Zug Estates Holding AG

EQS-Adhoc: Zug Estates heading for further growth

EQS Group-Ad-hoc: Zug Estates Holding AG / Key word(s): Final Results
Zug Estates heading for further growth

10-March-2017 / 06:55 CET/CEST
Release of an ad hoc announcement pursuant to Art. 53 KR
The Zug Estates Group successfully consolidated the growth achieved in the past
few years. Net income excluding revaluation amounted to CHF 24.0 million, thus
remaining on a par with the prior-year figure. Despite a drop in revenue, the
margin was increased from 38.2% to 39.2%. Property income rose by 2.3% to
CHF 40.1 million. The vacancy rate was held at 1.8%, a record low level.
Development projects worth CHF 440 million are under construction or at the
planning stage, and will generate a substantial increase in income as of 2018. A
12.2% increase in the distribution to shareholders (to CHF 23.00 per series B
registered share) will be proposed to the general meeting.

The Zug Estates Group generated operating income of CHF 61.2 million in 2016,
representing a year-on-year decrease of 2.7%. Property income rose by 2.3% to
CHF 40.1 million despite the sale of two sizable properties in the previous
year. Like for-like, income from hotel and catering activities was down by CHF
2.6 million to 16.5 million, owing mainly to the absence of catering revenue
from the Theater Casino Zug following non-renewal of the lease at the end of
2015. The gross operating profit (GOP) of the hotel & catering business unit
rose from 37.9% to 41.5%. Additional income from ordinary business activities,
and other operating income were on a par with the previous year's level.
Operating expenses were 3.9% lower year-on-year. Operating income before
depreciation and revaluation decreased by 1.9% to CHF 38.4 million (previous
year: CHF 39.2 million).

In 2016, the Group invested a total of CHF 76.2 million in the further
development, expansion and consolidation of its sites, in particular Suurstoffi
in Risch Rotkreuz. In addition, the book value of investment properties
increased by CHF 28.1 million net following revaluation.

As a result of the fall in income from the revaluation of investment properties
(net), EBIT and net income were down on the previous year's figures at CHF 63.8
million and CHF 48.4 million respectively. Net income excluding revaluation
amounted to CHF 24.0 million (previous year: CHF 24.1 million), thus remaining
on par year-on-year. The corresponding margin was increased from 38.2% to 39.2%.

Total return per share at 15.8%
The Zug Estates share closed at CHF 1 653.00 on December 31, 2016, 14.4% higher
than at the beginning of the year. Factoring in the payout of CHF 20.50 per
series B registered share made in April 2016 from the reserves from capital
contributions and, as such, exempted from withholding tax, total return per
share came to 15.8% in the 2016 financial year (previous year: 17.6%).

Fair value of portfolio up by 8.5% to CHF 1.3 billion
The Group continued its growth strategy in 2016, investing CHF 76.2 million in
further developing, expanding and consolidating its portfolio. In addition,
expenses in the amount of CHF 16.9 million for the Aglaya promotional property
were reported.

The book value of the entire portfolio stood at CHF 1 211.0 million at the end
of the year, up 8.8% on the previous year. Properties used for operational
purposes are stated at cost less write-downs. The fair value of these properties
was CHF 116.0 million (previous year: CHF 113.7 million), with the fair value of
the entire portfolio thus amounting to CHF 1 290.5 million (previous year: CHF 1
188.9 million).

Equity ratio at 61.2%
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 774.5 million as at December 31, 2016, equivalent to a solid equity ratio of
61.2% (previous year: 60.8%).

Portfolio vacancy rate down to 1.8%
The main usable floor area at the Suurstoffi site is fully let. The Lucerne
University of Applied Sciences and Arts and catering supplier CreaBeck commenced
operations in the second half of 2016. A rental agreement for the remaining 1
000 m2of office space was concluded with a technology firm that will move in in
the first half of 2017. The only remaining vacant area is for pre-invested
sublevel parking spaces earmarked for further development.

The retail mix in the Zug City Center site has been enhanced by new brands,
including Rituals and The Butcher. In addition, rental agreements for over 1 000
m2of office and retail space were extended or renewed. This will generate higher
rental revenue in the retail segment in particular.

As at December 31, 2016 (reference date), the vacancy rate was 1.8%,
representing a decrease of 3.6 percentage points compared with last year's
figure of 5.4%.

Development projects worth CHF 440 million under construction or at planning
2016 was another year of intensive construction and development activity. The
project pipeline is bulging. Specific development projects worth a total of CHF
440 million are under construction or at the planning stage at the Suurstoffi
site. These projects will generate a substantial increase in income as of 2018.

The year under review saw some major marketing successes: long-term rental
agreements for service business space were concluded with car sharing provider
Mobility and biotechnology company Amgen. At the beginning of 2018, Mobility
will relocate with some 130 staff to a newbuild in the third development phase.
This means that long-term tenants have been found for 70% of the commercial
space in this development phase. In summer 2018, Amgen is scheduled to take up
occupancy in newbuild Suurstoffi 22, where the company will be renting around
one third of the space. A long-term agreement for the operation of student
housing units was concluded with Zurich-based youth housing network JUWO. JUWO
will take over the first 52 housing units in mid-2017, followed by a further 48
in 2019 at the latest.

In November 2016, Zug Estates began selling the 85 condominiums in the Aglaya
tower block. At the same time, this marked the successful launch of the online
housing configurator developed specifically for Zug Estates. As at end-2016, a
total of 22 apartments had been reserved. The initial notarizations took place
in early 2017.

Business hotel segment sees improvement in profitability
Hotelbusiness Zug AG maintained occupancy rates at its establishments virtually
at the previous year's level despite a slight increase in room prices, while
accommodation revenue was down CHF 0.3 million year-on-year at CHF 10.9 million.
Catering income decreased by CHF 2.3 million, due mainly to the absence of
revenue from the Theater Casino Zug following the decision at the end of 2015
not to extend the lease. Other revenue for the business area was stable at CHF
0.6 million, but overall income decreased to CHF 17.1 million (previous year:
CHF 19.8 million). The strategic focus on the core segment of business hotels
with catering facilities resulted in an improvement in the GOP (gross operating
profit) margin from 37.9% to 41.5%.

Events after the balance sheet date
In order to finance the further expansion of the portfolio, a CHF 100 million
0.7% bond with a term from 2017 to 2022 was issued on January 24, 2017.
Otherwise, no significant events occurred after the balance sheet date.

Outlook for 2017
On the strength of the space rented by Lucerne University of Applied Sciences
and Arts (taken to income over the full year) and the envisaged occupancy of
newbuilds under the third development phase at the Suurstoffi site in the second
half of the year, Zug Estates anticipates higher rental income in the real
estate segment. At the same time, costs will increase due both to the measures
taken in the previous year to strengthen the organizational structure as well as
to higher maintenance expenditure.

A consolidation of revenue and gross operating profit at the previous year's
level is predicted in the hotel & catering business unit. The rooms at the
Parkhotel Zug are to be renovated in the summer. 
Overall, Zug Estates expects operating income before depreciation and
revaluation to match the previous year's level. However, due to the predicted
slowdown in market momentum, the Group anticipates that income from the
revaluation of investment properties (net) will be down on the previous year,
and that this will similarly impact net income. We are expecting a year-on-year
increase in net income excluding income from revaluation.

Prudent continued development of the Suurstoffi site will remain a priority. The
third development phase is scheduled for completion in the fall and will be
handed over to users in stages. Construction work on the Suurstoffi 22 office
building and the Aglaya residential tower block is progressing according to
plan, along with the development of the western section of the plot. In 2017,
Zug Estates is projecting a total investment volume of approximately CHF 150
million, including promotional property.

Proposals to the general meeting 2017
Net income excluding income from revaluation, which is relevant for the payout
to shareholders, amounted to CHF 48.73 per series B registered share (previous
year: CHF 48.97). The solid result and intact future prospects allow the board
of directors to propose that the payout be increased by 12.2% to CHF 23.00 per
series B registered share. This is equivalent to a payout of 47.2%.

The election of Beat Schwab as chairman of the board of directors is to be
proposed to the general meeting on April 11, 2017. He will succeed Hannes Wüest,
who is to step down from the board of directors for reasons of age.

Furthermore, Heinz Stübi will not stand for reelection. All other members will
stand for reelection. The board of directors will therefore reduce from seven to
five members.

Further information
Heinz M. Buhofer has notified Zug Estates of his intention to remain a member of
the board of directors only until the 2018 general meeting of shareholders.

Furthermore, he has proposed considering a voluntary offer for the conversion of
series A registered shares (voting shares) into listed series B registered
shares, provided that this still fulfills the Lex Koller restrictions and that
it enables a future-oriented successor solution from within the family. Subject
to these conditions being met, Heinz M. Buhofer would be prepared to convert his
stake in Zug Estates into series B registered shares either in part or in full
at the time of his departure from the board of directors.

Over the coming months, the board of directors of Zug Estates Holding AG will
consider the possibilities and conditions of a voluntary offer to convert
non-listed series A registered shares into listed series B registered shares,
and will be able to provide more details by the 2018 general meeting of

The detailed report on the financial year can be found on our website
www.zugestates.ch under
Investor Relations/Reports.

Ananalysts' and media conference (in German)will be taking place today at11:00
Rotkreuz. Hannes Wüest (Chairman), Tobias Achermann (CEO) and Gabriela Theus
(CFO) will be
presenting the results for 2016. If you wish to attend, please mail
ir@zugestates.ch (by 9:00 a.m.).

We will be holding awebcast in Englishat2:30 p.m. CET.  Following the
presentation, Tobias Achermann (CEO) and Gabriela Theus (CFO) will be available
to answer any questions. Registration is not necessary.
Dial in: +41 225 80 59 70 / Pin Code: 86485636#
The presentation can be viewed on our websitewww.zugestates.ch.

Upcoming events:
April 11, 2017 | General meeting of shareholders
April 19, 2017 | Cash distribution to shareholders (Payment Date)
September 1, 2017 | Publication of the 2017 half-year report

For further information, please contact:
Tobias Achermann, CEO,tobias.achermann@zugestates.ch, T +41 41 729 10 10
Gabriela Theus, CFO,gabriela.theus@zugestates.ch, T +41 41 729 10 10

About Zug Estates 
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, 2016, the total
portfolio value was CHF 1.3 bn.
Zug Estates Holding AG is listed on the SIX Swiss Exchange, Zurich, (ticker
symbol: ZUGN; securities number: 14 805 212).
End of ad hoc announcement------------------------------------------------------

Language: English

Company:  Zug Estates Holding AG

          Industriestrasse 12

          6300 Zug


Phone:    +41 41 729 10 10


Internet: www.zugestates.ch

ISIN:     CH0148052126, CH0148052118

Valor:    A1J0M6

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


End of Announcement EQS Group News Service


552719  10-March-2017 CET/CEST

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