Half-year results as per 30 June 2008

Solid real estate portfolio
During the reporting period, one property was purchased in the centre of Aarau for CHF 12.6 million as well as a development project with building permit in Wallisellen for CHF 8.2 million. As per end of June 2008, the real estate portfolio included 194 office and commercial buildings and 7 development sites with a carrying value of CHF 5.120 billion (end of 2007: CHF 5.001 billion).

The revaluation of the investment properties resulted in an appreciation of CHF 72.4 million. A significant part of this appreciation derives from positive income and market rent estimates, particularly in prime locations in Zurich. The portfolio's average weighted discount rate stood unchanged at 5.54%.

Positive vacancy development
As forecasted in spring 2008, the vacancy rate has been reduced from 10.9% in March 2008 to the level at the end of 2007, i.e. 10.6%. This decrease was the result of a number of new leases which could more than compensate newly terminated leases. Most of the new leases will be effective as from the third or fourth quarter 2008 and will allow reaching the vacancy target of 9% by year-end. Of the 10.6% vacancy rate, a total of 3.0 percentage points are due to current renovation work on various properties. Most of the renovation work will be completed in the second half of 2008 respectively in 2009.

Successful progress of development projects
The development projects continued successfully:

i) Hürlimann site, Zurich: After the successful settlement of the building permit procedure, the construction work for a modern thermal health spa in combination with a 4-star boutique hotel shall start during autumn 2008 and respective completion is expected for autumn 2010. The investment sum amounts to approximately CHF 50 million.

ii) Business park, Wallisellen: PSP Swiss Property had the opportunity to buy land with an approved project for the remaining 2 buildings (Richtistrasse 9 and 11) in Wallisellen. The first 3 buildings on Richtistrasse were developed during 2001 to 2003. Construction began in June 2008, and completion of the 2 new buildings is planned for 2010. The investment sum for this project (usable floor space of around 14'000 m2 and 217 parking spaces) amounts to approximately CHF 76 million (including land). Thus, the business park consisting of 5 modern office buildings will be finalised. Marketing of the commercial space is likely to begin in autumn 2008. The rental market in Wallisellen recovered well since 2006, and there is a sustained demand.

iii) Löwenbräu site, Zurich: The building permit for the project (investment sum of approximately CHF 120 million) was obtained in June 2008. At the moment, there is one appeal against the construction plan. 11 600 m2 are projected for free-hold apartments and 10 200 m2 each for offices and art trading floors. The project shall be realised stepwise from 2009 to 2013. The first expansions and conversions are likely to be completed in 2010.

Work on the other sites (in Lugano, Wädenswil, Wabern near Bern and Rheinfelden) progressed as planned.

Positive financial results
Net income excluding gains/losses on real estate investments increased from CHF 58.8 million to CHF 60.5 million. Corresponding earnings per share amounted to CHF 1.42 or 6.8% more than in the first half of 2007 (CHF 1.33). For PSP Swiss Property, net income excluding gains/losses on real estate investments is the basis for cash distribution to shareholders. Net income including net changes in fair values amounted to CHF 116.5 million (first half of 2007: CHF 142.2 million). Corresponding earnings per share were CHF 2.74 (first half of 2007: CHF 3.23).

Mainly as a result of the lowered vacancy rate, rental income increased by CHF 4.5 million to CHF 127.4 million. Operating expenses decreased by 16.9% to CHF 28.6 million (first half of 2007: CHF 34.5 million). Thereby, ordinary real estate operating expenses fell by 25.1% to CHF 7.1 million due to lower operating and ancillary expenses, this as a result of lower vacancies. In addition, general and administrative expenses were lowered by 36.2% to CHF 5.0 million; compared to the previous year's period there were significantly lower external consulting fees related to potential portfolio acquisitions.

Positive earnings development and lower expenses resulted in an increase of EBITDA excluding gains/losses on real estate investments by 12.6% to CHF 102.6 million (first half of 2007: CHF 91.1 million). Consequently, the EBITDA margin improved to 78.6% (first half of 2007: 73.3%).

At mid-year 2008, net asset value (NAV) per share amounted to CHF 60.22, i.e. 0.9% more than at the end of 2007 (CHF 59.71). NAV before deferred taxes increased by 1.6% to CHF 70.01 (end of 2007: CHF 68.94). The nominal value reduction in June 2008 amounted to CHF 2.40 per share.

Strong capital structure
With total equity of CHF 2.557 billion – corresponding to an equity ratio of 48.9% (end of 2007: 49.4%) – PSP Swiss Property continues to have a very sound capital structure. Interest-bearing debt increased by CHF 80.6 million or 3.9% to CHF 2.168 billion, corresponding to 41.5% of total assets (end of 2007: 40.7%). Due to the high proportion of interest rate hedges, average borrowing costs only rose by 0.04 percentage points to 2.77% in the first half of 2008 compared to 2007. The average weighted remaining term to maturity of all financial liabilities was 3.3 years (end of 2007: 3.7 years). 77.6% of all financial liabilities had fixed interest rates with maturities over more than 1 year (end of 2007: 83.0%).

The company's excellent position enabled to conclude a syndicated loan at attractive conditions with a number Swiss Cantonal banks in the first half of 2008. At mid-year 2008, PSP Swiss Property had unused credit lines of CHF 395 million.

Outlook 2008
The forecast communicated during the publication of the 2007 annual figures (29 February 2008) is being confirmed. i) Based on an unchanged property portfolio, an EBITDA excluding gains/losses on real estate investments of CHF 205 million (2007: CHF 193.9 million) is expected. ii) At year end, a vacancy rate of approximately 9% is expected.