Zug Estates increases earnings

The Zug Estates Group increased its net income by CHF 142.7 % to CHF 58.7 million in the 2024 financial year. The real estate company benefited from a revaluation result that, unlike in the previous year, was positive. However, the consolidated result also improved significantly before revaluation, namely by CHF 9.0% to CHF 36.9 million. This was due to the increase in income from real estate by CHF 5.5% to CHF 69.3 million. Contributing to this increase were index and reference interest rate adjustments, the decrease in the vacancy rate, which had increased in the previous year due to conversions, and the additional shares in the Metalli co-ownership association acquired in 2023, which now took effect for the first time over the entire period. Adjusted for portfolio changes (like-for-like), real estate income increased by 5.1%. Based on the good figures, the dividend is set to increase by 6.8% to CHF 4.70.

Discount rate slightly lower

A 2 basis point lower discount rate was applied to the valuation of the portfolio. Following a revaluation loss of CHF 11.0 million in the previous year, when the discount rate had risen by 15 basis points, Zug Estates reported a revaluation gain of CHF 24.8 million for 2024. This corresponds to around 1.4% of the portfolio value. The market value of the entire portfolio increased by CHF 1.7TP3T to CHF 1.83 billion, partly due to investments.

Vacancy rate falls very sharply

There was a significant change in the vacancy rate: following the conclusion of commercial leases for over 12,500 sqm and with rental income of more than CHF 5.4 million, the rate fell from 3.9% to 0.7% over the course of the year. The contract extensions and new leases signed in the 2024 financial year related to office and training space in Zug and Rotkreuz as well as retail space in Metalli. According to Zug Estates, some tenants in the Metalli shopping mall have decided not only to extend their space but also to expand it. For example, cosmetics label Rituals has moved to a larger space and the Benz Group has rented additional space to open another fashion store.

The "Metalli habitat" project continues

Zug Estates has some important news regarding the major "Metalli Living Space" project. A year ago, the company announced that it had interrupted the process for the Metalli and Bergli development plans (IB reported). The reason for this was the "2000 apartments for Zug's middle class" initiative, which was approved by the people and calls for a 40% quota for affordable new-build apartments in densely populated areas. Zug Estates has now announced that it will not amend the Bergli development plan and will instead focus on the Metalli development plan. "Zug Estates is convinced that the Metalli living space project will make a very valuable contribution to the creation of urgently needed living space and to the high-quality development of the city of Zug and has therefore decided to pursue the project further and launch the political approval process," the company writes. The political approval process could begin in mid-2025.

2024 Higher financing costs expected

For the new financial year, the management of Zug Estgates expects a slight increase in income from real estate. It is also forecasting "net income excluding revaluation and special effects at the previous year's level" - taking into account the expectation that financing costs will increase. (aw)