PSP Swiss Property : Green Bond Report 2023

Green Bond Report

 2023

Content

3 Foreword

1. Green Bond Framework
2. Allocation Report

8 Impact Report

11 Overview Green Asset Portfolio

14 Independent Assurance Report on the Green Bond Report

2 Content

Foreword

PSP Swiss Property has released its second Green Bond Report. The volume of Green Buildings once again exceeds that of the Green Bonds. Thanks to improved consumption data, we recorded growth in the Green Asset Portfolio.

PSP Swiss Property is proud to publish the Green Bond Report for the second time. Once again, the volume of our Green Buildings exceeds that of the issued Green Bonds, a testament to our efforts and the continuation of our sustainable investments. Due to the unchanged criteria for a Green Asset in 2023 combined with improved consumption data across our portfolio and the acquisition of a building, we were able to record an increase in Green Assets. This report offers a detailed insight into the individual investment properties of the Green Asset Portfolio as well as selected renovation properties.

In addition to the Green Bond Report, we have made significant progress in reporting: We have provided information according to the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Furthermore, we have published an updated path for reducing our emissions, which follows the guidelines of the Carbon Risk Real Estate Monitor (CRREM). These are based on the sectoral decarbonization approach of the Science Based Targets Initiative (SBTi), a leader in promoting scientifically based targets for emission reduction.

At the same time, we have made a clear commitment to the goal of the Paris Agreement to achieve net-zero emissions by 2050. You can find this and more detailed information about our efforts and sustainability achievements in the Sustainability Report 2023.

This Green Bond Report once again follows the Green Bond Principles of the International Capital Market Association (ICMA) regarding the use of proceeds, the process for evaluating and selecting assets, management of proceeds, and reporting.

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Use of proceeds / application of funds

An amount equal to the proceeds of the Green Bonds shall be used to finance or refinance the Green Asset Portfolio in accordance with the ICMA Green Bond Principles. The Green Bond Report includes information on the total amount of Green Bonds outstanding, a breakdown of the total amount by "appropriate green asset class", the balance available for distribution, the balance of net proceeds not distributed (if any), and investments in cash and/or other liquid assets.

Asset evaluation and selection process

For this purpose, we have created a special Green Bond Committee (GBC). This consists of members of the Executive Board and members of the Sustainability, Asset Management, Construction, Finance and Energy Management departments. The GBC oversees the evaluation and selection of properties for the Green Asset Portfolio. The final list of green assets considered for inclusion in the Green Asset Portfolio is approved by the Executive Board.

Revenue management

The allocation of green bond proceeds to the Green Asset Portfolio is reviewed by the GBC at least once a year. If, for any reason, the value of the Green Asset Portfolio falls below the total amount from the proceeds of outstanding Green Bonds, the unallocated funds will be temporarily invested in cash and/or other liquid assets. We will seek to reinvest these unallocated funds as soon as possible (but within 12 months at most).

Reporting

In line with our Green Bond Framework, we annually publish this Green Bond Report, with relevant data and measurement methods on allocations and impact for the outstanding Green Bonds. The information on allocation and impact was externally audited by Ernst & Young AG to obtain limited assurance.

Giacomo Balzarini	Patrick Thäler
Chief Executive Officer	Capital Markets & Sustainability

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Green Bond Framework

The PSP Green Bond Framework was published in November 2022 and formed the basis for the reclassification of PSP Swiss Property's outstanding bonds into Green Bonds. It is based on the four pillars of the June 2022 Green Bond Principles (GBP) of the International Capital Market Association (ICMA). For the Use of Proceeds, we have chosen the category Green Buildings, which is further subdivided into Investment properties in use, Renovation of existing buildings und Construction of new buildings. The table below shows the criteria for the different categories:

ICMA	Category		Contribution	Environmental
Category	Green Assets	Criteria	to UN SDG	objectives

Investment properties in use

Green

Buildings Renovation

of existing

buildings

Construction of new buildings

CO2 emissions below: 12 kgCO2e/m2/yr at end-2022 11 kgCO2e/m2/yr at end-2025 9 kgCO2e/m2/yr at end-2030 6 kgCO2e/m2/yr at end-2035

and

Classification:

Wüest ESG minimum 3.5

Expected CO2 emission after completion below: 12 kgCO2e/m2/yr at end-2022 11 kgCO2e/m2/yr at end-2025 9 kgCO2e/m2/yr at end-2030 6 kgCO2e/m2/yr at end-2035

or

30 % reduction in CO2e/m2/yr after completion

and

Classification: Expected Wüest ESG minimum 3.5

Expected CO2 emission after completion below:

5 kg CO2e/m2/yr

and

No fossil heating systems

Climate change mitigation

Climate change mitigation

Climate change mitigation

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Allocation Report

The Allocation Report provides information on the use of the funds from the outstanding Green Bonds. For this purpose, the outstanding bonds are compared to the total amount of the Green Asset Portfolio.

List of PSP Swiss Property's outstanding bonds as at 31 December 2023:

ISIN		Maturity Date	Coupon	Nominal Value in CHF 1 000
CH0307256435	16.02.2024	0.500 %	300 000
CH0262881458	06.02.2025	1.000 %	150 000
CH0319403777	29.04.2026	0.375 %	200 000
CH1232107164	01.07.2026	2.000 %	150 000
CH1305916830	11.12.2026	1.800 %	150 000
CH0398633807	08.02.2027	0.700 %	180 000
CH0419041220	04.02.2028	0.550 %	150 000
CH1239464816	02.10.2028	2.250 %	200 000
CH0461239060	02.02.2029	0.150 %	150 000
CH0488506665	06.02.2030	0.000 %	100 000
CH0506071361	04.02.2031	0.200 %	200 000
CH0515152475	16.09.2031	0.160 %	100 000
Total						2 030 000

As at the end of 2023, PSP Swiss Property has outstanding Green Bonds with a nominal value of CHF 2.030 billion. This compares with Green Assets with an investment value of CHF 3.580 billion, consisting of 67 investment properties and 3 sites and development properties. The list of qualifying properties was approved by the Executive Board on 2 April 2024.

Green assets accounted for 58 % of the total portfolio as at 31 December 2023.

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Green Assets vs. Green Bonds in CHF 1 000

184 322

3 396 111

2 030 000

Green Assets

Green Bonds

Green Asset Portfolio Investment properties

Green Asset Portfolio Sites and development properties

Outstanding Bonds

As the investment costs of the Green Assets exceed the volume of the total outstanding bonds,

100 % of PSP Swiss Property's outstanding bonds can be allocated to green buildings.

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Impact Report

In the Impact Report, various quantitative and qualitative performance indicators are reported, as well as various other indicators at portfolio level and for the individual green buildings. PSP Swiss Property publishes CO2 emissions, energy and water consumption figures for the entire green asset portfolio in operation as well as selected key figures for properties under development. The calculation of emissions is based on the basic principles and delineations set out in the PSP Sustainability Report 2023. The comparative key figures in this Green Bond Report are based on consumption in relation to the energy reference area. The energy reference area is the sum of all floor areas above and below ground that are located within the thermal building envelope and require heating or air conditioning for their use. We follow the specifications according to SIA 380:2015.

Comparison with Swiss benchmark portfolio

The basis for the calculation of the benchmark is the TEP Energy building stock model (BSM), which applies a quasi-building-specific variant with a representative approach. This variant was also used in the Energy Perspectives 2050+ and the ex-post analyses commissioned by the Swiss Federal Office of Energy, as well as for the study on the criteria for the climate compatibility of buildings in collaboration with Raiffeisen Swit- zerland. Thanks to broad-based surveys carried out by TEP Energy in earlier projects on behalf of the cantons and the federal government, past renovation activities on the building envelope and heating system changes are well supported empirically.

To calculate the benchmark, the specific greenhouse gas emissions (kgCO2e/m2) per building representative­ are calculated with the BSM. The building representatives cover the heterogeneity of the building stock. This is made up of fully, partially or non-renovated buildings from different construction periods, each with different energy sources. Based on this, the desired percentiles can be determined. For more robust results, a sample is taken into account that includes the buildings with +/- 1 % of the desired percentile. As a benchmark, we use the median value for office buildings.

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For each green building in operation, the difference between its greenhouse gas emissions in kgCO2e/m²/year and the median value from the benchmark is determined. The basis for each building is the established energy reference area according to SIA 380. The savings are multiplied by the number of square metres. For the year 2023, this comparison is as follows:

		Unit		CO2-Emissions
PSP Green Asset Portfolio		kgCO2e/m2		5.6
Benchmark Portfolio		kgCO2e/m2		8.9
Difference		kgCO2e/m2	3.3
Energy reference area		m2		667 026
Annual savings		Metric tons CO2e		2 201

Savings in CO2, energy and water

In the Green Bond Framework, we announced that we would report on energy and water savings. In the reporting year, the Green Asset Portfolio 2023 is compared with a like-for-like portfolio from the year 2022. This means that properties that have been reclassified, bought or sold are excluded from the comparison. Accordingly, under these assumptions, the comparison is as follows:

				Energy
		Emissions	consumption in	Water consump-
		in kgCO2e	kWh	tion in m3
PSP Green Asset Portfolio 2023		2 692 327	37 853 561	140 003
Like-for-Like Portfolio 2022		3 286 256	38 407 044	126 002
Difference		- 593 928	- 553 483	14 001

The analysis of energy consumption and CO2 emissions indicates a reduction. However, this decrease is largely due to the comparatively milder winter, which led to fewer heating days. However, water consumption increased. The rise in water consumption, following the considerable decrease during the pandemic, continued in the reporting year. With more employees returning to the offices, water consumption has accordingly increased.

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Overview of renewable energy production

PSP Swiss Property has already started to install photovoltaic systems on its buildings several years ago and plans to expand this further in the future. The chart below shows the installed capacities of the total portfolio as well as the Green Asset Portfolio. In addition, the share of PV production in % of landlord-obtained electricity is shown.

Installed capacity and PV production

				2 431
		2 035	2 088	1 187
1 755	1 793		922
5.92 %	5.66 %	4.86 %	5.57 %	5.73 %
2019	2020	2021	2022	2023

Installed capacity in kWp of the overall portfolio

Installed capacity in kWp of the Green Asset Portfolio

PV production in %

of landlord-obtained electricity

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