Dr. Iosif Baka­leynik, Chair­man / CEO

Letter to our shareholders 

Roland Friederich, CFO

Ladies and Gentlemen

Züblin Immo­bilien Hold­ing AG (Züblin) post­ed earn­ings of CHF 1.8 mil­lion in the first half of finan­cial year 2018/19. The pos­i­tive mar­ket envi­ron­ment for office prop­er­ties led to a fur­ther upward reval­u­a­tion in the port­fo­lio by CHF 1.0 mil­lion. Züblin is finan­cial­ly sol­id and its equi­ty amount­ed to CHF 127.4 mil­lion at 30 Sep­tem­ber 2018, equiv­a­lent to an equi­ty ratio of 61.1%. Nonethe­less, the growth being tar­get­ed by the com­pa­ny is a par­tic­u­lar chal­lenge in the cur­rent mar­ket environment.

Positive earnings

Züblin record­ed earn­ings of CHF 1.8 mil­lion in the first six months of finan­cial year 2018/19 (first half of 2017/18: CHF -30.4 mil­lion). Net oper­at­ing income remained sta­ble at CHF 3.7 mil­lion. Due to small­er changes in the mar­ket val­ue of the invest­ment prop­er­ties com­pared to the pri­or year, EBIT fell by CHF 0.3 mil­lion to CHF 2.7 mil­lion. Earn­ings from con­tin­u­ing oper­a­tions were CHF 1.8 mil­lion. This rep­re­sents an increase of CHF 2.6 mil­lion com­pared with the pri­or-year peri­od, of which CHF 2.1 mil­lion reflects one-off effects. Earn­ings per share for the first six months of finan­cial year 2018/19 stood at CHF 0.56.

Higher market value of real estate portfolio

The total val­ue of the Swiss port­fo­lio rose by CHF 1.0 mil­lion dur­ing the peri­od under review to CHF 201.2 mil­lion at 30 Sep­tem­ber 2018.

The data on the Züblin real estate port­fo­lio pro­vides a gen­er­al­ly sol­id pic­ture on all rel­e­vant core met­rics. In spite of the high vacan­cy rate in Bern the vacan­cy rate for the port­fo­lio as a whole is around 10% and the weight­ed aver­age lease term (WALT) of around five years under­lines the high qual­i­ty of the ten­an­cies. In the case of Arco West prop­er­ty in Bern, we exam­ined ideas for mixed use of the prop­er­ty and inten­si­fied let­ting efforts as part of a dri­ve to repo­si­tion the property. 

Solid financial position

The company’s cash and cash equiv­a­lents amount­ed to CHF 5.1 mil­lion at 30 Sep­tem­ber 2018. The real estate port­fo­lio is financed by a 5-year revolv­ing cred­it facil­i­ty of CHF 118 mil­lion, of which only CHF 65 mil­lion has been drawn down. The LTV of the port­fo­lio there­fore stands at 32%.

Züblin returns to dividend payment

At the AGM on 20 June 2018 the share­hold­ers gave their approval for off­set­ting the retained loss of CHF 110’102’351.50 against the oth­er reserves of CHF 3’410’406.60 and car­ry­ing for­ward the remain­ing retained loss of CHF 106’691’944.90 to the new account. With the approval of the tax-free dis­tri­b­u­tion of CHF 1.00 per reg­is­tered share (totalling CHF 3.3 mil­lion) from statu­to­ry cap­i­tal reserves, Züblin was able to pay a div­i­dend again in June 2018 for the first time in nine years. This rep­re­sent­ed a pay­out yield of 3.27% on the share price at 31 March 2018. Share­hold­ers also approved the pro­pos­al to re-elect the Board of Direc­tors with the same com­po­si­tion for a fur­ther one-year term in office.

Outlook

Züblin is now in a very sta­ble posi­tion and is able to con­cen­trate on build­ing its future. In a strong seller’s mar­ket, as already men­tioned, com­bined with high prices, good oppor­tu­ni­ties are extreme­ly rare. This makes it a demand­ing envi­ron­ment for all mar­ket play­ers look­ing to acquire suit­able invest­ment prop­er­ties. For the Züblin team this chal­leng­ing mar­ket envi­ron­ment means that a pru­dent approach to select­ing and review­ing invest­ment oppor­tu­ni­ties is more impor­tant than ever, along with explor­ing alter­na­tive ways to achieve growth and cre­ate added value.

Dr. Iosif Bakaleynik

Chair­man and Chief Exec­u­tive Officer

Roland Friederich

Chief Finan­cial Officer