Portfolio

Commentary on the Portfolio

Züblinʼs current portfolio comprises five investment properties in Switzerland located in Zurich, Bern, Baden and Egg with a total usable space of 28'135 m2. The overall asset value as of 30 September 2018 amounts to CHF 201.2 million. This represents an increase of CHF 1 million as compared with 31 March 2018, mainly deriving from the further compression of the discount rates.

As of 30 September 2018, annualized rental income was CHF 8.2 million. The vacancy rate for the portfolio improved slightly from 10.5% to 10.3% during the reporting period. Weighted average lease term (WALT) shows a slight decrease from 5.2 down to 4.7 years taking into account smaller lease extensions that did not impact the total WALT significantly.

Swiss real estate industry has experienced divergent trends during past six months. The leasing market stayed quite weak despite good macroeconomic performance. In particularly occupancies in secondary locations and rental rates in prime locations were still in movement. At the same time investment market looked quite overserved with investors hunting for yield in low interest environment. We see more supporters expecting rise of interest rates in mid- and long-term, but do not find that these expectations are generally priced in.

Züblin was able to benefit from a further increase in the value of its existing portfolio however, considered the risk-adjusted return for new acquisitions to be too low and consequently, did not conclude any transactions in the year under review. The team aims to grow the portfolio to the effective scale but is cautious to trade-off short term scaling to investment’s quality. Therefore our broad sourcing is balanced with disciplined selection and sound reasoning.

One more step was undertaken further to better respond to the demanding market situation. Züblin implemented a new operational set-up via outsourcing its day-to-day property operations to the experienced property manager in summer 2018. The company’s in-house asset management function will be reinforced with a seasoned expert.

Market value of
overall portfolio increased
by CHF 1 million

Portfolio Overview

 

 

30.09.2018

31.03.2018

 

 

 

 

Market value in CHF million

 

201.2

200.1

Annual rental income in CHF million

 

8.2

8.1

Vacancy rate monetary in %

 

10.3

10.5

Major tenants

Tenant

Sector

Portfolio Switzerland

 

 

 

Baker & McKenzie, Zurich

Law firm

35.9%

Roland Berger, Zurich

Consulting

17.1%

BR Bauhandel AG, Bern

Distribution

4.6%

Logismata AG, Zurich

Information technology

2.7%

Globomedica AG, Egg

Pharma

2.5%

Total

 

62.8%

Overall portfolio
WALT 4.7 years

Lease contract analysis in CHF Mio. 

Portfolio Details

 

 

Baden Rütistrasse 3/3a

Egg Gewerbestrasse 12/12a

Zürich Hardturmstrasse 76

Zürich Holbeinstrasse 22/30

Bern Morgenstrasse 136

Total

 

 

 

 

 

 

 

 

Investment category

 

Office

Office

Office

Office

Office

 

Date of acquisition

 

1.3.2000

1.4.2000

20.3.2000

1.7.2008

1.6.2000

 

Year of construction

 

1961

1982/87

1967

1961/72

1991

 

Year of rennovation

 

2012

2012

2010

2009/2010

2013

 

Plot size

sqm

1 172

4 894

1 100

1 660

2 740

11 566

Ownership

 

 

 

 

 

 

 

 

 

 

Annual rental income

CHF thousand

1 077

1 013

984

4 331

770

8 175

Vacancy rate

(CHF) %

2.3

9.0

0.0

0.0

51.3

10.3

Capitalisation rate

%

3.7

4.3

3.3

2.9

4.7

3.4

Discount rate (nominal)

%

4.2

4.8

3.8

3.4

5.2

3.9

 

 

 

 

 

 

 

 

Office

sqm

3 446

4 100

3 099

5 524

5 708

21 877

Retail

sqm

344

1 601

1 945

Storage

sqm

1 185

1 581

648

288

621

4 323

Total usable space

sqm

4 975

5 681

3 747

5 812

7 930

28 145

 

 

 

 

 

 

 

 

Vacancy

sqm

87

472

4 594

5 153

Vacancy rate

(sqm) %

1.7

8.3

0.0

0.0

57.9

18.3

 

 

 

 

 

 

 

 

No. of parking spaces

number

19

110

35

45

88

297

Ownership of 100%