Zug Estates Holding AG
Zug Estates Group achieves solid overall results
Zug Estates Holding AG / Key word(s): Annual Results/Real Estate Press release While Zug Estates succeeded in generating additional income in the real estate segment, the pandemic resulted in substantially lower sales in the hotel & catering segment.
The 2020 financial year was shaped by the impacts of the COVID-19 pandemic, even at Zug Estates. On the one hand, the company succeeded in substantially boosting its property income, as expected, and completed the Aglaya promotional project on schedule. On the other hand, many tenants were forced to close their businesses during the government-mandated lockdown. The fact that international business travel ground to nearly a complete halt caused sales in the hotel & catering segment to decline substantially. Net income of CHF 32.3 million was generated in the 2020 financial year as a result. This was CHF 43.7 million less than the CHF 76.0 million generated in the previous year, which not only included substantially positive revaluation effects but also several different special effects in the amount of CHF 21.3 million, such as gains on the sale of an investment property that was not in line with our strategy and a non-recurring positive tax effect from a reduction in the deferred tax rate. Despite further strengthening of the real estate segment, the negative trend in the hotel & catering segment resulted in lower year-over-year net income excluding revaluation and special effects of CHF 25.9 million (previous year: CHF 31.4 million). Increase in property income with a substantial decline in hotel and catering sales The effects mentioned above reduced operating income before depreciation and revaluation from CHF 53.4 million to CHF 49.6 million, a CHF 3.8 million decline. The average 7-basis-point reduction in the discount rate triggered by the markets is offset by more conservative overall estimates of market rents and the structural vacancy rate for retail space, as well as a one-time adjustment to the construction cost forecast for the completed construction site 1 development project. Overall, this resulted in a slightly negative revaluation result of CHF 2.2 million, which is equal to 0.1% of the corresponding portfolio value. There was a positive revaluation result of CHF 19.6 million in the previous year. EBIT subsequently declined from CHF 70.5 million to CHF 43.7 million (-38.0%). As announced, a substantial slowdown in construction activity meant that financing costs were capitalized at a lower rate, which caused financing costs to increase from CHF 5.6 million to CHF 7.2 million, even despite another reduction in the average interest rate. Tax expenditure amounted to CHF 4.3 million. A revision of the tax laws in the canton of Zug gave rise to a one-time release of deferred taxes in the amount of CHF 20.3 million and thus tax income of CHF 11.0 million. Investments raise value of portfolio to CHF 1.65 billion Vacancy rate higher due to completions Marketing successes despite the challenging environment Rental contracts for space totaling more than 5’700 m2 and rental income of more than CHF 2.6 million p. a. were renewed or extended during the year under review. While the contract extensions for the Suurstoffi site in Rotkreuz mainly related to office space, new contracts were signed with retail and catering tenants in the City Center site. One of these was a contract concluded with Familie Wiesner Gastronomie AG, which will open its second Miss Miu Korean-themed restaurant in the Metalli shopping area in summer/fall 2021. Project development with a focus on the Metalli Living Space After the City of Zug and Zug Estates presented the results of their joint planning process for the ‘Metalli Living Space’ in March 2020, the reference project based on that process as well as requests for changes to both development plans affected were prepared along with all relevant documents. Requests for changes to the development plans were submitted to the City of Zug in September 2020. The legally binding, modified development plans are expected to take effect in 2022/23. Nearing the goal of carbon-free operation of the entire portfolio When it comes to sustainability, Zug Estates sets high standards for other investments in its portfolio, as well. The installation of a carbon-neutral air conditioning system in the rooms of Parkhotel Zug was also completed on schedule in April 2020 and now enables guests to enjoy a considerably higher level of comfort. What’s more, customers visiting the Metalli shopping area have been able to take advantage of e-vehicle charging stations since early June. Two of the six stations are high-power, rapid charging stations, the very first to be installed in the City of Zug. Solid capital base Ordinary dividend raised and payment of a special dividend Outlook for 2021 Developments in the hotel & catering segment hinge largely on how the COVID-19 pandemic plays out and both sales and GOP are difficult to forecast in the current market environment. For the 2021 financial year, we expect operating income before depreciation and revaluation to be lower year over year due to the absence of the special effect from the sale of the Aglaya apartments. A definitive assessment of how this will impact net income excluding revaluation and special effects is not possible.
Report dated March 5, 2021 A virtual press conference will be held in German today at 11 a.m. At this time, Patrik Stillhart (CEO) and Mirko Käppeli (CFO) will present the 2020 annual results and follow up with a Q&A session. Please use the link below to register for the conference. We look forward to welcoming you. https://www.zugestates.ch/de/investor-relations/bilanzmedienkonferenz.html Downloads: Upcoming events:
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About Zug Estates: Zug Estates Holding AG | Industriestrasse 12 | CH-6300 Zug | T +41 41 729 10 10 | www.zugestates.ch End of ad hoc announcement
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