PORTFOLIO
about our PORTFOLIO
The 2023/24 financial year was a positive one from an operating perspective. Despite persistently challenging conditions in the Swiss office market, successes in letting have created a solid basis for business performance in the new financial year. As a result, the company once again succeeded in increasing rental income, extending the average lease term (WALT), and improving the financial stability of the portfolio.
The sharp increase in WALT from 2.9 years on 31 March 2023 to 6.4 years on 31 March 2024 had a stabilising effect on the portfolio and helped to secure our rental income in the long term. The large number of tenants who have remained loyal to us for many years reflects our focused efforts in asset management and the financial stability of the portfolio.
Rental income rose by 2.3% year-on-year to CHF 9.0 million (previous year: CHF 8.8 million). The increase [BS1] was the result both of rental agreements concluded last year (0.7%) and – thanks to the high proportion of indexation in our rental agreements – inflation-related rent adjustments totalling 1.6%. The vacancy rate remained unchanged at 9.3%. The successful letting of a longstanding vacant space at Morgenstrasse 136 in Bern from July 2024 takes effect in the 2024/25 financial year, when it will lead to a further increase in rental income and reduce the vacancy rate by 3 percentage points to 6.3%.
Prevailing market conditions – including softer buyer demand, rising yield requirements from investors and higher interest rates – led to an increase in the average nominal discount rate by 30 basis points and had a negative impact on the revaluation of the portfolio. However, this was partly offset by the positive effect of lease extensions, indexation and the letting in Bern. With a total asset value of CHF 225.1 million as at 31 March 2024, the valuation was down only slightly by 0.8% from the valuation a year ago.
Key figures of the Portfolio
Our properties at a glance
Letting
We successfully negotiated an early extension of the rental agreement for the Holbeinstrasse property in Zurichʼs Seefeld district. The lease for around 4,000 m2 of office space, which was originally due to expire in April 2025, was extended until at least 2035. The tenancy agreement with an international law firm that has been based in the property since 2010 accounts for 32% of Züblinʼs total rental income. The extension increased the propertyʼs WALT to 8.6 years.
At Morgenstrasse 136 in Bern-Bümpliz, the lease with a longstanding top 5 tenant for 1,600 m2 of office and exhibition space was successfully extended until September 2029. Together with a contract extension with another prime tenant in the property in the previous financial year, WALT rose to 5.6 years. In addition, the entire first floor was let to a medical technology company in the last quarter of the financial year. The rental agreement for 1,781 m2 has a term of 10 years and comes into force in July 2024. This agreement represents a significant letting success and gives cause for optimism that vacancies in the property can be further reduced. The letting reduces the vacancy rate in Bern from 47.5% to 28.6%.
At Gewerbestrasse 12a in Egg near Zurich, a vacant space was converted conceptually. A modern, partly fitted out, modular floor concept was created on an area of around 400 m2, which offers common areas for shared use as well as individual office units. This innovative concept is specifically designed to cater to the strong demand for small spaces, with smaller companies looking for a cost-effective space sharing model envisaged as potential tenants. A 10-year rental agreement for 171 m2 was signed after the balance sheet date. This letting will reduce the vacancy rate in the property from 13.4% to 9.4%.
Major tenants
Züblinʼs portfolio includes a number of longstanding and high-quality tenants. Our major tenants are well-known companies and administrative bodies of the City of Zurich. These tenants account for just under half of our rental income.
Rental contract analysis
The chart illustrates the timeline of expiring leases based on effective rental income (contract rent) and on the assumption that expiring leases will be extended or renewed at the rents applicable at the present time (market rent).
Sustainability and environmental indicators
For almost two decades Züblin has placed a clear focus on sustainability in its investment activities. This encompasses using resources responsibly both in ongoing operations and in construction and renovation projects. We aim to be a responsible participant in the property sector and are committed to advancing the environmental sustainability of our properties. At the same time, we seek to maintain and strengthen the balance between environmental responsibility, the interests of our stakeholders and the well-being of society.
We never forget that the success of our sustainability initiatives depends not just on our own efforts, but also to a large degree on the support and individual capabilities of our tenants, suppliers, and partners. We approach the challenge of achieving sustainability through open dialogue and in a spirit of partnership and cooperation.
Holbeinstrasse 22/30, Zurich
Year of construction 1961/72 – Overall renovation 2010
Mingergie®Standard / Lake-water Heat-pump
Hofwiesenstrasse 360, Zurich
Year of construction 1972
District heating network connection
Hardturmstrasse 76, Zurich
Year of construction 1967 – Overall renovation 2010
Gas heating
Gewerbestrasse 12/12a, Egg
(near Zurich)
Year of construction 1982/87 – Overall renovation 2012
Minergie®Standard / Gas heating
Rütistrasse 3/3a, Baden
Year of construction 1961 – Overall renovation 2012
Gas heating
Morgenstrasse 136, Bern-Bümpliz
Year of construction 1991 – Total rebuild 2013
Minergie®Standard / Gas heating
Due to our relatively small size, we remain below the statutory thresholds for comprehensive sustainability reporting. We therefore concentrate on the fact-based presentation of our key environmental figures, which can demonstrate our efforts to reduce CO2 emissions. The key figures determined at property level serve as a basis for our decisions on which measures to take next to continue reducing CO2 emissions. Although we are not presenting a comprehensive sustainability report, sustainability and environmental protection are at the centre of all operational activities and decisions at Züblin.
The key figures cover the calendar years 2022 and 2023 and are based on the energy suppliersʼ consumption data for total heating/cooling, water, and general electricity. Tenant electricity consumption is not included.
The evaluation of the property data showed that the sustainability concept pursued since 2008 represents a good starting point for Züblinʼs current property portfolio that can be built on going forward.
With the properties at Holbeinstrasse 22/30 in Zurich, Gewerbestrasse 12/12a in Egg and Morgenstrasse 136 in Bern-Bümpliz, the portfolio currently includes three buildings certified to the Minergie® standard. The analysis also showed that the CO2 emissions of our properties could be further reduced simply by replacing four heat generators that are currently still powered by fossil fuels. The CO2 reduction path for the portfolio after including all measures is currently in line with the range for the Swiss real estate sector of between 2 and 5 kg CO2 /m EBF*a.
Strategic focus
Züblin continues to focus on selective investments in office properties in its established core markets, with an emphasis on our home market of Switzerland. In the current market environment, acquisitions will only be made if they meet the investment criteria we have defined, complement the portfolio in a sustainable manner and ensure the creation of added value in the long term.
Our investment criteria
