Zug Estates Holding AG / Key word(s): Half Year Results/Real Estate
Ad hoc announcement pursuant to article 53 Listing Rules
The first half of 2022 was shaped by the Ukraine crisis and its impact on the economic environment: sharply increasing commodity and energy prices, as well as rising inflation and interest rates. At the same time, many sectors experienced a strong recovery once coronavirus restrictions were lifted, leading to robust demand – particularly for office and commercial space – as well as rising sales in the hotel & catering segment.
Rental income went up in the first half of 2022 and the vacancy rate fell further. In the hotel & catering segment, sales increased noticeably from April 2022 onwards, reaching a level in May and June that was comparable with sales before the COVID-19 pandemic.
At CHF 27.9 million, net income was CHF 4.8 million – or 14.6% – below the previous year’s level of CHF 32.7 million, which included a gain on sale before tax of CHF 7.3 million resulting from the sale of the property at Hofstrasse 1a/b in Zug. After adjustment for revaluation and special effects, net profit rose by CHF 1.4 million, or 8.6%, from CHF 15.4 million to CHF 16.8 million. The main reasons for this strong performance were the higher property income, increased income from the hotel & catering segment, and lower property expenses.
Increase in operating profit thanks to successes in both segments
Income generated by the hotel & catering segment went up considerably – by CHF 3.8 million, or 142.0%, from CHF 2.6 million to CHF 6.4 million. While the negative effects of the COVID-19 pandemic had an impact on the whole of the corresponding period in the previous year, an encouraging recovery began in 2022 following a mixed first quarter. As a result, gross operating profit (GOP) also increased – from 8.1% to 38.0%. In addition, the economic losses sustained during the pandemic were mitigated somewhat in the first half of the 2021 by the one-off payment of a non-returnable COVID-19 grant in the amount of CHF 2.1 million.
In all, operating revenue rose by CHF 2.4 million, or 6.5%, from CHF 36.1 million to CHF 38.5 million.
At CHF 3.2 million, property expenses were down CHF 0.8 million, or 19.9%, on the prior-year figure of CHF 4.0 million. For individual, larger maintenance measures that are planned – such as the partial renovation of the facade at the Metalli Living Space complex – the more expensive work will not be carried out until the second half of the year.
Staff costs went up by CHF 1.0 million, or 16.1%, from CHF 6.0 million to CHF 7.0 million. This was because of increasing activities in the hotel & catering segment, as well as lower short-time working compensation.
Portfolio value slightly up
Significant reduction in the vacancy rate up to the end of 2022
The conclusion of a ten-year rental agreement with Utopia Music AG for property S6 at Suurstoffi will mean another significant reduction in the vacancy rate in the second half of the year. It will be below 2% at the end of 2022. In July 2022, the company – which is currently based in Zug – began renting the whole of property S6 with 4,500m2 of rentable space.
Overall, demand for space proved to be robust in the first half of 2022. Rental agreements for a total of 10,500m2 and with rental income of around CHF 4.6 million p.a. were extended or concluded for the first time in the first half of the year. The agreements concluded concern both office space at Suurstoffi and the City Center site, as well as retail space at the Metalli complex. Demand for residential space remains extremely robust.
Solid equity ratio
At the beginning of the year, a maturing conventional bond of CHF 100.0 million was replaced with another green bond in an interest rate environment that at the time was still much more attractive. The term is slightly longer than seven years with a coupon of 0.75%. Zug Estates is thus the first listed Swiss real estate company to switch its entire bond portfolio to sustainable financial products.
As a result, the average financing term increased from 3.6 years as at 31 December 2021 to 4.4 years as at 30 June 2022, with the average interest rate unchanged at 1.3%.
Project development with a focus on the Metalli Living Space complex
Further reduction in carbon emissions and replacement of the last oil heating system in the portfolio
In future, we will be placing more of a focus on increasing production of our own energy, as well as consuming regional, renewable energy. Between 1 April 2021 and 31 March 2022, the solar panels at Suurstoffi produced 1,140 MWh of energy, equivalent to the average consumption of 250 houses. The installation of solar panels at the City Center site will further increase production of our own energy. The first step will be taken in autumn 2022 when six houses in the Haldenhof area will be equipped with solar panels, with the energy generated being shared by the residents of those houses (under a so-called ZEV arrangement).
Sustainable goals will play an important role in the further development of the Metalli Living Space complex in the centre of Zug. Thanks to Circulago, business is already virtually carbon-free. We are therefore focusing on the areas of biodiversity and recycling. However, social topics such as creating a diverse range of cultural and leisure activities and building affordable residential space are also at the heart of our plans.
Full details of our sustainability strategy can be found at https://zugestates.ch/en/sustainability.
Positive outlook for 2022
In the hotel & catering segment, we are cautiously optimistic for the second half of the year and expect a further recovery provided there is no repeat of the negative effects on international business travel associated with a rise in COVID-19 cases and the geopolitical situation does not change.
We still expect net income excluding revaluation and special effects to exceed CHF 30 million.
Report of 26 August 2022
The detailed report on the first half of 2022 can be found on our website:
A video conference will be held in German at 10 a.m. today. CEO Patrik Stillhart and CFO Mirko Käppeli will present the half-year results for 2022 and then respond to questions. The associated presentation will be available on our website from 9 a.m. at:
Please register for the conference via the link below. We look forward to your participation.
For further information, please contact:
About Zug Estates
Zug Estates Holding AG | Industriestrasse 12 | CH-6300 Zug | T +41 41 729 10 10 | www.zugestates.ch
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Zug Estates Holding AG
+41 41 729 10 10
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