Zug Estates is a real estate group in the Swiss cantonal capital of Zug. Zug Estates has existed as an independent company since 2012. Real estate investments in the area of the city of Zug form the core business, and the company deliberately focuses on the region. The total value of the property portfolio currently (as of mid-2019) amounts to around CHF 1.61 billion – making Zug Estates one of the 100 largest Swiss property investors and one of the 100 largest Swiss property developers.
Zug Estates was created by spinning off the real estate division of Metall Zug AG. Metall Zug is a Swiss industrial group in the field of apparatus, equipment and mechanical engineering. In 2012 the group’s real estate portfolio was bundled under the umbrella of Zug Estates Holding AG. Its shares were floated on the stock exchange in the same year. It was hoped that the split-up would result in a clearer profile and increased investor interest. The separation of industrial and real estate activities was intended to create tangible added value. We present Zug Estates in detail in its current form.
Listed Swiss real estate company with family majority
Despite the stock exchange listing, 66 percent of Zug Estates voting rights are still in the hands of the Buhofer family of entrepreneurs, who also control Metall Zug AG. This is, in effect, a family business and Zug Estates Holding AG is the parent company of the group. It includes the two wholly owned subsidiaries Zug Estates AG and Hotelbusiness Zug AG. Zug Estates AG in turn has a 72.25 per cent share in the Metalli co-owners’ association.
The real estate portfolio is largely spread over two areas: the central area in Zug with the Metalli complex at its heart, and the Suurstoffi area in Risch Rotkreuz, a community opposite Zug on the west bank of Lake Zug. In terms of value, the two sites together account for around 99 percent of the real estate portfolio in roughly equal proportions. Both sites are briefly presented below:
- Centre area/Metalli: this area comprises an area of almost 59,000 sqm in the vicinity of Zug railway station with a total of 13 properties. The market value (as of mid-2019) is a good CHF 816 million. The Metalli area consists of a complex with six properties. These are mainly commercial and office premises. However, a residential complex and a hotel are also located here. The second part of the site, to the north-east, consists mainly of residential buildings in the form of multi-storey residential buildings and housing complexes of various ages. There is also another large hotel and an apartment building here. In total, the area offers jobs for 2,000 people and living space for around 700 residents. The total sales area amounts to 16,000 sqm. There are also infrastructure facilities (health service, child care, education and training, youth culture). Both hotels on the site are operated by the subsidiary Hotelbusiness Zug AG.
- Suurstoffi: the Suurstoffi area is not yet a fully completed development in the western part of the municipality of Risch Rotkreuz. The most important part of the quarter is the Zug-Rotkreuz campus of the Lucerne University of Applied Sciences and Arts. The Department of Computer Science and the Institute for Financial Services Zug IFZ of the Department of Economics are located here. The development of the quarter by Zug Estates was already started in 2010. In the final stage the quarter will offer space for 2000 students, 1,500 residents and 2,500 jobs. A total of 11 properties are located on an area of around 105,000 sqm, most of which have already been built. In addition to buildings of the Campus Lucerne University of Applied Sciences and Arts, the properties include residential complexes, mixed-use buildings and office buildings. The “highlight” of the quarter is the 21-storey residential tower Aglaya – a green high-rise with offices and conference rooms on the first four floors.
Real estate strategy of Zug Estates
Zug Estates sees real estate investments as being related to the entire life cycle of a property. The aim is to design, develop, construct, manage and secure the value of the real estate in the portfolio under their own management. Development concepts should be sustainable and resource-saving. In its investment policy, Zug Estates follows the following principles:
- In addition to the management and administration of the existing property portfolio, further investments are to be made and projects developed. The aim is to increase the company’s own property assets, and the additional properties are to be held in the portfolio over the long term;
- Geographically, new acquisitions on a Zurich – Zug – Lucerne axis are preferred. It is also possible to make purchases outside of these areas if they offer interesting prospects. However, investments are only made in Switzerland;
- The aim is to achieve broad diversification (residential, service and retail properties, hotel and commercial buildings, car parks).
Financially solidly positioned
At Zug Estates, the emphasis is on solid financing. The proportion of borrowed capital in the balance sheet should not exceed 40 percent, and the investment should be predominantly self-financed. Some of the net profits generated are to be reinvested, and organic growth is the goal. Distributions will not be neglected. The aim is to achieve a balanced ratio between retained earnings and distributions with payout ratios of up to 50 percent.
Picture source: Peter Wormstetter
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