Solid operating results in a challenging market environment

Zug Estates Holding AG / Key word(s): Half Year Results/Real Estate Solid operating results in a challenging market environment 25-Aug-2023 / 06:30 CET/CEST Release of an ad hoc announcement pursuant to Art. 53 LR The issuer is solely responsible for the content of this announcement. Ad hoc announcement pursuant to Art. 53 LR  Zug, 25 August 2023

• Net income excluding revaluation and special effects up 7.4% to CHF 18.0 million (previous year: CHF 16.8 million)
• Increase in property income of 7.7% during first half of 2023
• Solid equity ratio of 54.0% (55.2% as at 31 December 2022)
• Portfolio value almost unchanged at CHF 1.83 billion thanks to acquisitions made
• Due to renovation work, the vacancy rate rose to 3.3% as at 30 June 2023 (1.6% as at 31 December 2022)
• Greenhouse gas emissions were significantly below the sector average at 0.9 kg CO_2eq per m² of the energy reference area

The changed interest rate and market environment are affecting the Swiss real estate market. On the one hand, higher interest rates are leading to higher financing costs and increased discount rates, which in turn are putting downward pressure on property values. On the other, the indexation of commercial leases and the increase in the benchmark interest rate are resulting in higher rental income, thereby underpinning the values and ensuring that real estate remains an attractive investment class. Additionally, the scarcity of supply in a few individual use categories, including in the residential segment and office space in prime locations, for example, mean that demand still remains good.

Zug Estates generated solid operating results in this market environment. Thanks to a portfolio that is broadly diversified in terms of use, the focus on attractive, well-developed locations and a very solid equity base, Zug Estates is poised to tackle the challenges presented by the changed market environment. Property income rose in the first half of 2023. Alongside this, the hotel & catering segment continued its recovery in the last half, leading to a gratifying result in this segment.