Zug Estates Group presents pleasing operating result

Zug Estates Holding AG / Key word(s): Annual Results/Real Estate
Zug Estates Group presents pleasing operating result

21-Feb-2024 / 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, 21 February 2024

Pleasing operating result for Zug Estates Group thanks to numerous rental
successes, increased rental income and repositioning of Garden Park Zug AG.

  * Net income excluding revaluation and special effects of CHF 33.9 million
    was slightly higher than the previous year's figure (CHF 33.8 million)

  * Rental income increased by 5.5% from CHF 62.2 million to CHF 65.7
    million

  * The decision to proceed with the S43/45 construction project at the
    Suurstoffi site in Rotkreuz represents an investment of around CHF 85
    million

  * Hotelbusiness Zug AG was successfully renamed Garden Park Zug AG with a
    simultaneous repositioning of the hotel & catering segment

  * The board of directors will propose to the general meeting of
    shareholders that the ordinary dividend per series B registered share be
    increased by 7.3% to CHF 44.00 (previous year: CHF 41.00)

  * In the 2024 financial year, a significant reduction in the vacancy rate
    to around 1% and an increase in net income excluding revaluation and
    special effects to over CHF 35 million are expected

2023 was characterised by a changed backdrop interest rate and market
environment, on the one hand, and an increasing supply shortage in some
segments of the real estate market, on the other. The rise in interest rates
compared with the previous year led to higher financing costs and an
increase in discount rates. The resulting downward pressure on real estate
values detracted from increased property income.

Zug Estates benefited from brisk demand for attractive, well-connected
rentable space and achieved numerous rental successes. The hotel & catering
segment showed an encouraging trend, while the refurbishment of the ground
floor of the Park Hotel Zug (formerly known as Hotelbusiness Zug AG) was
successfully completed with the opening of the new aígu restaurant and
repositioning of Garden Park Zug AG.

Net income excluding revaluation and special effects amounted to CHF 33.9
million in the 2023 financial year, representing a slight increase of CHF
0.1 million or 0.2% compared with the previous year's figure of CHF 33.8
million. Net income was 39.2% or CHF 15.6 million lower at CHF 24.2 million
(previous year: CHF 39.8 million), the decline being attributable to a
negative revaluation result caused by overall market factors.

Encouraging increase in property income and operating result
Property income of the Zug Estates Group rose by CHF 3.5 million or 5.5%,
from CHF 62.2 million to CHF 65.7 million in 2023. Improvements to the
bottom line were achieved as a result of the full year impact of the Renggli
Group acquired in the previous year, the purchase of an additional 3.5% of
MEG Metalli in 2023, as well as index and reference interest rate
adjustments. Adjusted for changes to the portfolio (like-for-like basis),
rental income was up CHF 0.9 million or 1.5%.

Despite the temporary loss of income due to the repositioning, hotel &
catering income rose from CHF 14.7 million in the previous year to CHF 15.2
million, a year-on-year increase of CHF 0.5 million or 3.5%. Income from
accommodation continued to pick up and was actually slightly above the level
prior to the outbreak of the COVID-19 pandemic. The repositioning of the
aígu and Bären restaurants caused a temporary fall in catering turnover in
2023. Thanks to careful coordination of the building work, hotel operations
were only marginally affected and gross operating profit (GOP) remained on a
par with the previous year's level at 37.8% (2022: 37.9%).

Operating income of the entire group increased by CHF 4.7 million or 5.8%,
from CHF 80.1 million to CHF 84.8 million.

Expansion of the portfolio caused property expenses to rise from CHF 7.8
million to CHF 8.2 million - an increase of CHF 0.4 million or 4.9%.

The operating result before depreciation and revaluation rose by 5.1% or CHF
2.5 million, from CHF 49.7 million to CHF 52.2 million.

The higher interest rates and a more hesitant transaction market in overall
terms led to a rise in discount rates. The net revaluation figure was
correspondingly negative at CHF 11.0 million, as against a revaluation gain
of CHF 6.8 million in the prior year.

Due to the revaluation effects mentioned, EBIT was down by CHF 15.4 million
or 28.9%, from CHF 53.0 million to CHF 37.6 million.

Both the acquisitions concluded and higher interest rates on short-term
interest-bearing debt resulted in a decrease in the net financial result of
CHF 2.4 million or 30.9% to CHF 10.2 million (previous year: CHF 7.8
million)
.
Value of portfolio falls slightly due to negative net revaluation figure
Acquisitions and investments for the portfolio amounted to CHF 28.3 million
in the 2023 financial year (previous year: CHF 123.2 million). The bulk of
this - CHF 19.4 million - was incurred in the first half of 2023 as a result
of the acquisition of another 3.5% co-ownership share in
Miteigentümergemeinschaft (MEG) Metalli. This increased the company's
co-ownership share of MEG Metalli to 78.75%. The Duggelistrasse 28 property
in Cham was sold in the second half of 2023 at its current book value of CHF
4.5 million.

In early December 2023, Zug Estates Ltd merged its two existing office sites
in Zug and Rotkreuz and moved into its new premises at the Metalli site. The
Industriestrasse 12 property was therefore reclassified from operating
properties to investment properties as at 31 December 2023. At the same
time, the Bären property - which is in the course of being renovated - was
reclassified from operating properties to investment properties under
construction following the conclusion of a lease agreement with Tibits Ltd.

The market value of the property as a whole fell by a marginal 0.2% or CHF
2.9 million and still amounts to CHF 1.83 billion. The slight reduction in
market value is attributable to a negative net revaluation result of CHF
11.0 million, which stems from an average increase in real discount rates of
15 basis points and represents around 0.6% of the portfolio value of all
investment properties.

Numerous rental successes in all segments will result in low vacancy rate in
2024
Zug Estates can look back on very successful rental activity in the 2023
financial year. Commercial leases for space totalling around 24'000m2 and
involving rental income of more than CHF 10.2 million p.a. were extended or
concluded. Most of the new contracts will only take effect in the first half
of 2024 and do not affect the vacancy rate as at the end of 2023. The rise
in the vacancy rate to 3.9% as at 31 December 2023 (previous year: 1.6%) is
primarily attributable to refurbishment work at the Metalli shopping mall,
which accounts for a share of 1.8%.

Agreements concluded in the 2023 financial year related to office and
education space in Zug and Rotkreuz as well as retail space at the Metalli
site. At the Suurstoffi site in Rotkreuz, new lease agreements for the S14
property covering around 2'600m2 were concluded with Lombardi SA Ingegneri
Consulenti and Pacojet International AG. In addition, on 1 January 2024 the
Canton of Zug took over the S6 property - which comprises around 4'500m2 -
for a fixed lease term of ten years, with plans to open a new cantonal
school.

At the Zug City Centre site, the lease with UBS AG for the Baarerstrasse 14a
property and leases for retail space totalling around 3'700m2 were extended
for five years. In addition, attractive brands were recruited for all newly
created rental units at the Metalli shopping mall following the renovation
of the former C&A and Zara spaces. LUSH, Maison Carat and Douglas opened
their outlets in autumn 2023. Lidl, doodah and lifestyle label PME Legend
are to follow suit in spring 2024.

At 6.5 years as at 31 December 2023 (previous year: 6.5 years), the weighted
average unexpired lease term (WAULT) was at a very high level for the
industry.

Opening of aígu restaurant and repositioning of Garden Park Zug AG
The ground floor of Park Hotel Zug was comprehensively refurbished between
June and October 2023. The outcome is the creation of aígu Restaurant & Bar
( www.restaurant-aigu.ch) - a new restaurant that blends Swiss cuisine with
the flair of southern France. Thanks to a spacious terrace and a new
conservatory, the restaurant, bar and conference area has been opened up and
made more inviting; it now has the space to host major events for up to 220
people.

The Bären property - a listed building - has been undergoing a complete
refurbishment since April 2023. Previously operated by Hotelbusiness Zug AG,
the restaurant has been taken over by Tibits Ltd, which - following
completion of the refurbishment work in June 2024 - is set to open its first
venue in Zug.

As part of the refocusing, Hotelbusiness Zug AG, which owns Park Hotel Zug
with the aígu Restaurant & Bar and City Garden Hotel, City Apartments and
Secret Garden Restaurant & Bar, has been renamed Garden Park Zug AG (
www.gardenpark.ch).

S43/45 project enters construction phase
To address the change in tenant requirements with regard to spatial quality
and flexibility of use, the S43/45 construction project involving the only
plot not yet developed at the Suurstoffi site was revised in the 2023
financial year. The application for modification was submitted to the Risch
Rotkreuz municipality in July 2023 and signed off in September 2023. The
project consists of two buildings with total office and education space of
around 14'400m2 as well as 1'100m2 of residential space for student living.

In view of the encouraging situation for rental properties at the Suurstoffi
site and across the Zug Estates portfolio, undiminished demand for
attractive, well-connected rental spaces as well as the positive market
outlook for the Zug region, the board of directors of Zug Estates Holding
Ltd decided to give the project the green light. Construction of the two
buildings, at an investment cost of around CHF 85 million, will take around
three-and-a-half years. Building work is due to start at the end of 2024,
with leased spaces likely to be handed over to future tenants from mid-2027.

Further development of Metalli Living Space not yet finalised
An initial review by the cantonal authorities of the development plans for
both the Metalli and Bergli sites was successfully concluded in the first
half of 2023. The plans were to have been submitted to the Greater Municipal
Council (GGR) of the City of Zug in October 2023. However, the process was
halted due to the "2000 homes for Zug's middle classes" city initiative,
which was approved by voters on 18 June 2023 and requires that at least 40%
of newly built residential space in all high-density areas be "affordable".

To ensure legal certainty with regard to implementation of the initiative,
the City of Zug commissioned a legal opinion, which was duly received in
early December 2023. Zug Estates is in close contact with the planning
department of the City of Zug in order to clarify the concrete impacts on
the development plans for both the Metalli and Bergli sites. A conclusive
assessment is not yet possible. However, it is clear that the financial
implications are not negligible. Against this backdrop, it is not yet known
whether - and if so to what extent - Zug Estates will pursue the two
development plans and therefore the Metalli Living Space project.

Comprehensive sustainability reporting
Zug Estates now publishes its sustainability report on the basis of GRI
Standards, in which it reports in detail on the objectives and achievements
of Zug Estates right across the ESG spectrum, in tandem with the annual
report. At the heart of the Zug Estates sustainability strategy is the
reduction in greenhouse gas emissions from the operation and construction of
properties as well as the creation and continuous development of
future-proof, versatile living spaces.

With 1.1 kg per m2 energy reference area (Scope 1 and 2), greenhouse gas
emissions from the operation of the entire real estate portfolio remain at a
very low level and are significantly below the industry average. The current
reduction pathway and latest assessment of consumption figures in relation
to energy and water can be found in the sustainability report, along with
extended reporting in relation to Scope 3 emissions. Furthermore, the report
provides information about past and current projects in the various thematic
areas being targeted by Zug Estates.

Equity ratio remains solid
Due to the purchase of further MEG Metalli shares, the equity ratio fell
slightly from 55.2% to a nevertheless still very solid 54.9%.

Interest-bearing debt, on the other hand, rose by CHF 13.8 million or 2.1%,
from CHF 660.5 million to CHF 674.2 million. Interest-bearing debt as a
percentage of total assets therefore amounted to 37.3% compared to 36.9% in
the previous year. A total of around CHF 150 million in short-term debt was
firmly secured with a medium maturity in the reporting period, resulting in
a slightly extended average residual maturity of 3.5 years (prior year: 3.4
years). Higher interest rates resulted in an average interest rate for the
period for interest-bearing debt of 1.5%, as against 1.3% in the prior year.

Dividend increase and change in dividend strategy
In line with the announced gradual increase in the dividend up to a maximum
of two-thirds of net operating income, the board of directors will propose
to the general meeting of shareholders that the dividend be increased by
7.3%, from CHF 4.10 to CHF 4.40 per series A registered share and from CHF
41.00 to CHF 44.00 per series B registered share.

The board of directors has decided to amend the dividend strategy in favour
of a more open formulation. Zug Estates continues to endeavour to ensure a
positive dividend trend. The distribution should ensure a solid, long-term
financing structure in the future too and not amount to more than 90% of
operating profit.

Outlook for 2024
Thanks to successful rental activity in the 2023 financial year as well as
rent increases due to index and reference interest rate adjustments, we
expect a significant reduction in the vacancy rate to around 1%, higher
rental income and an improvement in the operating result in 2024.

In the hotel & catering segment, we expect a rise in sales due to the
expanded catering offer. However, given the higher proportion of
comparatively low-margin catering revenues, we expect a slight decrease in
the GOP margin.

Taking into account slightly higher financing costs, we anticipate net
income excluding revaluation and special effects of around CHF 35 million
for the 2024 financial year.

Report on 21 February 2024
A media conference in German will be held today at 11:00 at Park Hotel Zug.
Patrik Stillhart (CEO) and Mirko Käppeli (CFO) will present the 2023 results
and then answer questions. The conference will be held in a hybrid format.
You can also follow it in a Zoom meeting. It will be possible to ask
questions online.

Please register for the conference via the link below. We look forward to
seeing you either in person or virtually.
https://zugestates.ch/en/stories/balance-sheet-press-conference-on-the-2023-annual-result

Downloads:

Press release (PDF)
Annual Report 2023 (PDF)
Sustainability Report 2023 (PDF)
https://zugestates.ch/en/downloads

Upcoming events:

     9 April 2024 | General meeting of shareholders
     22 August 2024 | Publication of half-year report 2024
     27 August 2024 | Sustainability forum

For further information, please contact:

     Patrik Stillhart, CEO    T +41 41 729 10 10, (1)ir@zugestates.ch
     Mirko Käppeli, CFO

1. mailto:ir@zugestates.ch
About Zug Estates
The Zug Estates Group conceives, develops, markets and manages properties in
the Zug region. It focuses on central sites that are suitable for a wide
range of uses and allow sustainable development. The real estate portfolio
is comprised mainly of the two sites in Zug and Risch Rotkreuz. The Group
also runs a city resort in Zug incorporating the leading business hotels
Park Hotel Zug and City Garden and a comprehensive range of restaurants. The
total value of the portfolio came to CHF 1.83 billion on 31 December 2023.
Zug Estates Holding AG is listed on the SIX Swiss Exchange, Zurich (ticker
symbol: ZUGN, security number: 14 805 212).

Zug Estates Holding AG | Baarerstrasse 18 | CH-6300 Zug | T +41 41 729 10 10
| www.zugestates.ch


---------------------------------------------------------------------------

End of Inside Information

---------------------------------------------------------------------------

   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:         SIX Swiss Exchange
   EQS News ID:    1841505

End of Announcement EQS News Service
---------------------------------------------------------------------------

1841505 21-Feb-2024 CET/CEST