible for a further 20 years Price: The ground rent is recalculated every ten years on the basis of net proceeds, absolute land value and value of the buildings themselves. The next recalculation will occur in 2010 effective on Pre-emption right: by both parties

52 Notes to the consolidated semi-annual report City, address Additional information Berne, Mingerstrasse 12 18/ PostFinance Arena Building right area: m 2 Term of contract: The building right begins to run on with the transfer of benefits and risks. The building right has been granted until Extension option: The extension must be renegotiated no later than five years before the expiry of the building right. Price: Up to the complete supply of the building and grounds, the ground rent is calculated proportionally, i.e. in relation to the rental income of the completed building for the achievable rental income of the general superstructure. However, a minimum ground rent is collected. The charge for the building right can be adjusted every five years, for the first time on , by 80% of the change in the national consumer price index. Pre-emption right: The granter of the building right has a unilateral preemption right to the buildings and facilities. On expiry of the building right agreement, the created buildings and facilities revert to the granter of the building right if the contract is not extended. For this, the granter must pay 100% of the current market value accepted by both parties. Berne, Weltpoststrasse 5 Building right area: m 2 Term of contract: The building right has been granted until Extension option: The extension must be renegotiated no later than three years before the expiry of the building right. Price: The ground rent is linked to the national consumer price index (April 2000, points). The next calculation will occur in 2010 effective on Pre-emption right: by both parties Emmenbrücke, Gersagstrasse 13 Sold: as at Glarus, Bärengasse 1/ Gemeindehausplatz Sold: as at Mels, Grossfeldstrasse/ Pizol-Center Building right area: m 2 Term of contract: The building right has been granted until Extension option: none Price: 50% of the ground rent is calculated on the basis of the old mortgage rate for first-ranking mortgages on residential buildings of the St. Galler Kantonalbank (Cantonal Bank of St. Gallen), adjusted annually on , with a further 50% adjusted according to the national consumer price index (September 2002, points). The next recalculation will occur in 2012 effective on Pre-emption right: There is a pre-emption right and, as from 2027, an acquisition right to the land. Spreitenbach, Fegistrasse Building right area: m 2 Term of contract: The building right has been granted until Extension option: The extension must be renegotiated no later than three years before the expiry of the building right. Price: The ground rent is recalculated every ten years on the basis of the latest land price. The next calculation will occur in 2017 effective on Pre-emption right: There is a mutual pre-emption right and, from the year 2042, an acquisition right to the land.

53 Notes to the consolidated semi-annual report City, address Additional information Spreitenbach, Pfadackerstrasse 6/ Limmatpark Building right area: 188 m 2 Term of contract: The building right has been granted until Extension option: none Price: The ground rent is index-linked and is adjusted annually to the BIGA cost of living index. The calculation is based on the status as at October 2001 of points (basis: May 2000 = 100). Adjustment is effected every year with reference to the status as of October in the previous year. Right of use: In addition to the building right for which costs must be paid, there are also mutual rights, free from all charges, to use car parking facilities, escalators, lifts, district heating supply, sewage pipes and a public right of way through the shopping centre and underground car park. Pre-emption right: none Zurich, Limmattalstrasse 180 Building right area: m 2 Term of contract: The building right has been granted until Extension option: entitlement to a 50-year extension, no later than one year before the expiry of the building right Price: The ground rent is adjusted annually by the average value of the change in the BIGA national consumer price index and the interest rate of the Zürcher Kantonalbank (Cantonal Bank of Zurich) for first mortgages on commercial properties. After ten years, the land value is adjusted to reflect prevailing market conditions. The next adjustment of the land value is due in 2015 with effect from Pre-emption right: by both parties Right of use As in the case of a building right, the right of use is also defined by IAS 17 as a lease operation. The interest for the right of use is shown in the tables «Future ground rent payments» and «Ground rent payments for the reporting period». The following property is encumbered with a right of use contract (user). City, address Additional information Zurich, Stadelhoferstrasse 18 Right of use for: 80 m 2 Term of contract: The right of use has been granted until Extension option: If the contract is not terminated or changed prior to with a notice period of one year, it will be automatically extended by another five years. Price: The charge for the the right of use is adjusted each year by 80% of the change of the national consumer price index. Pre-emption right: none Future ground rent payments in CHF Ground rent payments for up to 1 year Ground rent payments from 1 year to 5 years Ground rent payments for more than 5 years Total future ground rent payments* * Including PostFinance Arena

54 Notes to the consolidated semi-annual report Ground rent payments for the reporting period in CHF Ground rent payments Total ground rent payments for the reporting period Swiss Prime Site as the granter of a building right Swiss Prime Site has granted a building right on the following property: City, address Additional information Burgdorf, Emmentalstrasse 14 Building right area: m 2 Term of contract: The building right has been granted until Extension option: The leaseholder may apply for an extension of the lease no later than two years before its expiry. Price: The ground rent can be adjusted every five years. Adjustment is carried out for 60% of the ground rent amount based on changes to the national consumer price index and 40% is based on the interest rate for first class residential mortgages in Burgdorf. The values set to determine the ground rent at the beginning of the contract are: points respectively 5.5%. Adjustments are based on the factors preceding the (index level and interest rate). The next adjustment is due in 2009 with effect from Pre-emption right: On expiry of the building right agreement, the created buildings and facilities revert to the granter of the building right if the contract is not extended. The granter shall pay 65% of the the condition value. Future ground rent income in CHF Ground rent income for up to 1 year 9 9 Ground rent income from 1 year to 5 years Ground rent income for more than 5 years Total future ground rent income Ground rent income for the reporting period in CHF Ground rent income recognised as other operating income 4 4 Total ground rent income for the reporting period 4 4

55 Notes to the consolidated semi-annual report 20 Deferred income tax assets in CHF Deferred income tax assets Total deferred income tax assets The tax effects of loss carry-forwards were capitalised as deferred income tax assets in cases where they can in all probability be set off against future profits. Note 9 «Income taxes» gives information on the calculation of the deferred income tax assets. 21 Short-term liabilities in CHF Accounts payable to third parties Accounts payable to related parties Subtotal accounts payable Short-term financial liabilities to third parties Short-term financial liabilities to related parties Subtotal short-term financial liabilities Other short-term liabilities Advance payments from third parties Advance payments from related parties Current income tax liabilities Accrued expenses and deferred income Total short-term liabilities Accounts payable included only commitments for ancillary cost accounts and invoices in respect of properties. The short-term financial liabilities to third and related parties included mortgages which will fall due for payment within a year. The following table shows how an interest rate change could affect the interest expense of a new investment in short-term financial liabilities under the assumption of an interest fluctuation of 0.25% and 0.50%. Interestrate sensitivity in CHF Annual interest 2008 extrapolated Deviation from actual interest expenses Annual interest 2007 Deviation from actual interest expenses Actual interest rate in the reporting period Reduction in the actual interest rate of 0.25% (524) (790) Reduction in the actual interest rate of 0.50% (1 048) (1 580) Increase in the actual interest rate of 0.25% Increase in the actual interest rate of 0.50% There were no unusual debt covenants in relation to short-term financial liabilities. The other short-term liabilities of CHF million [CHF million] comprised liabilities of CHF million [CHF million] related to the convertible bond, CHF million [CHF million] to the Swiss Federal Tax Administration, value added tax, and CHF million [CHF million] for dividends due by the former Maag Group.

56 Notes to the consolidated semi-annual report All advance payments consisted of rental and ancillary cost payments made in advance. The accrued expenses and deferred income included CHF million [CHF million] of accruals from the real estate accounts (primarily renovation and planning costs). CHF million [CHF million] were capital taxes and CHF million [CHF million] was administra- tion and advertising expenditure as well as auditing and valuation fees. For personnel costs, CHF million [CHF million] was accrued. Interest liabilities to lenders amounted to CHF million [CHF million], of which CHF million [CHF million] concerned related parties and CHF million [CHF million] were related to third parties. 22 Long-term financial liabilities Long-term financial liabilities consisted of mortgage-backed loans, of which CHF million [CHF million] were granted by the related Credit Suisse Group respectively CHF million [CHF million] by third parties and a convertible bond of CHF million [CHF million]. Loans are structured as fixed advances. in CHF Total of which with related parties Total of which with related parties Long-term financial liabilities as at beginning of the reporting period Changes (net) Total long-term financial liabilities as at end of the reporting period The long-term financial liabilities of CHF million [CHF million] were carried at nominal value with the exception of the convertible bond, where the proportionate costs until maturity were deducted from the nominal value. The present market value is the same or only slightly different to the historical nominal value. An individual valuation at market value was therefore not made. There were no unusual debt covenants for the mortgage-backed loans or the convertible bond. The only significant restrictions in individual contracts referred to the keeping of a LTV (loan to value) and a DSCR (debt service corporate ratio). The contractual limits were kept by the Company and are continuously supervised. To secure the financial liabilities, various credit-line contracts were entered into both with third-party banks and with related banks under market conditions (at arm s length). Within the credit-line limits, the respective maximum available credit amount is determined and adjusted by the banks on the basis of the valuation of the land mortgage rights transferred to them as security. The increase in framework credits or loans, the repayment of existing loans and refinancing take place continuously based on the liquidity plan. The Management Board (Chief Financial Officer) is responsible for the timely execution and it is monitored by the Board of Directors. As at balance sheet date the borrowed financing ratio was 59.5% [59.6%] of the overall investment properties portfolio including the PostFinance Arena.

57 Notes to the consolidated semi-annual report Long-term financial liabilities, split by interest rates in CHF Total of which with related parties Total of which with related parties Fixed-rate mortgages/fixed advances/ convertible bond up to 3.00% Fixed-rate mortgages/fixed advances up to 3.25% Fixed-rate mortgages/fixed advances up to 3.50% Fixed-rate mortgages/fixed advances up to 3.75% Fixed-rate mortgages/fixed advances up to 4.00% Fixed-rate mortgages/fixed advances over 4.00% Total long-term financial liabilities The weighted average interest rate for all financial liabilities was 3.0% [3.0%]. The credits were borrowed at fixed interest rates. For this reason, a change in the interest rate in the capital market up to the due date has no influence on the interest expenses. Long-term financial liabilities including interest, split by maturity dates in CHF Total Amortisation share of which with related parties Interest expenses share of which with related parties Within 1 to 2 years Within 2 to 3 years Within 3 to 4 years Within 4 to 5 years After more than 5 years Total long-term financial liabilities and interest in CHF Total Amortisation share of which with related parties Interest expenses share of which with related parties Within 1 to 2 years Within 2 to 3 years Within 3 to 4 years Within 4 to 5 years After more than 5 years Total long-term financial liabilities and interest The weighted average residual term to maturity of all financial liabilities was 4.3 [4.2] years.

58 Notes to the consolidated semi-annual report Convertible bond Long-term financial liabilities included mortgage liabilities and a convertible bond which was issued on with the following key parameters: Volume CHF million Interest rate 2.0% p.a., payable annually as at , starting as at Maturity 5 years ( ) Conversion price CHF (on CHF 62.55) Listing SWX Swiss Exchange Security number (SPS05) Each individual bond with a nominal value of CHF is convertible into registered shares until shortly before the maturity date at a conversion price on of CHF per registered share. At the present conversion price, a maximum of registered shares can be issued in respect of the convertible bond. The registered shares which must be issued are secured with conditional capital of the Company. The possible exercise of the conversion rights results in a dilution of earnings per share. In the reporting period, no conversions took place. The convertible bond is included under long-term financial liabilities with an amount of CHF million [CHF million]. This corresponds to an issue amount of CHF million less the issue costs for the residual term to maturity of CHF million [CHF million]. Amortisation of the convertible bond costs stood at CHF million [CHF million]. In the case of the convertible bond, the allocation of an option value to the shareholders equity is not made as the interest on the convertible bond was equivalent to the market interest rate at the time of issue. 23 Deferred income tax liabilities in CHF Deferred income tax liabilities as at beginning of the reporting period Increase from depreciation/revaluation, net Reduction from sale of properties (265) (294) Tax rate changes (3 331) (4 020) Total deferred income tax liabilities as at end of the reporting period Deferred income tax liabilities result from revaluations and depreciations of investment properties under commercial law. On the other hand, deferred income tax liabilities are reduced by disposals. The deferred income taxes are subject to the risk of tax rate changes as well as changes in the cantonal tax regulations; however, revaluations have a larger effect on deferred income taxes. When calculating the deferred income tax liabilities, these risks do not affect all properties to the same extent. What is significant is the ratio of the current market value to the acquisition costs or, depending on the cantonal tax regulations, to the book values; on the other hand, in the cantons with a monistic tax system, the duration of ownership must be taken into account. Information about the status and changes in revaluations can be found in Notes 5 «Revaluation of investment properties» and 19 «Investment properties». Note 9 «Income taxes» gives information on the calculation of the deferred income taxes.

59 Notes to the consolidated semi-annual report 24 Provisions in CHF Provision for the «Ergänzungsstiftung» as at beginning of the reporting period Release of the provision (184) Total provision for the «Ergänzungsstiftung» as at end of the reporting period The provision for the «Ergänzungsstiftung», based on an actuarial calculation, results from the acquisition of the Frey Group. It is used to cover pension benefits to three recipients from the «Ergänzungsstiftung der Arthur Frey AG». No cash outflow is expected in the medium term. The calculation of the shortfall was based on a technical interest rate of 3%. The value fluctuation reserve amounts to 15%. 25 Shareholders equity Share capital Issued registered shares Nominal value in CHF in CHF Nominal share capital as at Nominal value reduction on (3.10) (79 526) Nominal share capital as at Nominal value reduction on (3.40) (87 222) Total nominal share capital as at A register of shares is kept for the registered shares. Only the person whose name appears in the share register is recognised as the shareholder or usufructuary. Each share is entitled to one vote at the General Meeting of Shareholders. The Board of Directors is entitled to decline foreign purchasers of registered shares as shareholders with voting rights, insofar as and for as long as their acknowledgment might prevent the Company from producing evidence of the composition of the circle of shareholders required by federal law. Otherwise there are no restrictions on registration or voting rights. Anyone who acquires or holds, either directly or indirectly or in joint agreement with third parties, more than 33 1 /3% of the vote-carrying shares must make an offer to acquire all listed shares of the Company. The treasury shares held on , [ ], are not entitled to a dividend. Therefore, as at balance sheet date, dividend-entitled share capital amounting to CHF million [CHF million] comprises [ ] shares. Authorised capital Number of registered shares Nominal value in CHF in CHF Authorised capital as at Nominal value reduction on (3.10) (24 800) Authorised capital as at Approval/extension of capital by the General Meeting of Shareholders on Nominal value reduction on (3.40) (27 200) Total authorised capital as at

60 Notes to the consolidated semi-annual report The Board of Directors has been authorised to increase the share capital accordingly at any time before in the aforementioned volume. The shareholders subscription rights remain guaranteed. The precise wording can be found in the articles of association of the Company. Conditional capital Number of registered shares Nominal value in CHF in CHF Conditional capital as at Nominal value reduction on (3.10) (14 043) Conditional capital as at Nominal value reduction on (3.40) (15 402) Total conditional capital as at The conditional capital is divided into an amount of up to CHF million [CHF million] for exercising options and/or conversion rights granted in connection with bond or similar issues and an amount of up to CHF million [CHF million] for option rights granted to the shareholders. The precise wording can be found in the articles of association of the Company. Capital reserves in CHF Capital reserves as at Nominal value reduction of treasury shares on Share-based basic fee 238 Purchase of treasury shares ( ) Sale of treasury shares 181 Capital reserves as at Nominal value reduction of treasury shares on Sale of treasury shares Total capital reserves as at Capital reserves derive from above-par issues at the time of foundation and the capital increases as well as from changes out of trading with subscription rights, treasury shares and share-based basic fees. Since 2007, only the nominal share capital is stated in the share capital. Therefore, all other changes previously shown in the share capital were retrospectively transferred into capital reserves. Retained earnings in CHF Retained earnings as at Profit distributions Profit for the period Retained earnings as at Profit distributions Profit for the period Total retained earnings as at The retained earnings consist of earnings retained since the Company s foundation. Total shareholders equity

61 Notes to the consolidated semi-annual report The following decisions were taken by the General Meeting of Shareholders of : A nominal value reduction of CHF 3.40 from CHF to CHF per share. The share capital on which the reduction is based consists of the shares already issued before the General Meeting of Shareholders. The capital reduction was performed on The reduction amounted to CHF million. The deadline to carry out the authorised capital increase was extended to Future obligations and contingent liabilities in CHF Total future obligations On , a total contractor agreement was entered into with HRS Hauser Rutishauser Suter AG for the construction of the office building including restructuring of the existing ice hall with an extension of a training and parking hall at Mingerstrasse in Berne for the amount of CHF million. Until completion in the late summer of 2008 (ice hall) or 2009 (office building), payments with a total amount of CHF million must still be made. The purchase price of CHF million for the existing PostFinance Arena will be settled concurrently with the transfer of ownership in September On , a total contractor agreement was entered into with the consortium Losinger/Steiner for the construction of the Prime Tower including the adjoining buildings Cubus and Diagonal at the Maag site in Zurich in the amount of CHF million. No payments were made in the 2007 financial year. Until the completion at the end of 2010, further payments in the amount of CHF million will become due in terms of this total contractor agreement. On a total contractor agreement concerning the construction of the Platform building on the Maag site in Zurich West was signed with HRS Hauser Rutishauser Suter AG in the amount of CHF million. Building will start at the beginning of Therefore, no payments are yet due. On the contract was signed and certified for the purchase of the property Froburgstrasse 1 3, Olten, at a purchase price of CHF million. Transfer of ownership and transfer of benefits and risks will take place on There were no contingent liabilities as at the balance sheet date, and also no sureties and no guarantees. 27 Details of pledged assets in CHF Market value of the respective properties Nominal value of the pledged mortgage certificates Current utilisation Segment reporting The main business activity of Swiss Prime Site is renting investment properties with low residential space. The portfolio as illustrated in Note 19 «Investment properties» has a standardised risk structure. The properties are located exclusively in Switzerland, which is treated as one geographical unit for segment reporting purposes.

62 Notes to the consolidated semi-annual report Transactions with related parties The related parties are the Board of Directors, the Management Board, the subsidiaries, Credit Suisse Group and all its subsidiaries, the «Personalvorsorgestiftung der Arthur Frey AG», the «Ergänzungsstiftung der Arthur Frey AG» and AXA Winterthur (until July 2007). In the following tables, the accrued basic fee for the reporting period is stated as a gross amount, i.e. before deduction of the ordinary social contributions. Expenses allowances paid to the members of the Board of Directors and the Management Board are reported under «Other compensation» and paid as flat-rate expenses. Board of Directors and Management Board Disclosure, pursuant to IAS 24, of the following compensation for members of the Board of Directors and Management Board is based on the accrual principle (statement for the appropriate periods, regardless of the flow of payments). The term «member of the Board of Directors» as used in the following tables refers exclusively to ordinary fees paid to non-executive Board members, as Swiss Prime Site did not have any executive Board members either in the reporting period or in the previous period. 50% of the fees of members of the Board of Directors are paid out as at the end of the year in the form of Swiss Prime Site AG shares. No fees were paid in the reporting period. Compensation to members of the Board of Directors in CHF Basic fee to members of the Board of Directors including the fee for committee members Other compensation Total compensation for members of the Board of Directors, gross In the current and previous period, no separate severance compensation was paid to former members of official company bodies. Compensation for members of the Management Board in CHF Basic fee to members of the Management Board including the fee for committee members Other compensation 4 4 Total compensation for members of the Management Board, gross The compensation as reported only covers additional duties (member of the Investment Committee and secretary of the Board of Directors) of Management Board members. The management board function is covered by the fee paid to the asset manager.

63 Notes to the consolidated semi-annual report Maximum total remuneration in CHF Basic fee in cash Other compensation 2 2 Maximum total remuneration, gross Shareholding According to IFRS 2 the shareholdings of the Board of Directors and the members of the Company s management are disclosed. Number of registered shares Members of the Board of Directors Members of the Management Board Total shareholding [0] shares were allocated during the reporting period. Options There are no outstanding or allocated options. Additional fees and remuneration No additional fees were paid. Loans to company bodies There are currently no outstanding loans to company bodies. Other related parties All investments in investment properties of CHF million [CHF million] as well as divestments of investment properties of CHF million [CHF million] were performed to third parties. No purchases or sales to or from related parties and shareholders were performed in the reporting period or in the comparison period. The management fee (plus the charged salary costs for the administration) for the asset manager, Credit Suisse, Real Estate Asset Management, Zurich, amounted to CHF million [CHF million] in the reporting period. On an annual basis, it amounts to % [ %] of total assets (total of all valued consolidated assets at the beginning of each quarter). In general, agency commissions amounting to % of the purchase or sales price (excluding purchase costs) of all properties acquired, contributed or sold by Swiss Prime Site are paid. In the reporting period, sales and purchase commissions of CHF million [CHF million] and construction commissions of CHF million [CHF million] were paid to Credit Suisse, Real Estate Asset Management. In addition, costs for sales commissions of CHF million [CHF million] and building trustee commissions of CHF million [CHF million] were paid to Wincasa. For the most part, the facility management of investment properties is carried out by Wincasa. Payments to the facility managers are reported in Note 4 «Direct operating expenses». Mortgage and loan interest payments to related parties and bank interest from related parties are reported in Note 8 «Financial expenses and financial income».

64 Notes to the consolidated semi-annual report Major subsidiaries Participation Companies Share capital in CHF in % (held directly or indirectly) Method of consolidation SPS Immobilien AG Real estate company Olten, CH full SPS Immobilien Residenz AG Real estate company Olten, CH full SPS Finance Limited Financing company Jersey full Société Immobilière Rue Céard No. 14 Real estate company Olten, CH full Maag Property Company AG Real estate company Olten, CH full 31 Major shareholders Major shareholders (shareholding interest > 3.0%) Shareholding interest* in % Shareholding interest* in % Swiss Prime Site AG, Olten Credit Suisse Investment Foundation, Zurich Pension Fund of the Swiss Federal Railways, Berne Credit Suisse Asset Management Funds, Zurich Schweizerische Mobiliar Holding AG, Berne 4.5 Pension Fund of Credit Suisse Group (Switzerland), Zurich RE Investment Switzerland, Guernsey 3.1 n.a. * According to the entry in the register of shares 32 Risk management Principles Swiss Prime Site attaches considerable importance to the identification, measurement and control of risks. By applying comprehensive and systematic measures for the identification and valuation of risks, the risk management aims to ensure that undesirable risks are minimised well in advance, and that there is always an appropriate relationship between return and risk.

65 Notes to the consolidated semi-annual report The effect of the risks on the Company s cash flow and value is reviewed regularly and, if necessary, appropriate countermeasures are taken. The principles of risk distribution/optimisation are set out in separate investment and financing regulations. The Management Board and the Board of Directors are informed regularly, at least quarterly, about the risk situation. Risk types Real estate is subject to specific risks that can be divided into the following categories (not an exhaustive list): specific real estate risks risks related to construction activities market risk and diversification refinancing and liquidity risks valuation risks credit risks changes to laws and regulations fiscal risks restricted acquisition/sale possibilities of real estate environmental risks and risks in connection with contaminated sites business-specific operational risks risks related to outsourcing When buying properties, Swiss Prime Site examines the environmental risks and the risks related to contaminated sites. If there are any identifiable environment-related problems, either the expected costs are included in the calculation of the purchase price or an indemnity is agreed with the vendor or the operator of the facilities, or else Swiss Prime Site refrains from concluding the purchase of the property. Risks in connection with building activities (new buildings, modifications and renovation) Various risks exist in connection with building activities. They include: delays in the issue of building permits following objections which may lead to additional costs or cancellation of the project higher than expected building costs, possibly connected with construction defects failure of the company responsible for the construction work, usually the general contractor, to provide the specified services, or the insolvency of that company inability to find a suitable user or buyer after completion of the building These risks are specially monitored during the individual construction phases, among others with the involvement of building owner s trustees who exercise strict control over the project. As Swiss Prime Site operates almost exclusively in Switzerland, it is exposed at most to insignificant currency risks from the activity of SPS Finance Limited, Jersey, for administration costs. The general economic development and structural changes determine the development of general and specific supply and demand on the market for office and commercial properties, which in turn affects the level of rents and the vacancies risk. The financial markets have an effect through financing costs, funds procurement opportunities and investors yield expectations. Business-specific risks are understood as all operational risks and the risk of losing major specialists or managers. All these risks are addressed by means of an appropriate selection and diversification of properties and tenants, the adjustment of the expiry date structure of the tenancies, building measures, the provision of assurances for financing, the degree of indebtedness and a regular monitoring of processes and procedures. Specific real estate risks The usual real estate risks are covered by corresponding insurance policies. Market risk and diversification In order to diversify risks, Swiss Prime Site invests in both office and retail premises at top-class locations, attaching particular importance to a diversified tenant structure and high tenant creditworthiness. Thus it is possible to minimise risk concentration through these measures. The focus is on a broad spread of use types and a deliberate diversification of the tenant mix, combined with a high degree of flexibility in the possible uses. The high quality standard of a property is maintained or increased through targeted modernisation and improvement investments. Active management ensures an excellent administrative service that checks and monitors tenant creditworthiness and ensures a balanced structure of the tenancy renewal dates. The following guidelines apply to the diversification of investment risks: the net target rental income of one tenant group shall amount to a maximum of 25% of the total target rent income the market value of an individual property shall amount to a maximum of 20% of the total portfolio value

66 Notes to the consolidated semi-annual report the share of new construction projects shall amount to a maximum of 25% of the total portfolio value the share of residential properties (without the compulsory residential properties prescribed by law) is a maximum of 20% of the total investment volume the portion of land not overbuilt is a maximum of 5% of the overall market value of the properties. Refinancing and liquidity risks Due to the introduction of IFRS 7, the risks in relation to financial investments are described in Note 2 «Summary of the main accounting principles» under the corresponding subchapters and the Notes 13 «Accounts receivable», 14 «Other receivables», 16 «Accrued income and prepaid expenses», 18 «Longterm financial investments», 21 «Short-term liabilities» and 22 «Long-term financial liabilities». Financial risk management is in accordance with the following principles of capital structure and interest commitment as laid down by the Board of Directors: on average, a maximum of 65% borrowed capital may be used to finance the property portfolio an equity ratio of 40% is aimed at; however, the Board of Directors can approve a temporary shortfall borrowings with a residual term of less than one year should constitute a maximum of 50% of borrowings the objective is a balanced maturity profile of the borrowings. The interest commitment is, amongst other things, determined by taking into account the maturity structure of the existing rental agreements, the intended purchases and sales of properties, and the possible changes to market rents, inflation and interest levels. The structure of financial borrowings as at the end of the reporting period is shown in Note 22 «Longterm financial liabilities». particular to pay back credits. The goal is to invest free money in real estate. To secure larger liabilities, non-secured but free credit limits are available. The Management Board (Chief Financial Officer) is responsible for the timely provision of the required cash. In doing so, it adheres among other things to the provisions of the investment regulations and uses rolling liquidity planning as an aid. The Board of Directors monitors the observance of the provisions of the investment regulations. Credit risks So that the liquidity flow can be influenced positively, the outstanding debt risk must be managed by an active debtor management. Through a balanced tenant mix and the avoidance of dependencies on large tenants, rental interest deficits are prevented as far as possible. Firstly, outstanding debts are prevented by a strict creditworthiness check before entering into the contract. Then, through the administration by means of an efficient debt collection and legal case reporting, the debtor level is kept as low as possible. The danger of outstanding debt risks is influenced by the general economic development. In this way, it can happen that tenants could show good creditworthiness on signing the contract, but then get into payment difficulties due to a deterioration of the economic situation. Receivables which are outstanding for more than three months are impaired unless the creditworthiness of the tenant is undoubted. Receivables towards tenants who are in payment difficulties are immediately impaired. Valuation risks Semi-annually, the real estate portfolio is valued by an external independent company of valuation experts applying the fair-value principle. The valuation is based on international standards using the discounted cash flow method. Cash management is the responsibility of the asset manager Credit Suisse, Real Estate Asset Management, Zurich. He is responsible for the provision of the necessary liquidity. Basically, the current income ensures sufficient cash to fulfil the current obligations. A possible lack of cash is financed through short-term loans. The sight deposits are invested in secure investments. There are no foreign currencies. The level of cash is kept as low as possible and is used in Regulatory and tax risks Possible future changes to legislation, other regulations or official practice, in particular in the field of tax, tenancy or environment protection law, could influence real estate prices, costs and income, and hence the Swiss Prime Site business result. Such developments are followed closely, and corresponding measures are taken.

67 Notes to the consolidated semi-annual report Risks connected with outsourcing Swiss Prime Site has entrusted its portfolio management to Credit Suisse, Real Estate Asset Management. Not employing its own staff (except in SPS Finance Limited in Jersey) and completely outsourcing the property portfolio management and management of the Company entails certain risks, such as dependence and loss of know-how in the event of the termination of the contract. Risk monitoring The various risks are monitored and checked by different Swiss Prime Site bodies and departments: Board of Directors Audit Committee Internal Risk Management 33 Events after the balance sheet date Publication of the aforementioned group financial statements was approved by the Board of Directors on in a change in the book values of the Group assets and liabilities as at or which should be disclosed here. Between and the date of approval of the present consolidated financial statements, no other events occurred which might have resulted

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70 Property details