Zug Estates increases operating result

Zug Estates reports that property income rose from CHF 20.8 million to CHF 23.4 million in the first half of 2018 compared with the same period last year. Operating income before depreciation and revaluation increased by almost eleven percent to 21.7 million (previous year: 19.6 million). Taking into account the revaluation gain of 3.5 million (previous year: 7.2 million), Ebit was 23.4 million and net income 17.8 million - below the corresponding figures for the previous year. By contrast, Group earnings excluding revaluation gains increased by 13 percent to 14.8 million.

The market value of the portfolio increased by four percent to 1.47 billion in the first half of 2018. The vacancy rate was 1.9 percent as of June 30, 2018, up from 1.5 percent as of December 31, 2017. Zug Estates attributed the increase to the completion of additional residential and commercial space.

The real estate company reports important development and marketing successes for Suurstoffi and also the center area in Zug: In the Metalli shopping center, all retail space has been leased for the first time; Läderach Chocolatier Suisse will open a branch in the third quarter of 2019. The contract with Metalli's largest office tenant has been extended until 2027 at market conditions. In total, leases for more than 2,600 sqm were extended in the first half of the year.

The renovation of the property at Baarerstrasse 14a will be completed in summer 2019. In addition, construction work has begun on store extensions for tenants Esprit and Confiserie-Café Speck in the Metalli. Completion is scheduled for October 2018 and will result in additional annual rental income of CHF 95,000, Zug Estates added.

Building site A and high-rise building S22 are completed

At construction site A (Suurstoffi 16, 18, 20), the third construction phase was handed over in full to the tenants at the end of February 2018. Zug Estates has invested a total of around 115.3 million in this construction phase. In addition to the companies Mobility and GfK, which are already located there, a medical community will move into construction site A. The apartments are fully let, and 84 percent of the commercial space has been let.

The wooden high-rise S22 has been completed and the space has already been handed over to the anchor tenant Amgen. Other tenants such as Arval and Mobilezone are to follow in the second half of the year. In addition, the brewery group AB InBev has leased 1,500 sqm of space there.

Completion of the garden tower is scheduled for the fourth quarter of 2019; the investment volume is around 100 million. As of mid-2018, 84 percent of the apartments had been reserved or sold, and the approximately 1,800 sqm of commercial space had been leased long-term by coworking provider Spaces, Zug Estates said.

The first stage on construction site 1 is expected to be handed over to the Lucerne University of Applied Sciences and Arts in the third quarter of 2019. Completion of the second stage is scheduled for the second quarter of 2020. Around 70 percent of the total 26,000 sqm of rental space has been let on a long-term basis.

For the year as a whole, Zug Estates expects rental income to rise due to the completion of construction site A and the S22 property. However, property expenses will increase due to renovation work at Metalli. Overall, the company expects a slightly better operating result before depreciation and revaluation. Zug Estates also anticipates a year-on-year increase in net profit excluding revaluation gains. (ah)