Suisse Romande Property Fund

N° ISIN: CH0258245064 SIX Symbol SRPF Avenue De Pictet-de-Rochemont 29, Geneva, GE Contents

Introduction 4

Organisation 7

Message from the Fund Management Company 8

Management report for the financial year 2019 11

Statement of net assets 14

Statement of income 15

Mortgages and mortgage-backed liabilities 16

Compensation rates 17

List of purchases and sales during the financial year 19

Inventory of properties 20

Indices calculated according to SFAMA guidelines 22

Dividends 22

Fund evolution over 3 years 23

Valuation principles and basis for the calculation of the net asset value 24

Information on specific economic or legal matters 26

Further information 27

Report of the Audit Company 28

Geographical location of buildings 31

SRPF, Annual Report 2019 | 3 Introduction

Suisse Romande Property Fund (“SRPF” The real estate investment fund is based on a collective or the “fund”) has been established, under investment scheme (the fund contract) under which the fund management company undertakes to ensure that Swiss law, as a contractual investment fund the investors participate in the real estate investment in the “real estate investment fund” cate- fund on a pro rata basis in relation to the units they gory in accordance with the Swiss Federal have acquired, autonomously and in their own name. Act on Collective Investment Schemes of The Custodian bank is a party to the fund contract, in accordance with the tasks entrusted to it by law and by 23 June 2006 (CISA). the fund contract.

Investor eligibility is not restricted. The real estate investment fund is not divided into unit classes. The fund contract has been established by JSS Real Estate Management Ltd (“JSSREM” or “the Fund Man- SRPF aims to preserve the capital in the long term and agement Company”), Geneva, as the fund management to ensure the distribution of an appropriate income. company, with the approval of Bank J. Safra Sarasin Ltd in Basel, as the custodian bank. On 1 June 2019, The Fund Management Company invests the assets of JSSREM took over administration and management of the investment fund in real estate assets in Switzerland the fund, and the name of the fund was changed from and ensures that at least 80 % of the fund’s assets are “Valres Suisse Romande Fonds” to “Suisse Romande invested in French-speaking Switzerland. Property Fund”. SRPF invests primarily in residential buildings and pro- The fund was approved by the Swiss Financial Market perties used for commercial purposes, as well as in Supervisory Authority (FINMA) on 15 October 2014. other assets permitted pursuant to the fund contract.

Since 11 December 2017, the fund is listed on the SIX Swiss Exchange and is part of the SXI Swiss Real Estate Funds Broad Index.

Fund Management Company JSS Real Estate Management Ltd Rue de la Corraterie 4 1204 Genève

Custodian bank Bank J. Safra Sarasin Ltd Elisabethenstrasse 62 4051 Basel Sales restrictions There is no distribution authorisation abroad. The units of this real estate fund cannot be offered, transferred or delivered in the United States.

4 | SRPF, Annual Report 2019 SRPF, Annual Report 2019 | 5 Place Bourg-de-Four 33, Geneva, GE 6 | SRPF, Annual Report 2019 Rue de Chêne-Bougeries 17–19, Chêne-Bougeries, GE Organisation (since 1 June 2019*)

Fund Management JSS Real Estate Management Ltd Company Rue de la Corraterie 4, 1204 Geneva Board of Directors Oliver Cartade President Oren-Olivier Puder Vice President Jean-Pierre Jacquemoud Administrator Executive Johny Rodrigues CEO (until 31.08.2019) Committee Dan Bihi-Zenou CEO (since 01.09.2019) Clément Marchenoir CFO Giovanna Bray Real Estate Director (until 30.11.2019) (replaced by Antoine Chauvière since 01.01.2020 as Head of Fund Management) Custodian bank Bank J. Safra Sarasin Ltd, Basel Audit company Deloitte Ltd, Geneva Permanent Experts Léon Ly Wüest Partner AG, in Zurich and Geneva Hervé Froidevaux Wüest Partner AG, in Zurich and Geneva Property Managers Naef Immobilier SA, Geneva/Neuchâtel Rosset SA et Régie Rosset & Cie, Fribourg /Geneva Gerama SA, Fribourg Bernard Nicod SA, Vaud Burnier & Cie SA, Vaud m3 Real Estate SA, Geneva Fidimmobil Agence Immobilière & Commerciale SA, Neuchâtel Société Privée de Gérance SA, Geneva RS Servim Sàrl, Vaud (terminated on 31.03.2019) Moser Vernet & Cie SA, Geneva (terminated on 21.05.2019) Régie Marmillod SA, Vaud (terminated on 30.09.2019) The precise execution arrangements of the mandates are laid down in contracts concluded between JSS Real Estate Management Ltd and said agents. Risk Management ASMA Asset Management Audit & Compliance SA, Geneva Legal & Compliance J. Safra Sarasin Investmentfonds Ltd, Basel

* For the period until 31 May 2019 see page 26.

SRPF, Annual Report 2019 | 7 Message from the Fund Management Company

The 2019 financial year was a year of tran- The appraisal of all the properties as at 31 December sition and structural reorganisation for 2019 provided the management company and investors with a standardised and consistent valuation of the the real estate fund SRPF. portfolio as a whole. While the NAV dropped slightly (CHF 110.68 at the end of 2019 compared to CHF 112.65 at the end of 2018), this valuation is now based on a uniform appraisal of the entire portfolio on the same The new fund management company JSS Real Estate date. Management Ltd, authorised by the FINMA, took over the administration and management of the SRPF fund A new construction was delivered in Satigny (Canton on 1 June 2019, following the difficulties encountered of Geneva), part of which is occupied by Coop while by the previous fund management company. the remaining space is predominantly residential. The fund management company has also continued to pro- This structural reorganisation gave rise to a number gress the Westpark construction, which will be rented of major changes: JSSREM has a Board of Directors to several tenants, most notably Appart’City and Lidl consisting of three new members and a new Executive (post-closing event: the construction was completed on Committee which now includes a CEO, a CFO and Head 1 March 2020). of Fund Management, all of whom have substantial expertise and proven experience in the real estate sector. SRPF’s prospects are good with regard to enhancing the 2018 and 2019 proved to be particularly complex. value of its portfolio in the coming years. Effectively active since last quarter of 2019, the new executive management team immediately examined the state of affairs in detail, thereby enabling it to identify The great diversity of the portfolio, particularly in terms improvement and development opportunities for the of the type and size of its real estate assets, makes future. it possible to better deal with a variety of situations and risks. In addition, the often desirable locations Determined to make rapid progress, JSSREM identi- of the properties in the fund, the high level of rental fied the priorities, performed the necessary analyses, vacancies in the portfolio, the significant rental and drew up a roadmap and already started to implement a construction reserves, the potential for lowering inter- series of measures. est expenses and the non-optimised operating costs all represent attractive opportunities for organic growth. Significant actions have thus already been taken includ- These opportunities will result in profitability levels ing, in particular, appointing Wüest Partner to perform greater than those available on the property acquisi- the valuation of all properties as at 31 December 2019, tions market. Such opportunities will therefore be taking cost reduction measures (insurances, financ- seized as soon as possible. ing, etc.), identifying digital solutions to ensure more efficient portfolio management, analysing portfolio By studying this value creation potential inherent to renovation needs (CAPEX) and implementing litigation the portfolio, JSSREM expects that the SRPF fund will management processes. also enhance its eco-responsible characteristics while

8 | SRPF, Annual Report 2019 Rue Rothschild 21, Geneva, GE

fostering solid and sustainable growth in terms of both Oliver Cartade NAV and results, which should subsequently be reflected Chairman of the Board of Directors, in future dividends. JSS Real Estate Management Ltd

Therefore, we believe that SRPF offers an excellent Dan Bihi-Zenou value proposition for investors. CEO, JSS Real Estate Management Ltd

JSSREM wishes to thank both the investors and its partners for their loyalty and trust. The Fund Manage- ment Company will continue to focus on the deploy- ment of its capabilities and expertise to serve investors at best while implementing its strategy with confidence and determination.

SRPF, Annual Report 2019 | 9 10 | SRPF, Annual Report 2019 Aïre-la Ville 225-227-229, Satigny, GE Management Report for the Financial Year 2019

Results The fund’s assets fell slightly compared to the previ- As at 31 December 2019, the net income of Suisse ous year to CHF 297,037,154 (CHF 302,326,124 as Romande Property Fund was CHF 5,598,279 (–7 % com- at 31.12.2018). Thus, the net asset value (NAV) as pared to 2018), with a total income of CHF 1,313,159 at 31 December 2019 was CHF 110.68 compared to compared to CHF 3,864,731 the previous year (–66 %). CHF 112.65 as at 31 December 2018.

Rental revenue increased to CHF 17,432,175 (compared These results reflect both the growth and the diffi- to CHF 14,163,898 as at 31.12.2018), resulting in a culties of the fund during the years 2018 and 2019, total annual revenue of CHF 18,930,020 (compared while at the same time illustrating the intrinsic quality to CHF 15,739,318 in 2018) while costs totalled CHF of the portfolio. 15,564,616 (compared to CHF 9,698,316 in 2018), primarily reflecting the impact on the portfolio of the Furthermore, in light of the complications linked to the acquisition of the Arcenter building (Canton of Geneva) spread of the COVID-19 coronavirus pandemic, the in March 2019. performance and development of the fund could be affected during the coming financial year. The market value of the real estate holdings increased from CHF 386,076,385 on 31 December 2018 to Accordingly, in this difficult context that has impacted CHF 461,283,300 on 31 December 2019. The debt the fund in 2019 and the uncertainty related to the ratio increased to 31.95 %, compared to 20.99 % the sanitary crisis, the fund management has adopted a previous year. cautious approach with a view to strengthening the self-

Aïre-la Ville 225-227-229, Satigny, GE

SRPF, Annual Report 2019 | 11 financing capacity and resilience of the SRPF fund, by to the properties at Boulevard des Tranchées 4 in distributing a limited proportion of the available income Geneva (GE), Rue du Vieux-Moulin 5 in Onex (GE), Route for dividends totalling CHF 2,361,737 (i.e. CHF 0.88 de Chamblioux 37 in Granges-Paccot (FR), Rue des per unit). Bruyères 1 in Le Sentier (VD) and Rue du Chaumont 3/5 in Payerne (VD). These five sales were transacted in Indices analysis order to take advantage of the favorable market condi- The rent default rate increased to 11.56 % in 2019 tions, generating capital gains of CHF 2,232,875. (compared to 9.39 % in 2018). This was primarily due to the acquisition of the Arcenter building in Geneva Review of the past financial year (with numerous vacant premises), but as well as to the Following the takeover of the fund as of June 1, 2019, existence of vacant premises in other buildings await- a very significant part of the activity and efforts were ing necessary renovation work delayed because of the focused on switching from the former fund management fund management change. company to JSS Real Estate Management Ltd, on the necessary administrative procedures, such as the trans- The operating profit margin (EBIT) fell to 47.39 % com- fer of the properties in each canton to the new manage- pared to 70.53 % in 2018. The TER (GAV) was 0.80 % ment company, the implementation of the teams and the vs. 0.75 % last year. resumption of idle management.

The return on equity was 0.43 % (down from 1.27 % Construction projects already launched were maintained in 2018), while the return on invested capital (ROIC) within the agreed frameworks with regard to deadlines was 0.72 % compared to 1.23 % in 2018. The return on and costs. The Bosquets (Vevey, VD) renovation project investment totalled 0.44 % (2.68 % in 2018). was completed and has been fully rented since the end of the first quarter 2019. In Canton Geneva, the Satigny Acquisitions and sales project (in particular the tenant Coop) was completed The SRPF fund acquired a new property during the re- and delivered in July; and, finally, work on the Westpark porting period. This acquisition is presented on page 19 project continued to progress (tenants including Lidl of the present report. and Appart’City). (Post-closing event: delivered in March 2020). Several sales were completed during 2019, representing a total value of CHF 36,450,000. These sales relate Existing mortgage credits were reviewed, monitored regularly and renegotiated whenever optimisation opportunities arose. The average annual interest rate of the fund fell from 1.30 % to 0.96 %.

JSSREM also performed a systematic review of disputes. As part of this review, it launched the necessary steps in the context of tenants’ bankruptcies, the eviction of cer- tain tenants, and the termination of the lease of a major tenant in the fund, installed in the Arcenter building as the latter had defaulted on payment of its rent and loan granted before the acquisition of the building (see page 26). JSSREM launched the necessary legal proceedings and made the required provisions, a fact reflected in the NAV indicated in the present report.

At the end of 2019, the market price of SRPF was CHF 112.50, representing a premium of CHF 1.82 in relation to the NAV. Rue du Lac 54, Clarens, VD

12 | SRPF, Annual Report 2019 Rue du Lac 54, Clarens, VD

Outlook In 2020, the aim is to continue implementing the measures taken and to seize opportunities for improvement. More particularly, the portfolio currently includes properties displaying significant medium- and long-term real estate development possibilities with a view to rejuve- nating the portfolio as a whole, thereby allowing it to be repositioned in terms of eco-responsible performances.

Thanks to the changes implemented, the development potential of the SRPF fund and the competences of our new management team, we are confident that we will be able to ensure controlled future growth that is profi- table and offer regular returns to our investors.

SRPF, Annual Report 2019 | 13 Statement of Net Assets

31.12.2019 31.12.2018 Assets CHF CHF Cash holdings, balances on postal and bank accounts at sight 1,331,078 4,116,818 Properties Development land, properties under construction 55,650,000 66,462,385 Residential properties 134,445,000 152,090,000 Commercial properties 173,409,300 106,370,000 Mixed-use properties 97,779,000 61,154,000 Total properties 461,283,300 386,076,385 Other assets 4,647,230 17,391,377 Total assets 467,261,608 407,584,580

Liabilities

Short-term liabilities Short-term interest-bearing mortgages and other mortgage-backed liabilities 113,102,457 25,501,500 Other short-term liabilities 13,335,746 10,202,439

Long-term liabilities Long-term interest-bearing mortgages and other mortgage-backed liabilities 34,270,000 55,531,207 Other long-term liabilities 0 82,479 Total liabilities 160,708,203 91,317,625

Fund’s net assets before estimated liquidation taxes 306,553,405 316,266,954 Estimated liquidation taxes –9,516,251 –13,940,830 Net assets of the fund 297,037,154 302,326,124

Change in the net assets Fund’s net assets at beginning of the financial year 302,326,124 303,292,218 Distribution –6,602,129 –4,830,826 Interim distribution 0 0 Balance from sales and purchases of units 0 0 Total income of the financial year 1,313,159 3,864,731 Fund’s net assets at end of the financial year 297,037,154 302,326,124

Change in the number of units (redeemed and issued) Statement at beginning of the financial year 2,683,792 2,683,792 Units issued 0 0 Units redeemed 0 0 Number of units in circulation 2,683,792 2,683,792 Net asset value per unit 110.68 112.65

Additional information (annex 3 Art. 95 CISO-FINMA) Value of properties depreciation account 0 0 Value of reserves account for future repairs 0 0 Balance on account of earnings retained for reinvestment 0 0 Number of units due to be redeemed at end of next financial year 0 0

14 | SRPF, Annual Report 2019 Statement of Income

31.12.2019 31.12.2018 CHF CHF Income Revenue from postal and bank accounts 470,639 15,104 Rental income (gross income generated) 17,432,175 14,163,898 Interim interest capitalised 978,984 1,469,402 Other income 48,222 90,914 Total income 18,930,020 15,739,318

Expenses Mortgage interest and interest on mortgage-backed liabilities 1,496,896 982,958 Other interest due 479,375 28,013 Maintenance and repairs 1,691,968 945,330 Management of properties Property-related costs 5,112,856 2,216,164 Management expenses 1,147,040 959,139 Valuation and auditing expenses 287,506 160,254 Direct taxes 2,737,4 45 2,535,743 Banking fees 182,039 32,498 Cost of publishing, printing, other 6,363 23,030 Remuneration as per fund regulations for the Fund Management Company 2,012,511 1,487,287 Remuneration as per fund regulations for the Custodian bank 182,723 180,283 Other expenses 227,894 147,617 Total expenses 15,564,616 9,698,316

Income Net income 3,365,404 6,041,003 Realised capital gains and losses 2,232,875 0

Realised income 5,598,279 6,041,003 Unrealised capital gains and losses –8,709,701 1,264,559 Liquidation taxes 4,424,581 –3,440,830 Total income 1,313,159 3,864,731

Appropriation of the net income Realised income 5,598,279 6,041,003 Capital gain carried forward from the previous financial year 0 0 Ordinary income carried forward from the previous financial year 22,935 584,061 Net income available for distribution 5,621,214 6,625,063 Capital distribution 0 0 Income distribution 2,361,737 6,602,128 Earnings paid to investors 3,259,477 22,935

SRPF, Annual Report 2019 | 15 Mortgages and Mortgage-Backed Liabilities

Detail of the mortgages and mortgage-backed liabilities Type CHF Rate From Maturity Short-term debt FRA 10,000,000 0.70% 10.12.2019 16.01.2020 FRA 1,000,000 0.70% 20.12.2019 19.01.2020 FRA 2,660,000 0.65% 09.12.2019 08.01.2020 FRA 2,000,000 0.65% 23.12.2019 22.01.2020 FRA 20,000,000 0.70% 08.04.2019 08.01.2020 Libor 3 month 59,025,000 0.70% 29.12.2019 31.03.2020 Fixed 1,100,000 1.95% 06.03.2013 06.03.2020 Fixed 2,156,000 2.15% 31.01.2014 06.03.2020 Fixed 2,200,000 1.15% 30.06.2020 30.06.2020 FRA 3,477,400 0.92% 27.09.2018 27.09.2020 Fixed 400,000 1.41% 07.10.2014 07.10.2020 Fixed 649,057 1.05% 21.11.2016 21.11.2020 Fixed 7,550,000 1.25% 16.12.2017 16.12.2020 Fixed 885,000 3.00% 27.12.2010 27.12.2020 Total short-term debt 113,102,457 0.81% Weighted average rate < 1 year

Long-term debt Fixed 1,425,000 1.00% 02.10.2016 02.10.2021 Fixed 4,380,000 0.94% 30.11.2016 31.12.2021 FRA 4,700,000 1.15% 21.07.2017 21.07.2022 Fixed 5,975,000 2.13% 15.07.2014 15.07.2023 Fixed 5,530,000 0.88% 14.09.2018 14.09.2023 Fixed 1,975,000 0.88% 14.09.2018 14.09.2023 Fixed 2,556,000 2.39% 25.02.2014 25.02.2024 Fixed 1,000,000 1.90% 07.10.2014 07.10.2024 Fixed 1,430,000 2.27% 30.11.2015 30.11.2024 Fixed 1,080,000 2.27% 30.11.2015 30.11.2024 Total long-term debt from 1 to 5 years 30,051,000 1.46% Weighted average rate from 1 to 5 years Fixed 475,000 1.80% 13.03.2015 13.03.2025 Fixed 1,872,000 1.32% 29.06.2018 08.10.2025 Fixed 1,872,000 1.34% 29.06.2018 08.10.2025 Total long-term debt 5 years and longer 4,219,000 1.38% Weighted average rate > 5 years Total long-term debt 34,270,000 1.45%

Total 147,372,457 0.96% Weighted average rate

16 | SRPF, Annual Report 2019 Compensation Rates

Information on rates applied in accordance with the fund contract Maximum rate per year as per sales prospectus Applied rate Payments to the Fund Management Company Management fee (art. 20 para. 1 and para. 8 of the fund contract) 1.00% 0.65% Issuing commission (art. 19 para. 1 of the fund contract) 5.00% na Compensation for activities involving the purchase or the sale of properties (art. 20 para. 4 of the fund contract) 3.00% 3.00% Fee for activities when carrying out feasibility studies and acting on behalf of the Project owner (art. 20 para. 4 of the fund contract) 3.00% 3.00% Fee for activities when carrying out the project development and monitoring (art. 20 para. 4 of the fund contract) commission usuelle SIA max. 5.00% Compensation for the management of properties (art. 20 para. 4 of the fund contract) 6.00% 6.00% Commission for the distribution of income (on the amount paid) (art. 20 para. 3 of the fund contract) 0.50% 0.50% Payments to the Custodian bank Fee for the administration, the handling of payment transactions, the supervision of the fund management company (art. 20 para.3 of the fund contract) 0.06 % 0.06%

Transparency of the management fees The Fund Management Company may pay to distributors, from the management fee, commissions as reimburse- ments in respect of distribution activities, for the sale and the intermediation of fund’s units (Fund Contract art. 20 para. 7). The Fund Management Company does not grant any rebates or retrocessions within the meaning of SFAMA’s transparency guidelines dated 22 May 2014.

Route du Mandement 17, Meyrin, GE

SRPF, Annual Report 2019 | 17 Boulevard des Philosophes 7, Genève, GE List of Purchases and Sales during the Financial Year

Purchases Canton Commune Address Type Date of Purchase price purchase CHF GE Vernier Route de Montfleury 1–3 / Route de Peney 2 Commercial 29.03.2019 88,500,0001 Total purchases 88,500,000

Sales Canton Commune Address Type Date of Sales price sale CHF GE Geneva Boulevard des Tranchées 4 Mixed 21.05.2019 11,660,000 GE Onex Rue du Vieux-Moulin 5 Residential 21.05.2019 16,590,000 FR Granges-Paccot Route de Chamblioux 37 Residential 24.06.2019 3,900,0001 VD Le Sentier Rue des Bruyères 1 Mixed 24.06.2019 2,100,000 VD Payerne Rue du Chaumont 3–5 Residential 24.06.2019 2,200,0001 Total sales 36,450,000

1 indirect holding

SRPF, Annual Report 2019 | 19 Inventory of Properties

Canton Commune Address Type Cost Market value Rental income GE Aïre Route Aïre 162, 164, 166 1 Residential 3,571,591 3,810,000 170,391 GE Chêne-Bougeries Rue de Chêne-Bougeries 17 Mixte 2,545,319 3,061,000 127,916 Rue de Chêne-Bougeries 19/ GE Chêne-Bougeries Chemin de la Fontaine 3–5 Mixte 5,071,641 6,667,000 231,727 GE Chêne-Bougeries Chemin du Pont-de-Ville 18 Commercial 381,279 578,300 0 GE Geneva Place du Bourg-de-Four 33 Mixed 2,750,966 3,496,000 122,780 GE Geneva Boulevard des Philosophes 7 1 Mixed 9,776,120 15,210,000 528,916 GE Geneva Rue Rothschild 21 1 Residential 5,963,303 6,805,000 257,036 GE Geneva Avenue Théodore-Weber 9 1 Residential 9,791,222 12,790,000 498,233 GE Geneva Rue de Lyon 71 1 Residential 12,420,094 15,310,000 633,850 GE La Plaine/Dardagny Route de Challex 4–6 Residential 11,520,105 12,000,000 587,341 GE Meyrin Route du Mandement 17 Residential 8,103,293 8,334,000 399,670 GE Meyrin Rue des Lattes 41 Residential 3,577,959 3,118,000 175,344 GE Satigny Route d’Aire la Ville 225–229 Mixed 35,162,580 29,980,000 662,088 GE Versoix Avenue Théodore Vernes 12–14 1 Residential 9,273,748 10,610,000 471,750 GE Geneva Avenue Pictet-de-Rochemont 29 1 Residential 9,480,533 12,180,000 407,855 GE Vernier Ch. Mouille-Galand 5/Route de Peney 20 2 Under construction 20,950,138 23,480,000 0 GE Vernier Ch. Mouille-Galand 3/Route de Peney 20 2 Under construction 26,280,164 32,170,000 0 GE Vernier Route de Montfleury 1–31 Commercial 93,702,507 83,340,000 3,028,967 VD Clarens Rue du Lac 54 Mixed 4,838,781 4,514,000 200,191 VD Lausanne Place Grand-Saint-Jean 2 Commercial 11,485,170 16,910,000 560,590 VD Lausanne Place du Tunnel 13–14 1 Mixed 5,964,894 8,169,000 340,665 VD Lausanne Chemin de Renens 55, 57/Av. Morges 92 1 Mixed 3,684,064 4,891,000 175,234 VD Lonay Chemin des Mouettes 1 Commercial PPE 2,128,566 2,056,000 138,971 VD Lonay Chemin des Mouettes 1 (lot 8) Commercial PPE 1,958,381 1,892,000 125,885 VD Montreux Chemin du Réchon 7 1 Residential 2,068,351 2,010,000 78,315 VD Nyon Chemin de la Redoute 14–22 Residential 29,915,475 28,730,000 1,277,853 VD Prangins Route de l'Aérodrome 73–75 Commercial 3,286,813 2,990,000 172,200 VD Renens Avenue de Préfaully 28–30 Commercial 7,475,526 7,077,000 413,340 VD Vevey Rue des Bosquets 14–15 Mixed 3,612,600 3,241,000 61,825 FR Bulle Rue de Gruyères 56 Mixed 2,741,356 2,250,000 123,363 FR Bulle Rue des Agges/Rte des Granges 1 Mixed 2,642,494 2,810,000 164,397 FR Fribourg Rue de Romont 3 Commercial 3,817,920 3,531,000 194,700 FR Fribourg Route des Arsenaux 9/Rue du Simplon 13 Commercial 24,839,530 19,670,000 1,022,216 FR Fribourg Rue du Varis 20 Residential 2,486,639 2,864,000 112,272 FR Fribourg Rue Saint-Pierre 6 Commercial 27,576,422 26,600,000 1,242,184 FR Granges-Paccot Route de Chantemerle 3 Commercial 3,689,904 3,482,000 195,120 NE Colombier Chemin des Uttins 2 Residential 3,682,217 3,463,000 163,704 NE Colombier Chemin des Uttins 6–8 Residential 6,307,333 6,891,000 271,578 NE Neuchâtel Rue de Maillefer 11b /11c Commercial PPE 5,302,206 5,283,000 453,824 JU Delémont Rue des Moulins 28 Mixed 14,842,857 13,490,000 702,314 JU Porrentruy Rue des Tilleuls 31–33 Residential 5,931,132 5,530,000 263,886 Total 450,601,193 461,283,300 16,758,491

1 Indirect holding 2 Land under construction

20 | SRPF, Annual Report 2019 Recap Type Cost Market value Rental income Development land and constructions 47,230,303 55,650,000 0 Residential properties 124,092,996 134,445,000 5,769,080 Commercial properties 176,255,070 164,178,300 6,829,316 Commercial properties in condominium ownership (PPE) 9,389,152 9,231,000 718,680 Mixed-use properties 93,633,672 97,779,000 3,441,415 Total 450,601,193 461,283,300 16,758,491

Type of properties Commercial property: the part of the property used for commercial purposes is deemed to be predominant when its yield corresponds to at least 60 % of that of the building (Art. 86b OPCC). Mixed-use properties (both residential and commercial): when the yield of the commercial part exceeds 20 %, but is less than 60 % of the building’s yield (Art. 86b OPCC).

List of contractual payment commitments for purchases of buildings and mandates for construction and invest- ments in buildings at 31 December 2019 Contractual commitments relating to the work contract for the construction of the building at Chemin Mouille-Galand 3, 5/ Route de Peney 20 (West Park A and B): CHF 6,750,000. There are no contractual payment commitments relating to property acquisitions at the balance sheet date.

Rue des Tilleuls 31–33, Porrentruy, JU

SRPF, Annual Report 2019 | 21 Indices Calculated According to SFAMA Guidelines

31.12.2019 31.12.2018 31.12.2017 Rent default rate 11.56% 9.39% 3.97% Borrowing ratio 31.95% 20.99% 19.96% Operating profit margin (EBIT margin) 47.39% 70.53% 71.96% Operating expense ratio (TER REF GAV) 0.80% 0.75% 0.84% Operating expense ratio (TER REF MV) 1.26% 0.90% 1.14% Return on Equity (ROE) 0.43% 1.27% 4.38% Return on Invested Capital (ROIC) 0.72% 1.23% 4.60% Distribution yield 2.18% 2.12% 2.54% Payout ratio 70.18% 109.29% 94.74% Agio/Disagio 1.65% 2.89% 15.03% Return on investment 0.44% 2.68% 8.34%

Fund’s performance 31.12.2019 31.12.2018 31.12.2017 Suisse Romande Property Fund –0.94% –9.61% 13.70% SXI Real Estate Funds® TR® 27.46% –5.32% 6.60%

Reference to past performance and results is not necessarily a reliable indicator of current or future performance and results.

Performance and return data do not take account of the commissions and fees incurred on the issue and re- demption of units and are calculated considering that gross dividend has been reinvested immediately in the investment fund.

Dividend

The total distribution for the financial year ending 31 December 2019 is CHF 2’361’737, which represents a dividend of CHF 0.88 gross per share. Coupons 9 and 10 will be cashable by 15.05.2020 at the latest.

Coupons CHF per unit Coupon n° 9 return paid on property assets directly owned 0.66 Coupon n° 10 return paid on property assets indirectly owned 0.22 Total 0.88

Net return (after withholding tax) CHF per unit Coupon n° 9 return paid on property assets directly owned 0.66 Coupon n° 10 return paid on property assets indirectly owned 0.14 Total 0.80

22 | SRPF, Annual Report 2019 Fund evolution over 3 years*

Net assets Number of units Net asset value (NAV) CHF CHF 2019 297’037’154 2’683’792 110.68 2018 302’326’124 2’683’792 112.65 2017 303’292’218 2’683’792 113.01

* as at 31 December and in accordance with Art. 103 al.2 UCI-FINMA

Chemin du Réchon 7, Montreux, VD

SRPF, Annual Report 2019 | 23 Valuation Principles and Basis for the Calculation of the Net Asset Value

Valuation principles and basis for the buying and selling properties, unique opportunities may calculation of the net asset value nevertheless arise and be exploited as well as possible In accordance with applicable provisions of the legislation in the interests of the investment fund. This may there- and with the guidelines of the Swiss Funds & Asset Man- fore result in discrepancies in relation to the evaluations. agement Association (SFAMA) on real estate investment funds dated 2 April 2008 (as at 13 September 2016), The net asset value of the investment fund is calculated the fund properties (including development land and prop- annually and at each unit issue. The net asset value of erties under construction) were valued by independent a unit is determined by the market value of the fund’s valuation experts using the Discounted Cash Flow (DCF) assets, minus all the investment fund’s liabilities, divided method. This valuation is based on the potential of return by the number of units in circulation. The statement of for each property and involves projecting future income net assets and the statement of income are established and expenses over a given period. The net cash flows in accordance with Article 95 CISO-FINMA as well as with calculated this way are discounted and the sum of these applicable self-regulation rules. amounts with the residual value of the property make it possible to obtain the market value. This is the fair market As the appraisal of the portfolio as a whole as at value of the property at the time of valuation. 31 December 2019 was conducted by Wüest Partner, we present the method adopted below. Each expert assesses the evolution of the properties independently, models the DCF calculation according to Wüest Partner AG method the specific parameters and determines the discount Wüest Partner uses the two-period DCF) model, where rate. The properties are valued at their market value. cash flows are estimated explicitly over a time horizon This value is the amount that could be obtained when a of ten years and as perpetual annuities for the second property is sold under normal market conditions. When phase (infinite time horizon) in the form of an output value. The perpetual annuities in year 11 are calculated on the basis of a cash flow annuity modelled from year 11 ad infinitum. This output value, or theoretical sale value, is obtained based on a capitalisation of the perpetual annuity (also referred to as terminal value or residual value). The market value is calculated by dis- counting the net cash flows at the date of valuation for the periods 1 to 10 and the output value. Furthermore, cash flow projections are presented in real terms, which has the advantage of making the forecasts more understandable. As far as revenue is concerned, the rental status of each building is analysed in detail at the level of individual objects, taking account of the current situation and potential rents on the market (leases and rents). The lease review also permits the type and terms of the leases to be taken into account while making it possible to specify the existence, or not, of Route de Peney/Chemin Mouille-Galand 3, Vernier, GE

24 | SRPF, Annual Report 2019 Route de Peney/Chemin Mouille-Galand 3, Vernier, GE

incidental or development costs to be borne by the tenant characteristics of the building and factors related to the and/or the lessor, free rents, etc. In addition, a struc- location and the market. The market-adapted discount rate tural vacancy rate according to different assignments is adjusted according to risk, thanks to regular monitoring is acknowledged. Costs are based on the exploitation of the returns required by investors during transactions. rate for previous years. This is complemented by Wüest It is defined on the basis of the free-risk rate (long-term Partner benchmarks and an assessment of the state of Confederation bond) as well as on premiums for general each building. In particular, renovation needs or restora- real estate risk (liquidity risk premium, market risk) and for tion costs are estimated based on a split of the building’s specific risks related to the building itself (micro-situation, replacement value according to the different elements of form of ownership, quality of the object, etc.). construction and their life expectancy. The determination of the applicable discount rate reflects an estimate of the The weighted average (real) discount rate for the year under risk inherent to the building concerned. To establish this review (as at 31.12.2019) is 3.26 % and the discount rates value, Wüest Partner takes account of both the specific used to value the properties vary from 2.70 % to 3.80 %.

SRPF, Annual Report 2019 | 25 Information on Specific Economic or Legal Matters

When this report went to print, the global economy was The Fund Management Company undertakes to recover in a state of uncertainty with regard to the ongoing delayed or unpaid rents, making full use of every legal development of the COVID-19 coronavirus crisis. The means available. As part of this, the lease of the major spread of the pandemic will have a significant impact tenant in the fund, located in the Arcenter building, was on both the global economy and the Swiss economy terminated as it had defaulted on payment of its rent during 2020, in particular on the financial and real and a loan granted before the acquisition of the build- estate markets. It is therefore expected that the nega- ing. JSSREM launched the necessary legal proceedings tive development of the stock markets, the decline of and recorded the necessary provisions in expenses the manufacturing economy and the lock-down might (CHF 770,253 for unpaid rent and CHF 1,031,650 con- affect the fund’s performance and development dur- cerning the loan, including interest) which are therefore ing the coming financial year. JSSREM is monitoring reflected in the NAV set out in this report. the spread of COVID-19 very closely together with the effects on its operations and activities. The Fund Man- The business taxation reform has been accepted in all agement Company has nevertheless already taken the cantons in which JSSREM owns properties. The federal- necessary steps to pursue its activities in the best level reform has also been accepted and will take interests of the investors in this unprecedented and effect in 2020. The profits of the real estate compa- highly volatile environment. nies owned by the fund will enjoy a positive impact with an increase in the disposable income. The liquidation On 31 May 2019, Valres Fund Management SA – which taxes have also been reduced, thereby increasing the had gone into liquidation – transferred the administration net asset value. and management of the Valres Suisse Romande Fonds to JSS Real Estate Management Ltd, a fund management Fund Management Company until 31.05.2019 company established in accordance with the Swiss Valres Fund Management SA (in liquidation since 01.02.2020) Place du Molard 5, 1204 Geneva Federal Act on Collective Investment Schemes (CISA), Board of Directors until 31.05.2019 authorised by FINMA and with head office in Geneva.The Raffaele Rossetti President (until 01.02.2019) name of the fund was changed as of 1 June 2019 to Edgar Brandt President (since 01.02.2019 until 31.05.2019) “Suisse Romande Property Fund” (SRPF). Philippe Beckers Vice President (until 01.02.2019) Gerhard Niggli Vice President (since 01.02.2019 until 31.05.2019) Ralph Kattan Delegated Administrator (Administrator Deloitte Ltd is the auditor of the SRPF fund retroactively without signing authority since 26.09.2018 and from 1 January 2019. until 01.02.2019) Paul-André Roux Administrator (until 01.02.2019) Direction until 31.05.2019 At the end of August 2019, Johny Rodrigues left the Ralph Kattan Delegated Administrator (Administrator position of CEO at JSS Real Estate Management Ltd. without signing authority since 26.09.2018 He was succeeded by Dan Bihi-Zenou on 1 September until 01.02.2019) 2019. Johny Rodrigues CEO (until 31.05.2019) Giovanna Bray Real Estate Director/Fund Manager (until 31.05.2019) As Head of the Fund Management on the JSS Real Urs Markwalder Director /CFRO (until 31.05.2019) Estate Management Executive Committee from 1 Janu- Philippe Beckers Delegated Administrator until 01.02.2019, ary 2020, Antoine Chauvière replaced Giovanna Bray, then member of the direction since 01.02.2019 BDO Ltd Liquidator since 01.02.2019 who left the company on 30 November 2019.

26 | SRPF, Annual Report 2019 Further Information

List of tenants representing more List of properties owned by Capital Real Estate SA: than 5% of the rental income: Boulevard des Philosophes 7, Geneva No tenant has a rental income equal to or greater than Chemin du Réchon 7, Montreux 5% of the total rental income. Rue Rothschild 21, Geneva Avenue Théodore-Weber 9, Geneva Information on derivatives: Rue de Lyon 71, Geneva The investment fund does not include derivative finan- Avenue de Morges 92 / cial instruments. Chemin de Renens 55/57, Lausanne Place du Tunnel 13/14, Lausanne Consolidation of the real estate companies: Chemin des Mouettes 1, Lonay In 2019, the fund created a new, wholly owned real estate Route des Granges / Rue des Agges, Bulle company (Arcenter SA, created on 22 March 2019). Route d’Aïre 162/164/166, Aïre Avenue Théodore-Vernes 12/14, Versoix The fund owns two real estate companies: Capital Real Avenue Pictet-de-Rochemont 29, Geneva Estate SA, owned by the fund since 2016, and Arcenter SA, owned by the fund since March 2019. These companies List of properties owned by Arcenter SA: are fully consolidated in the fund’s accounts and close Route de Montfleury 1/3, Vernier their accounts on 31 December.

Route de Challex 4–6, La Plaine/Dardagny, GE

SRPF, Annual Report 2019 | 27 Report of the Audit Company Short form report of the audit company for collective investment schemes to the Board of Directors of the Fund Management Company on the financial statements of Suisse Romande Property Fund

Financial Statements for the year ended on the auditor’s judgement, including the assessment of 31 December 2019 and Report of the Auditor the risks of material misstatement of the financial state- As audit company for collective investment schemes, ments, whether due to fraud or error. In making those risk we have audited the financial statements of the invest- assessments, the auditor considers the internal control ment fund Suisse Romande Property Fund which com- system relevant to the entity’s preparation of the financial prise the statement of net assets and the income statements in order to design audit procedures that are statement, the statement of the appropriation of avail- appropriate in the circumstances, but not for the purpose able earnings and the disclosure of the total costs as of expressing an opinion on the existence and effective- well as the supplemental disclosures in accordance ness of the entity’s internal control system. An audit also with article 89 paragraph 1 lit. b–h and article 90 of the includes evaluating the appropriateness of the account- Swiss Collective Investment Schemes Act (CISA) for the ing policies used and the reasonableness of accounting year ended 31 December 2019 (pages 7 and 14 to 27). estimates made, as well as evaluating the overall pres- entation of the financial statements. We believe that the Responsibility of the Fund Management audit evidence we have obtained is sufficient and appro- Company’s Board of Directors priate to provide a basis for our audit opinion. The Board of Directors of the Fund Management Company is responsible for the preparation of the financial state- Opinion ments in accordance with the requirements of the In our opinion, the financial statements for the year Swiss Collective Investment Schemes Act, the related ended 31 December 2019 comply with the Swiss ordinances as well as the fund contract and prospec- Collective Investment Schemes Act, the related ordi- tus. This responsibility includes designing, implement- nances as well as the fund contract and the prospectus. ing and maintaining an internal control system relevant to the preparation of financial statements that are free Other Matter from material misstatement, whether due to fraud or The financial statements of the fund for the year ended error. The Board of Directors of the Fund Management 31 December 2018 were audited by another auditor Company is further responsible for selecting and apply- whose report, dated 30 April 2019, expressed an un- ing appropriate accounting policies and making account- qualified opinion on those financial statements. ing estimates that are reasonable in the circumstances. Report on other legal requirements Responsibility of the Audit Company We confirm that we meet the legal requirements on for Collective Investment Schemes licensing as well as on independence according to the Our responsibility is to express an opinion on these Auditor Oversight Act and that there are no circum- financial statements based on our audit. We conducted stances incompatible with our independence. our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we Deloitte AG plan and perform the audit to obtain reasonable assur- ance whether the financial statements are free from material misstatement. Simona Terranova Vida Gratteau An audit involves performing procedures to obtain Licensed Audit Expert audit evidence about the amounts and disclosures in the Auditor in Charge financial statements. The procedures selected depend Geneva, 29 April 2020 The French version of the annual report has been subject to audit by the auditors. Consequently, this is the only reference to the report of the auditors. 28 | SRPF, Annual Report 2019 SRPF, Annual Report 2019 | 29 Chemin de la Redoute 14–22, Nyon, VD 30 | SRPF, Annual Report 2019 BoulevardRue des Lattes des Philosophes 41, Meyrin, 7,GE Genève, GE Geographical Location of Buildings

Regional breakdown Distribution by type (number of properties) (number of properties)

(2) (2) (3) (18) (15) (7)

(12)

(11) (12)

Geneva 44% Residential 37% Vaud 27% Commercial 29% Fribourg 17% Mixed 29% Neuchâtel 7% Constructions 5% Jura 5%

SRPF, Annual Report 2019 | 31 JSS Real Estate Management Ltd Rue de la Corraterie 4 1204 Geneva T: +41 (0)58 317 57 80 F: +41 (0)58 317 57 99 E: [email protected] www.jssrem.ch