Letter to our Shareholders

Dr. Iosif Bakaleynik
Chairman / CEO 

Roland Friederich
CFO

Ladies and Gentlemen

Züblin Immobilien Holding AG (Züblin) generated rental income of CHF 4.0 million in the first six months of the 2017/18 financial year, 1.3% more than compared to the previous year period. Operating result increased by 2.6% to CHF 3.8 million. Successful letting activities and a stable market environment resulted in positive valuation effects of CHF 1.2 million which, combined with further cost reductions, led to an EBIT of CHF 3.0 million. Overall, the net comprehensive income amounted to CHF 5.5 million and increased equity from CHF 122.2 million as of 31 March 2017 to CHF 127.7 million.

Positive Net Comprehensive Income

Net comprehensive income for the period under review provides a more accurate picture of Züblin’s performance. In contrast, the reported net loss of CHF 30.4 million can be disregarded, because it resulted from reclassifications of reserves on cash flow hedges and reserves of discontinued operations in Germany in accordance with IFRS. These reserves were to be removed from equity and had to be recycled through the income statement. Net comprehensive income or adjusted net profit of CHF 5.5 million are free from these effects.

Market value of Swiss real estate at CHF 199.7 million

As of 30 September 2017, the vacancy rate of the Swiss real estate portfolio improved by 0.5 percentage points to 10.1%. Excluding the persistently high vacancy in the Arco West property in Berne, the occupancy rate would be at 99.0%. All other Swiss properties are in good or very good locations, are well maintained and have a solid tenant base. 

At the end of September 2017, the market value of the Swiss real estate portfolio amounted to CHF 199.7 million.

Sale of the German portfolio completed

As announced, Züblin made use of the attractive market environment in Germany to realize value. The sale of the German portfolio to CLS Holding plc consisted of twelve office properties and was successfully completed in summer of 2017. The gross asset value of the properties amounted to EUR 152 million. In total, CHF 59 million were received by Züblin through the transaction.

Successful refinancing

In autumn 2017, Züblin completed a five-year, revolving framework financing of CHF 118 million for its Swiss real estate portfolio. This loan agreement with a Swiss Cantonal Bank replaces the previous syndicated financing in the same amount. Due to the current negative interest situation, Züblin used funds from the sale of the German portfolio and has only drawn up a partial amount of CHF 66 million from the new credit line.

Funds for investment opportunities available

With the new credit facility, Züblin is able to invest in carefully selected investment opportunities and selectively expand its portfolio with a current market value of CHF 199.7 million. The credit facility allows portfolio expansion up to a loan-to-value (LTV) ratio of 60% — currently the value is 33%. At the end of the reporting period, the equity ratio was 61.4%.

Board of Directors confirmed

At the Shareholders’ Meeting on 20 June, 2017, all members of the Board of Directors were confirmed for a further term of office of one year. Also approved was the extension of the authorized capital. The Board of Directors is authorized to increase the share capital by issuing a maximum of 1’659’013 fully paid up registered shares with a nominal value of CHF 22.50 until 20 June 2019.

Outlook

Following the successful sale of the German portfolio and the closing of the new credit facility in Switzerland, Züblin is now well positioned to carefully assess new investment opportunities for targeted growth steps contributing the creation of added value.

Dr Iosif Bakaleynik

Chairman and Chief Executive Officer

Roland Friederich

Chief Financial Officer