Zug Estates Holding AG

EQS-Adhoc: Successful 2015 financial year for Zug Estates


EQS Group-Ad-hoc: Zug Estates Holding AG / Key word(s): Final Results
Successful 2015 financial year for Zug Estates

11.03.2016 / 06:55
Release of an ad hoc announcement pursuant to Art. 53 KR.
The issuer is solely responsible for the content of this announcement.

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The Zug Estates Group posted a significant increase in net income in 2015.
Property income grew by 4.4% to CHF 39.1 million, operating income before
depreciation and revaluation rose by 4.0% to CHF 39.2 million, and net income
increased by almost 50% to CHF 67.1 million. A 10.8% increase in the
distribution to shareholders to CHF 20.50 per series B registered share
(previous year: CHF 18.50) will be proposed to the general meeting.
 

The Zug Estates Group generated operating income of CHF 63.0 million in 2015,
representing a year-on-year increase of 1.6%. Property income rose by 4.4% to
CHF 39.1 million despite the sale of two properties and a decrease in
residential rents resulting from a reduction in the reference rate. Stripping
these factors out, property income would have been about CHF 1 million higher
and up approximately 7.6% on the year before. In an increasingly challenging
market environment, the hotel & catering business unit reported income of CHF
19.8 million, practically maintaining the previous year's figure and improving
profitability. The Group's operating expenses were 2.3% lower year-on-year.
Operating income before depreciation and revaluation rose by 4.0% to CHF 39.2
million (previous year: CHF 37.7 million).

In 2015, the Group invested CHF 47.5 million in the further development and
consolidation of its sites. In addition, the book value of investment properties
increased by CHF 50.5 million net following revaluation. Income from the
revaluation of investment properties (net) thus more than doubled compared with
the previous year's figure of CHF 21.3 million. The contributing factors here
were the above-average quality of the locations and properties in the portfolio
(high proportion of residential property), the continuous development and
positioning of the Suurstoffi site as a preferred location for housing and
business, the successful conclusion of rental agreements, and market-related
factors.

As a result of the good operating result and the high revaluation, EBIT and net
income were well above the previous year's figures at CHF 86.3 million and CHF
67.1 million respectively. Net income excluding income from revaluation
increased by 0.3% to CHF 24.1 million (previous year: CHF 24.0 million).


Payout increases by 10.8%

Net income excluding income from revaluation, which is relevant for the payout
to shareholders, rose year-on-year by 0.5% to CHF 48.97 per series B registered
share; the inclusion of income from revaluation resulted in a significant
increase to CHF 136.69 (previous year: CHF 91.75). The solid result allows the
board of directors to propose to shareholders in 2016 that the payout be
increased by 10.8% to CHF 20.50 per series B registered share.


Overall earnings per share at 17.6%

The Zug Estates share closed at CHF 1 445.00 on December 31, 2015, 16.2% higher
than at the beginning of the year. Factoring in the payout of CHF 18.50 per
series B registered share made in May 2015 from the reserves from capital
contributions and, as such, exempted from withholding tax, overall earnings per
share came to 17.6% in the 2015 financial year (previous year: 8.5%).


Fair value of portfolio rises to CHF 1.2 billion

The Group continued its growth strategy in the year under review, investing CHF
36.9 million in expanding its portfolio. In Risch Rotkreuz, the second
development phase was completed, and construction started on the third phase.
Headway was also made on planning work for the other phases. The Group used the
favorable market environment to give the portfolio further focus. On March 1,
2015, it sold the industrial site in Oberentfelden (Aargau) at fair value. Zug
Estates also decided to sell two further non-strategic apartments in Baar.
Furthermore, on July 1, 2015, Zug Estates purchased the last property under
third-party ownership at the Suurstoffi site. Conversely, the Group sold the
property Suurstoffi 3a-c. These consolidation activities created the ideal
conditions for the development of Lucerne University's Suurstoffi campus.

The book value of the entire portfolio stood at CHF 1 113.3 million at the end
of the year, up 6.7% on the previous year. Adjusted for the transactions in
2015, the portfolio grew by 8.4%. Properties used for operational purposes are
stated at cost less write-downs. The fair value of these properties is CHF 113.7
million, with the fair value of the entire portfolio thus amounting to CHF 1
188.9 million (previous year: CHF 1 111.0 million).


Equity ratio still more than 60% despite continuing investment activity

The Zug Estates Group can build on a solid equity base offering long-term
stability. In spite of continuing investment activity, equity capital totaled
CHF 723.4 million as at December 31, 2015, equivalent to a solid equity ratio of
60.8%.


New rental agreements in sync with strong development momentum

The second development phase of the Suurstoffi site, consisting of nine
apartment buildings comprising 145 rented apartments and 11 condominium
apartments, was completed on schedule and the units were handed over to the
occupants in the first half of the year. All apartments have been let,
increasing the proportion of residential property within the portfolio to just
under 30%.

A number of significant letting transactions for commercial space were also
completed in 2015. A long-term rental agreement was negotiated with Lucerne
University of Applied Sciences and Arts (HSLU) for the two-stage construction of
the new Suurstoffi Rotkreuz campus. Market research company GfK concluded a
long-term rental agreement for service business space. GfK will be relocating
with about 200 employees in fall 2017 to a new building under the third
development phase. In Zug, rental agreements for approx. 1 700 m2 of office and
retail space were extended or renewed. This will generate higher rental revenue
in the retail segment in particular. For the remaining commercial space,
negotiations with prospective tenants are at an advanced stage. The Zug Estates
Group therefore expects to be able to report largely full occupancy for the main
rental properties by the end of 2016.

As at December 31, 2015 (reference date), the vacancy rate was 5.4%,
representing a decrease of one percentage point since the middle of the year.
Adjusted for voids before initial renting (parking spaces in particular) and
space rented to the HSLU and other tenants over 2016, the year-end vacancy rate
came to 2.3%.


Construction and development activity strong

2015, too, was marked by strong construction and development activity. Zug
Estates reported major progress at both sites in the year under review:
On the Suurstoffi site, a third development phase was launched, comprising 152
rental apartments, eight apartments with 52 rooms for HSLU students, and
commercial space for some 500 workplaces. Construction began on schedule in fall
2015, with occupancy planned for the second half of 2017. The investment volume
amounts to some CHF 110 million. Long-term rental agreements have already been
concluded for 38% of the commercial space.Negotiations for further space are
progressing.The HSLU's choice of location will allow Zug Estates to proceed with
the integrated planning of the western section of the Suurstoffi plot on which
the final site of the Lucerne University of Applied Sciences and Arts is to be
constructed by 2019, and make a start on the necessary adaptation of the
development plan in cooperation with the local municipality. The draft
development plan envisages a substantially higher plot ratio as well as
additional residential space. It was drawn up on the basis of a professional
urban planning variant study and, following a preliminary evaluation by the
Canton of Zug, is to be put to voters in Risch for approval in fall 2016. In
tandem with work on adapting the development plan, designs for the new building
were invited by public competition, the results of which will be announced in
spring 2016.In addition, the decision was taken to construct a 70-meter
residential tower block in the center of the Suurstoffi site. About 90
condominium properties and approx. 2 500 m2 of office and commercial space are
planned. The study process has been completed and the planning application is
due to be submitted in spring 2016. Construction is timetabled to start in fall
2016, with occupancy scheduled for winter 2018/19.Moreover, continuing demand
for office space at the Suurstoffi site prompted the decision by Zug Estates to
begin planning an office building for 600 workplaces. The building is being
planned with a composite masonry-and-timberwork design and at 36 meters high on
completion, it will be Switzerland's tallest wooden building.The negative
outcome of the vote taken on the Zug city tunnel in a local referendum clarified
the position on an important precondition for the future development of the Zug
City Center site. The circumstances are now in place to initiate a master plan
to tap into the enormous potential of the center of Zug.

Business hotel segment robust

Hotelbusiness Zug AG defended its market leadership of Zug's business hotel
segment in 2015. Occupancy rates at its establishments rose slightly, with room
prices remaining almost unchanged, while accommodation revenue was stable at CHF
11.2 million. Overall revenue for the business area was 3.9% lower at CHF 19.8
million, and the GOP (Gross Operating Profit) margin improved from 36.5% to
37.9%.


Outlook for 2016

Zug Estates is cautiously optimistic about the future. Overall, it expects
operating income before depreciation and revaluation to match the previous
year's level. On the strength of the apartments completed in 2015, the newly
concluded rental agreements, and declining vacancies, the Zug Estates Group
anticipates higher rental income in the real estate segment. Careful
preparations for the imminent, major growth drive will result in higher costs.

Owing to the absence of revenue from the Theater Casino Zug, catering income in
the hotel & catering business unit is expected to be around CHF 2.0 million
lower than in the previous year. Thanks to the focus on the segment's core
business, however, Zug Estates anticipates a further rise in profitability.

Continuing demand for property investment means the Zug Estates Group can expect
to generate income from the revaluation of investment properties (net) in 2016
as well, but it is predicting a year-on-year decline. The development of the
Suurstoffi site will remain a key priority. Construction of the third phase
(investment volume: approx. CHF 110 million) is progressing on schedule. At the
same time, planning work continues for the further development of the western
section of the plot (investment volume: more than CHF 100 million), for the
Suurstoffi 22 office building, and for the residential tower block.

End of ad hoc announcement

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Additional features:

Document:http://n.eqs.com/c/fncls.ssp?u=PAQWMCDDKJ
Document title: Successful 2015 financial year for Zug Estates

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11.03.2016 News transmitted by EQS Schweiz AG. www.eqs.com - news archive:
http://switzerland.eqs.com/de/News

The issuer is responsible for the contents of the release.
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Information and Explanation of the Issuer to this News:


The Zug Estates Group conceives, develops, markets and manages properties in the
Zug region. It focuses on centrally located sites suitable for a wide range of
uses and with potential for sustainable development. A large part of the real
estate portfolio is located at two sites in Zug and Risch Rotkreuz and is
broadly diversified by type of use. The Group also runs a city resort in Zug
incorporating the two leading business hotels Parkhotel Zug and City Garden,
augmented by a range of restaurant outlets. As at December 31, 2015, the total
portfolio value was CHF 1.2 billion.

Zug Estates Holding AG is listed on the SIX Swiss Exchange, Zurich, (ticker
symbol: ZUGN; securities number: 14 805 212).


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Language: English

Company:  Zug Estates Holding AG

          Industriestrasse 12

          6300  Zug

          Switzerland

Phone:    +41 41 729 10 10

E-mail:ir@zugestates.ch

Internet: www.zugestates.ch

ISIN:     CH0148052126, CH0148052118

Valor:    A1J0M6

Listed:   Regulated Unofficial Market in Stuttgart; Open Market in Frankfurt ;
SIX


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