Zug Estates: Corona shapes half-year results
Zug Estates Holding recorded a significant decline in consolidated earnings in the first half of 2020. According to the company, this was due to the corona-related poor figures in the Hotel & Catering segment.
According to Zug Estates, it was mainly the retail tenants and thus the Metalli shopping mall that were affected by the lockdown and the associated store closures. With over 90% of the tenants affected, a final solution for a one-off rent waiver has been found. Rent reductions totaling 0.7 million had been granted.
In the Hotel & Catering segment, the virtual standstill in international business travel led to a significant drop in revenue, Zug Estates added. Revenue in the segment fell from 8.2 to 3.6 million.
In contrast, despite the pandemic, the real estate company was able to hand over the 49 remaining condominium units of the Aglaya promotion project to the owners on time. This reportedly resulted in income of 72.5 million and a pre-tax promotion profit of 9.5 million. For the entire Aglaya promotion project, Zug Estates generated a return on investment of 17.3%, it said. As no sales revenue was recorded in the same period last year, operating income increased from 36.7 million to 105.4 million.
Group earnings slump
The bottom line for the first half of 2020 was a consolidated profit of8.3 million. This is aroundTP2T 681 less than in the prior-year period (26.1 million). Adjusted for revaluation and special effects, it was primarily the declining figures in the Hotel & Catering segment that led to a reduction in consolidated net income ofTP2T 22.71 from 15.4 million to 11.9 million, the real estate company reports.
Despite the decline in sales in the hotel sector, real estate income increased because the majority of rental agreements concluded in the previous year now took full effect. Compared with the same period of the previous year, it increased byTP2T 5.41 to 28.2 million.
The real estate portfolio as a whole was valued 13.6 million lower, which was said to be due to a slightly more conservative assessment of market rents for retail space in general and individual specific office spaces. The market value of the portfolio is 1.63 billion, the same level as on December 31, 2019.
As the last building in construction field 1 in Rotkreuz was put into operation in the first half of the year, the vacancy rate had increased from 3.3% (Dec. 31, 2019) to 5.3% as of June 30, 2020. The weighted average remaining lease term (WAULT) is 6.7 years.
For the year as a whole, Zug Estates expects an operating result before depreciation and revaluations and a consolidated result excluding revaluations and special effects significantly below the previous year. In the Hotel & Catering segment in particular, the real estate company expects sales to be significantly below the previous year's level.
Zug Estates also reports that its residential products are enjoying very good demand, even in the current market environment. However, there is a noticeable reluctance on the part of large prospective buyers of office space due to the pandemic. The number of inquiries for retail space in the Metalli, on the other hand, is stable. There are currently no indications of a decline. (ah)
