Press Release. Züblin concentrates on Germany and France. Zurich, 15 May 2014

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1 Press Release Zurich, 15 May 2014 Züblin concentrates on Germany and France Züblin ended the financial year 2013/2014 with another substantial loss of CHF 64 million (2012/2013: loss of CHF 89 million). The sale of the non-strategic properties in Germany and the Netherlands has made further progress, but a further write-down in market values by CHF 41 million was required. The Board of Directors approved the sale of three strategic properties in Switzerland and one in France, so securing the high valuations of these properties. The funds raised were used to pay down debt. At its meeting on 9 April 2014 the Board of Directors also decided to sell the remaining Swiss portfolio. This decision has been taken to secure the high valuations of the Swiss properties and in view of the upcoming repayment of the bond issue. As a result Züblin will concentrate on its strategic portfolios in Germany and France. Operating result in line with expectations In the last financial year the performance of the Züblin Group was again dominated by the major renovation projects in Paris and Berne and the divestment of non-strategic properties. As a result rental income decreased by 23% to CHF 42 million in the financial year 2013/2014. As expected, a loss of CHF 10 million was recorded at the operating level. Four strategic properties sold Four strategic properties were sold during the reporting period for a total of CHF 216 million. Overall these sales generated a profit of CHF 11 million. In Switzerland Züblin benefited from the buoyant market conditions and successfully sold the property in Zollikofen and two properties in Zurich. The property in Lyon was also sold at a profit. Progress in the sale of the non-strategic portfolio At the beginning of the financial year the non-strategic portfolio comprised 25 properties with a total value of CHF 145 million. Of this portfolio, eight properties were sold in the Netherlands and seven in Germany. The value of the non-strategic portfolio had to be written down by a further CHF 41 million during the financial year as a result of disposals and valuation adjustments. The German portfolio accounted for CHF 17 million of this adjustment, mainly due to the bankruptcy of Praktiker, and the Dutch properties for CHF 24 Page 1

2 million, with the Dutch market still showing no signs of improvement. At the end of the financial year there remain ten non-strategic properties up for sale, five in the Netherlands and five in Germany. The total value of these non-strategic properties to be sold amounted to CHF 41 million at the end of the financial year. Renovation work completed Züblin was able to complete all the renovation projects. The Company again invested in the future by investing a further CHF 53 million in the sustainability of its properties in the last financial year. "Newtime" and "Imagine" in Paris and "Arco West" in Berne are now being marketed for letting. Portfolio value at CHF 791 million The overall value of Züblin's portfolio was CHF 791 million as of 31 March 2014, compared with a value of CHF 1,065 million one year ago. France accounts for 50% of the portfolio, Switzerland for 24% and the strategic part of Germany 21%. The non-strategic portfolio now only represents 5% of the portfolio, down from 14% on 31 March In addition to the realized and unrealized value adjustments of CHF 41 million in the nonstrategic portfolio the changed market conditions in France led to a downward revaluation of property values by CHF 7 million, while values in Switzerland and Germany remained stable. Interest rate swap transactions derecognized through the income statement As a result of the property sales carried out in the reporting year and the planned sales, adjustments again had to be made to our interest rate swap portfolio, as in the previous year. The valuation differences of CHF 16 million (prior year: CHF 11 million), which were previously recognized in equity, were derecognized through the income statement. This has no impact on cash flow or the Company's equity as the interest rate swaps will be held to maturity and the negative value was already recognized in equity. Impact on key financial ratios The factors listed above led to a net loss of CHF 64 million in the financial year 2013/2014 (previous year: loss of CHF 89 million). Basic NAV per share was CHF 3.03 at 31 March 2014 (CHF 3.59), while EPRA NAV per share was CHF 3.62 (CHF 4.57). Based on the share price of CHF 1.96 on 31 March 2014, this represents a discount to intrinsic value of 35% (Basic NAV) and 46% (EPRA NAV). The loan-to-value ratio has continued to improve as planned and fell to 61.3% at 31 March 2014 compared to 65.7% one year ago. The vacancy rate rose from 10.5% to 42.9% after the inclusion of all properties under renovation. Page 2

3 Sale of Swiss properties planned The Board of Directors of Züblin Immobilien Holding AG decided at its meeting on 9 April 2014 to focus its portfolio on Germany and France and to sell the Swiss properties. As a result the Company intends to make an offer to the bondholders of the 4% bond maturing on 20 July 2015 for the early redemption of their bonds, probably in the second half of Cost reduction - Organization restructured The Board of Directors and Group Management have come to the conclusion that the greatly reduced portfolio and lower rental income mean that a reduction in the Group's operating costs is now necessary. The Company is aiming to achieve savings of CHF 3 million annually. Some of these savings have already been realised in the reporting period. In view of this objective and the Company's decentralized management structure CEO Bruno Schefer proposed to the Board of Directors that he would reduce his level of engagement for Züblin to 50% from 1 January 2014, with corresponding adjustments to his employment contract as regards salary and notice period. The Board of Directors welcomed and accepted this proposal. Outlook The economic environment remains fragile, as it continues to be beset by a range of uncertainties. In this situation the Board of Directors has decided to increase its financial leeway. The Company wants to take advantage of the continued robust property market in Switzerland and sell the Swiss portfolio. Alongside these sales the focus for the next year is on concluding the disposal programme for the non-strategic properties, letting the properties in Paris and the implementation of the cost-cutting programme. Annual report / Results presentation The annual report of the Züblin Group is available online at The results presentation can also be accessed on the website. For more information Bruno Schefer, CEO, Züblin Immobilien Holding AG, Claridenstrasse 20, CH-8002 Zurich. Tel , bruno.schefer@zueblin.ch. Further information is available at Brief portrait of the Züblin Group The Züblin Group invests in energy-efficient office properties in prime locations. Züblin's core markets are Switzerland, France and Germany. Within these countries, the Company concentrates its investments on a few selected cities. The portfolio comprises 32 properties with a market value of CHF 791 million as of 31 March Page 3

4 On 10 April 2014, Züblin informed to sell the remaining Swiss properties. This will allow the Company to exploit the current level of high demand for commercial properties in Switzerland. Further acquisitions in Switzerland will depend on the long-term strategy of Züblin. Page 4

5 Key figures Financial year 2013/2014 in million CHF to to Income statement Rental income Change in market value of investment properties EBITDA Earnings EPRA Return on equity -24.1% -26.9% Balance sheet Investment properties 791 1'065 Equity Equity Ratio 26.6% 23.1% EPRA Equity EPRA Equity ratio 31.5% 29.1% Mortgages Loan to Value 61.3% 65.7% Key figures per share in CHF Earnings of shareholders EPRA NAV per share NAV per share Share price Portfolio Annualized adjusted contracted rent 1) EPRA Net Initial Yield (NIY) 2.1% 5.2% Average interest rate 4.1% 4.4% Vacancy rate monetary 1) 42.9% 10.5% 1) Excluding renovation projects previous year Page 5