Ad hoc press release pursuant to article 53 Listing Rules
Zug, 27 August 2021

• Net income excluding revaluation and special effects increases 29.6% to CHF 15.4 million (previous year: CHF 11.9 million)
• Net income amounts to CHF 32.7 million (previous year: CHF 8.3 million)
• Property income up 5.6% during first half of year
• The portfolio's market value rose 1.0% to CHF 1.67 billion
• We expect net income excluding revaluation and special effects for the financial year as a whole to be higher year-on-year

Zug Estates generated extremely solid overall results in the first half of 2021. The impact of the COVID-19 pandemic is still clearly evident in the hotel & catering segment.

The first half of 2021 continued to be influenced by the impact of the COVID-19 pandemic. The next government-imposed lockdown forced a great many of our catering and retail tenants to temporarily close their businesses. In the hotel & catering segment, the mandated closures of catering services as well as the substantial decline in international business travel caused sales to plummet.

Fortunately, this lockdown was less restrictive than it had been in the previous year. Our tenants additionally benefited from ongoing government support measures. Property income rose further, especially as a result of rent increases from rental agreements that had been concluded in previous years. The first half of the year also featured the successful sale of the property at Hofstrasse 1a/b in Zug.

Net income was up CHF 24.4 million to CHF 32.7 million in the first half of 2021, mainly as a result of sales and revaluation effects. After adjustment for revaluation and special effects, net profit rose 29.6%, from CHF 11.9 million to CHF 15.4 million.

Increase in net income as a result of higher property income
The full-period effect of and rent increases from rental agreements that had largely been concluded in previous years as well as the minor nature of the negative effects of the COVID-19 pandemic resulted in a 5.6% increase in property income of CHF 29.8 million (previous year: CHF 28.2 million).

Restrictions in international business travel as well as the catering industry's second lockdown caused income generated by the hotel & catering segment to decline by CHF 1.0 million, from CHF 3.6 million to CHF 2.6 million. Robust demand for our serviced city apartments as well as strict cost management caused gross operating profit (GOP) to increase slightly to 8.1% (previous year: 7.8%). In addition, the economic losses were mitigated somewhat by the one-off payment of a non-returnable COVID-19 grant in the amount of CHF 2.1 million.

The sale of the last property outside our two sites resulted in a gain on sale before tax of CHF 7.3 million. No investment properties had been sold in the previous year. The sale of the last condominium apartments in the Aglaya project in Rotkreuz, however, resulted in a promotional profit before tax of CHF 9.5 million in the first half of 2020.

As expected, operating revenue declined from CHF 105.4 million to CHF 36.1 million due to the absence of revenue generated through the sale of promotional properties.

A lower level of borrowing costs eligible for capitalisation led to a slightly higher negative financial result of CHF 3.7 million (previous year: CHF 3.5 million) with the average interest rate on interest-bearing debt unchanged at 1.3%.

Portfolio value up slightly at a somewhat lower vacancy rate
The portfolio's market value rose slightly to CHF 1.67 billion as at 30 June 2021 (31 December 2020: CHF 1.65 billion). The real estate portfolio's valuation was raised by a total of CHF 12.3 million, which corresponds to approximately 0.8% of the value of all investment properties in the portfolio as at 30 June 2021; this increase is largely attributable to the reduction in the discount rates. There was a revaluation loss of CHF 13.6 million in the prior-year period.

Last year's completion of building S6 on the Suurstoffi site caused the vacancy rate to increase to 5.0% as at 31 December 2020. The vacancy rate as at 30 June 2021 remained nearly unchanged at 4.8%, which is primarily attributable to initial vacancies in the Suurstoffi building. After adjustment for initial vacancies, the vacancy rate declined from 1.5% as at 31 December 2020 to 1.3% as at 30 June 2021. The weighted average unexpired lease term (WAULT) of 6.5 years (6.8 years as at 31 December 2020) came to rest at a very high level for the industry.

Demand for both residential products as well as the retail and catering spaces in our portfolio remains high. The first half of 2021 saw new leases concluded with Orell Füssli Thalia AG and McOptic (Switzerland) AG for retail space at the Metalli complex, for example, as well as a new lease for space at the Suurstoffi site, which will be used for a catering business. We are seeing a certain amount of restraint with respect to office space, particularly when it comes to leases for large office facilities. Lease extensions or new leases were signed for a total of around 1'500 m² in office space during the period under review. Additionally, Novartis Pharma Schweiz AG opted to remain at the Rotkreuz location long term and signed a lease renewal agreement for a smaller office space of around 4'800 m² and a term that extends until at least 31 December 2027. The remaining office space of 3'700 m² will become vacant at the start of 2023 and has a very high-quality fit-out.

Solid equity ratio
Due to the substantial decline in investment activities, interest-bearing debt dropped from CHF 591.8 million to CHF 581.4 million during the first half of 2021. Accordingly, the equity ratio rose slightly from 56.3% to 56.7%, which is a very solid number for the industry. The debt has an average maturity of 3.9 years (4.3 years as at 31 December 2020).

Project development with a focus on the Metalli Living Space
The reference project was prepared in 2020 based on the results of the planning process for the Metalli Living Space conducted jointly with the City of Zug. Requests for changes to the development plans for both Metalli and Bergli were submitted to the City of Zug in September 2020. The City of Zug is currently drafting the development plans. At the same time and in view of the upcoming architectural competitions, Zug Estates is taking a more in-depth look at the positioning and design of the planned use categories and building parts. The legally binding, modified development plans are expected to take effect in 2023.

One major aspect of the Metalli Living Space development project is to breathe life into the City Center site. The goal is to preserve the tried-and-true elements of the space while also creating space for many new ones. New uses and concepts are already being implemented in line with this basic idea. From May to October 2021, the Secret Garden pop-up restaurant will add new life to the catering spaces in the City Garden, while the Miss Miu Korean-themed restaurant in the Metalli complex opened its doors in August 2021 and the ZugSPORTS festival was also held in August.

Work on the construction project for the last two buildings (S43/45) on the Suurstoffi site in Rotkreuz has been stepped up in the past few months. The project has already been approved for construction. Once all planning work has been finished, the decision about when to start construction will be reached taking demand and current market trends into consideration.

Systematic implementation of the sustainability strategy
Following the Metalli complex's connection to the Circulago lake water district in 2020, another nine properties in the City Center will be connected this year. This structural measure will put Zug Estates one major step closer to its goal of carbon-free operation of the entire portfolio. Given that the remaining properties are scheduled to be connected in 2022 and 2023, nearly carbon-free operation of the entire portfolio is within reach.

Zug Estates' sustainability strategy not only focuses on reducing carbon emissions and optimising its energy consumption, but also has the Group pursuing projects and goals related to materials, biodiversity and water. Apart from these environmental issues, the areas of social and corporate responsibility are also becoming increasingly important, which is why Zug Estates will be publishing its first sustainability report in accordance with GRI standards in September 2021.

Positive outlook for 2021
In the real estate business unit, we anticipate that rental revenue will increase for the year as a whole, an assessment we arrived at based on full-year rental income, some newly rented space and a reduction in the negative impact of the COVID-19 pandemic. Property expenses will be lower than in the previous year due to a reduction in the amount of renovation work performed at the Metalli site.

Despite the persistently high level of uncertainty regarding forecasts on the performance of the hotel & catering segment, the non-returnable COVID-19 grants already received suggest that both sales and GOP will be higher year-on-year.

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.

We expect net income excluding revaluation and special effects to be higher year-on-year.

Report from 27 August 2021
The detailed half-year report is available on our website:
https://www.zugestates.ch/en/mn/downloads.html

A video conference will be held in German at 10:30 a.m. today. CEO Patrik Stillhart and CFO Mirko Käppeli will present the half-year results 2021 and answer questions afterwards. The corresponding presentation will be available on our website as of 10:00 a.m.: https://www.zugestates.ch/en/mn/downloads.html

Please register for the conference using the link provided below. We look forward to your attendance. https://www.zugestates.ch/investor-relations/berichterstattung.html

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About Zug Estates
The Zug Estates Group conceives, develops, markets and manages properties in the Zug region. It focuses on central sites which are suitable for a wide range of uses and allow sustainable development. The real estate portfolio comprises the two sites in Zug and Risch Rotkreuz. The Group also runs a city resort in Zug incorporating the two leading business hotels Parkhotel Zug and City Garden and a comprehensive range of restaurants. The total value of the portfolio came to CHF 1.67 billion as at 30 Juni 2021.

Zug Estates Holding AG is listed on the SIX Swiss Exchange, Zurich, (ticker symbol: ZUGN; securities number: 14 805 212).

Zug Estates Holding AG | Industriestrasse 12 | CH-6300 Zug | T +41 41 729 10 10 | www.zugestates.ch