Real estate markets. UBS Alpine Property Focus A version of this report was originally published outside of the US in German on 23 May 2018.

Transcription

1 UBS Alpine Property Focus 2018 Chief Investment Office Americas, Wealth Management 22 May :12 pm BST Maciej Skoczek, CFA, Economist; Matthias Holzhey, Economist; Claudio Saputelli, Economist Prices for vacation homes in the Swiss Alpine region have recovered slightly However, the price trends lag those of the top destinations in Austria and France This report analyzes the most expensive vacation apartment markets in the Alpine region, using a wide selection of indicators to provide supporting data Second homes in Engadin/St Moritz most expensive As was the case last year, Engadin/St Moritz is the most expensive tourist destination in the Alpine region A good-quality vacation apartment in the area costs around CHF 15,000 per square meter This is around 7 percent more than in last year This is followed by Gstaad, where prices come in at a whopping CHF 14,500 per square meter, again higher than in 2017, although prices rose a more moderate 2 percent over the year The French resort of Courchevel, along with St Anton am Arlberg and Kitzbühel in Austria make up the remainder of the top-five spots for most expensive Alpine vacation destination where good-quality second homes fetch around CHF 13,000 per square meter Prices in these resorts rose by 4 to 7 percent in euro terms compared to the previous year Rising prices in Austria and France Average second home prices across all Alpine destinations increased by 15 percent compared to the previous year Prices climbed significantly in relative terms at Austrian and French destinations (5 percent and 3 percent, respectively) In Swiss resorts, prices rose by 1 percent on average compared to the previous year Of all the Alpine regions, only the top Italian destinations recorded a slight fall in prices Overall, prices in the Austrian Alps are almost 20 percent higher than in 2013, while in the French Alps they are up by around 15 percent In contrast, prices in Switzerland are down 4 percent from 2013, with Italy 10 percent lower Exchange rate and economy benefit Swiss vacation apartment market Over the past year, the euro appreciated by almost 10 percent against the Swiss franc This movement was a factor in the Eurozone Alpine destinations advancing in terms of price, in some cases substantially As a result, Swiss vacation apartments became relatively more attractive The strong economy also supports demand within Switzerland In 2018, we expect slightly rising prices for second homes in the Swiss Alpine region A version of this report was originally published outside of the US in German on 23 May 2018 Price overview of the destinations Bars show the bandwidth of the prices for vacation apartments in the upmarket segment, in thousands of Swiss francs per square meter CH FR AT 0 IT 5 10 Luxury market* Engadin/StMoritz Gstaad Courchevel St Anton am Arlberg Kitzbühel Verbier Val d'isère Méribel Lenzerheide Jungfrau Region Zermatt Cortina d'ampezzo Laax/Flims Davos/Klosters Megève Courmayeur Engelberg Andermatt/Sedrun Saas-Fee Adelboden/Lenk Chamonix Crans-Montana Scuol Arosa Villars-Gryon-Les D Samnaun Anniviers Val-d'Illiez Hasliberg Flumserberg Breil/Brigels/Obersaxen Wildhaus Nendaz/Veysonnaz Leysin-Les Mosses Aletsch-Arena Ovronnaz Anzère Evolène Disentis/Mustér Leukerbad Source: Wüest Partner, Callon, Nomisma, immiat, UBS *Locations with a high-end segment with no top limit to prices This report has been prepared by UBS Switzerland AG Please see important disclaimers and disclosures at the end of the document

2 Number of vacation apartments likely to continue growing If the supply of vacation apartments remains static, the prices of existing properties inevitably move in tandem with demand For vacation apartment owners, the legal framework appears to be advantageous at present This is because the Second Homes Act imposes tight limits on the new construction of second homes in Switzerland's tourist destinations The supply of new vacation apartments is nevertheless not likely to peter out quickly Grandfathered homes as a major reserve of second homes There is a large reserve of potential second homes as, under the Second Homes Act, grandfathered1 homes are not subject to any restriction on use In around two-thirds of destinations we have reviewed, however, their repurposing is restricted through local regulations Even before adoption of the Second Homes Initiative in 2012, most tourist-oriented municipalities (especially in the Canton of Grisons) controlled the housing market by means of first home quota plans, area quotas, incentive taxes or zoning regulations Nevertheless, in many regions, the proportion of usage-restricted grandfathered homes is below 10 percent Only in Oberengadin, where the municipalities introduced usage restrictions in the early 1980s, up to one-third of the grandfathered homes are registered as first home Shrinking population increases stock of second homes Around 80,000 homes (40 percent of the total stock) are used as a primary place of residence in vacation destinations If only one percent of these homes were converted into second homes per year, the stock of second homes would rise by 06 percent each year How many first homes actually come on the market as second homes depends on the population trends in the individual destinations If there is growing demand for first homes (for example in Lower Valais), a correspondingly smaller number of second homes will come to the market A comparison of building permits and population growth indicates an over-supply of first homes, and consequently a growth in the stock of second homes The specific repurposing of first homes into second homes by means of replacement buildings is not, however, in the spirit of the Second Homes Act If this option is exploited (for example by way of a legal loophole), further restrictions could follow at the municipal level The introduction of further restrictions is currently being discussed in some localities (eg in Davos and Zermatt) Low population growth favors conversion of first homes Population growth since 2006 and potential expansion of the stock of second homes through the conversion of grandfathered first homes, in percent Ovronnaz Leysin-Les Mosses Anzère Flims/Laax Nendaz/Veysonnaz Anniviers Engelberg Val-d'Illiez Crans-Montana Verbier Villars-Gryon-Les Diablerets Scuol Engadin/StMoritz Zermatt Flumserberg Evolène Hasliberg Gstaad Wildhaus Disentis/Mustér Jungfrau Region Breil/Brigels/Obersaxen Davos/Klosters Lenzerheide Adelboden/Lenk Saas-Fee Arosa Samnaun Aletsch-Arena Leukerbad Andermatt/Sedrun Population growth Conversion potential Relatively low Medium Relatively high Source: FSO, UBS 1 As defined in the Second Homes Act, grandfathered homes are all types of homes that legally existed or for which a legally valid construction permit had been granted as at March 11, 2012 Source: gettyimages 2

3 Hotel repurposing and homes managed for tourism with low impact Existing hotels are a further source of new second homes If it can be shown that a hotel can no longer be run profitably, parts of it may be sold as a second home or leased on a long-term basis However, this potential supply of second homes is small in most locations Homes managed for tourism purposes2 may continue to be established in municipalities with a high proportion of second homes Managed homes are sold with a restriction on use In these cases, the buyer acquires condominium ownership with future rental income, as the apartment must be permanently advertised for short-term rental The buyer may not furnish the apartment according to personal taste and may make personal use of it for not more than three weeks per high season For this reason, homes managed for tourism tend to be comparable with hotel investments and contribute only indirectly to the supply of second homes Letting only mildly attractive Over the past ten years, online portals have made it considerably easier to rent out vacation apartments, enabling owners to earn more income Above-average rental income can be found at locations with unique or exceptional tourist attractions/activities (such as Engelberg, Zermatt or the Jungfrau region), especially during the peak winter season However, vacation apartments seldom guarantee regular income over the course of the year; on average, only around one out of three properties is fully let over a full 12-month season In the low season, in particular, occupancy can fall to just 20 percent When leasing a vacation apartment through Airbnb, the average expected yield across all destinations after deducting leasing expenses is around 4 percent Yields vary considerably by between 1 to 2 percent in Gstaad and around 7 percent in Evolène Second homes are often not ideal investment properties Although attractive returns can be achieved depending on destination and season, the expected yield is lower and more volatile than the average found in the biggest Swiss cities Large bandwidth of rental yields Expected rental yields*, in percent; expected daily rental income** on an annual average, in CHF Evolène Engelberg Jungfrau Region Zermatt Hasliberg Aletsch-Arena Leukerbad Val-d'Illiez Breil/Brigels/Obers Anniviers Disentis/Mustér Arosa Leysin-Les Mosses Ovronnaz Villars-Gryon-Les D Samnaun Andermatt/Sedrun Adelboden/Lenk Wildhaus Nendaz/Veysonnaz Davos/Klosters Anzère Flims/Laax Scuol Verbier Crans-Montana Lenzerheide Saas-Fee Engadin/StMoritz Flumserberg Gstaad Yields (top axis) Daily rental income (bottom axis) Source: AirDNA, UBS *When letting a studio apartment with around 30 square meters of usable space ** The expected daily rental income is calculated based on the average price of a studio and the occupancy rate in the previous year 2 Tourist managed homes may be established in the form of accessory apartments, with the residents performing the role of host Managed homes may also be established as structured hotel-like businesses These offer apartments for shortterm letting, have minimal hotel infrastructure (reception) and offer hotel services (restaurants, cleaning, etc) 3

4 Leading vacation apartment markets in the Alpine region The table of leading vacation apartment markets focuses on destinations with a price per square meter of over CHF 8,000, sorted by price While extensive, the list does not capture all properties or locations within these parameters We also sort the list by market size and data availability Prices are expressed in Swiss francs (EUR/CHF exchange rate = 117); price changes, on the other hand, are in local currency Due to limitations on data availability, the analysis of rental prospects, population growth and supply restrictions are only carried out for destinations in Switzerland Source: Fotolia Top vacation apartment markets in the Alpine region Price category one: Price per square meter over 8,000 Swiss francs Prices Place vs Vacation destination Location characteristics Annual growth Level in CHF/m² 1yr 5yr* 10yr 1 Engadin/StMoritz Gstaad Market size Market outlook Accessibility Tourist facilities Occupancy Rental perspective Population growth Restrictive supply 3 +1 Courchevel St Anton am Arlberg Kitzbühel Verbier Val d'isère Méribel Lenzerheide Jungfrau Region Zermatt Cortina d'ampezzo Flims/Laax Davos/Klosters Megève Courmayeur Engelberg Andermatt/Sedrun Saas-Fee Adelboden/Lenk Chamonix-Mont-Blanc Crans-Montana Scuol Arosa * Austria and Italy: price growth over 4 years Well above average Above average Average Below average Well below average No data Source: UBS 4

5 Key results Prices The report shows the asking prices per square meter of living space (single-family homes and condominiums) of an upmarket standard for the respective location The data does not allow for any differentiation between use as a first or second home The rate that prices change is annualized and relates to the upmarket home ownership segment of the market Historical price data is readily available for Switzerland and France For Italy and Austria, the five-year growth rate was extrapolated using the four-year growth rate The five most expensive Alpine destinations showed rising real estate prices last year In Engadin/St Moritz, second homes rose about 7 percent, while in the leading Austrian vacation destinations of St Anton am Arlberg and Kitzbühel, and in the French resort of Courchevel, prices increased around 5 percent Overall, prices rose in all French destinations included in the study, while the Italian locations of Courmayeur and Cortina d'ampezzo saw a slight correction The picture was more diverse for the Swiss destinations The top Valais locations of Verbier and Crans-Montana suffered the sharpest price drop compared to the previous year (around 3 percent) Small price corrections of just under 2 percent were recorded in Arosa and Engelberg Properties in Saas-Fee and in the Jungfrau region showed strong price gains Price increases were more moderate in Flims/Laax, Andermatt, Zermatt and Davos/Klosters, while prices stagnated in Lenzerheide and Adelboden/Lenk Top vacation apartment markets in the Alpine region Source: UBS 5

6 Market size The number of existing second homes determines the size of the market The average market size for the regions in the top price category is 5,500 units The total number of vacation apartments varies between slightly more than 10,000 units in Crans-Montana or Davos/Klosters to less than 2,000 vacation apartments in St Anton am Arlberg With almost 9,000 properties, Chamonix and Engadin/St Moritz are among the biggest vacation apartment markets Accessibility This indicator measures travel times by both private and public transport to airports, airfields, regional centers and major metropolitan areas The trend towards shorter but more frequent vacations and weekend trips generally favors easily accessible destinations Proximity to regional centers makes it easier to rent out a second home to locals, while proximity to an airfield is important for demand in the luxury segment Thanks to their proximity to major centers and airports, Kitzbühel, Chamonix, Engelberg and Megève have optimum accessibility and can be easily accessed by public transport In contrast, Val d'isére and Zermatt are less accessible Tourist facilities This indicator measures the availability of ski slopes and supporting facilities, including cross-country ski routes It also includes a measure of the certainty of snow and takes into account visitor assessment of the resort The availability of summer activities (summer lift facilities, golf courses or proximity to a glacier) also has a positive influence on the indicator The same applies to the outstanding tourist attractions such as the Jungfraujoch, Matterhorn or the Aiguille du Midi The breadth and availability of tourist activities helps to categorize destinations, but it is not a compelling argument for, or against, buying a vacation apartment While some vacation apartment buyers appreciate a wide range of activities, others prefer quieter locations The indicator does not take into account the close proximity of some destinations, which can greatly expand the range and availability of tourist activities/ facilities 1 Crans-Montana 2 Davos/Klosters 3 Chamonix-Mont-Blanc 4 Engadin/St Moritz 5 Flims/Laax 1 Kitzbühel 2 Chamonix-Mont-Blanc 3 Engelberg 4 Megève 5 Méribel 1 Engadin/St Moritz 2 Zermatt 3 Méribel 4 Courchevel 5 Davos/Klosters The range of the tourist facilities varies only moderately between the destinations we review and facilities are highly rated at all of the leading destinations Engadin/St Moritz, Zermatt, Courchevel and Méribel have the greatest range of facilities, while Scuol, CransMontana and Courmayeur lag slightly behind 6

7 Occupancy Occupancy relates to vacancy rates in the municipalities and not to the bed occupancy in the second homes Availability rates on a key date (number of advertised properties in relation to housing stock) and, if available, official vacancy rates, are used to calculate this indicator Second homes advertised for sale or as long-term rentals are recoded as vacant Vacancy rates averaged 32 percent across our focus Alpine region over the year By region, the average vacancy rate in Italy fell by one percentage point over the year, although at 37 percent, it remains the highest in the Alpine region A similar fall was seen in the Austrian Alps, although in this case only two out of 100 apartments are vacant on average In France, occupancy rates fell marginally, with the average vacancy rate standing at 3 percent 1 St Anton am Arlberg 2 Adelboden/Lenk 3 Lenzerheide 4 Engelberg 5 Zermatt Vacancy rates for all apartments averaged around 33 percent in the Swiss Alpine destinations The highest vacancy rates were recorded in the Valais Alps: in Ovronnaz, Crans-Montana, Leukerbad and Nendaz/ Veysonnaz, more than 5 percent of all apartments were vacant (in some cases significantly more) In Grisons, on the other hand, the vacancy rate is much lower The vacancy rate in Lenzerheide is just 12 percent, while in Scuol and Davos/Klosters it is 21 percent Letting prospects On assessing the let-ability of an apartment, we consider: i) letting prospects based on achievable returns when let short-term as a vacation home The indicator is based on figures from the agency platform Airbnb, with the analysis supplemented by average tourist visits and the level of hotel prices ii) the possibility of a long-term rental to a local is taken into account on the basis of yield figures and population trends Engelberg, the Jungfrau region and Zermatt, three locations with pre-eminent international attractions, offer above-average yields In Gstaad and Saas-Fee, on the other hand, the weak first home market puts pressure on letting properties The yields on tourist letting are also clearly below-average in these cases Population growth If the population increases in a municipality, there is greater scope for infrastructure spending and the municipality's finances are supported This also boosts the attractiveness of a destination for owners of second homes In general, the current population trend is likely to continue in the years to come Population growth is favored by location-related factors such as an attractive tax environment, a prosperous regional economy and convenient links to regional centers The permanent population should grow most strongly in Flims/Laax and Engelberg Rising demand for first homes is also expected in the vacation locations at Crans-Montana and Verbier in Lower Valais The outlook for the first home market in Andermatt/Sedrun and in 1 Engelberg 2 Zermatt 3 Jungfrau Region 4 Arosa 5 Flims/Laax 1 Flims/Laax 2 Engelberg 3 Verbier 4 Crans-Montana 5 Engadin/St Moritz 7

8 Saas-Fee, on the other hand, is weak These destinations suffer from emigration, poor accessibility from urban centers and relatively high income taxes Restrictive supply The new construction of vacation homes is severely restricted by the Second Homes Act However, the bigger the proportion of first homes without any restriction on usage in a municipality, the greater the potential for future new second homes In addition, if the current construction of first homes exceeds the expected population growth, the likelihood of repurposing the grandfathered stock of housing increases The potential for new second homes is relatively high in most Valais destinations A large number of first homes, a lack of municipal restrictions on use and high availability building-zoned land make the supply more flexible In many Grisons destinations, on the other hand, the potential for new second homes seems to be lower With increasing demand, higher price rises than in Valais are therefore possible 1 Engadin/St Moritz 2 Flims/Laax 3 Lenzerheide 4 Arosa 5 Scuol 8

9 Other vacation apartment markets in Switzerland In many Alpine vacation destinations residential property prices are well below 8,000 francs per square meter Nendaz/Veysonnaz is the biggest vacation apartment market, with 8,000 units, and offers the best tourist facilities among these destinations The tourist facilities in most of the smaller regions cannot compete with the top destinations for example the average ski area in the extended group of vacation apartment markets is only half as big as in the top locations Apart from Leukerbad and Villars-Gryon, the current price level everywhere is in excess of 2007's levels Compared to last year, however, price drops were recorded in around half of the destinations The largest correction of around 6 percent was seen in Anniviers The prices were also in decline at many destinations in Valais and Vaud In Hasliberg and Samnaun, on the other hand, prices rose significantly Source: Fotolia The number of vacant apartments is significantly elevated in some Valais destinations in the second price category In Ovronnaz, Leukerbad and Nendaz/Veysonnaz, for example, at least five out of 100 apartments are vacant In Grisons destinations and in Flumserberg and Wildhaus, on the other hand, vacancies remain manageable The letting prospects are above average in Villars-Gryon and Hasliberg In Flumserberg, as a typical one-day destination, one should not expect high income and occupancy rates In view of the high population growth in the vacation locations of Lower Valais and the Canton of Vaud, demand for first homes is likely to remain relatively robust In contrast, the outlook is not as rosy at destinations in Upper Valais and in Surselva Restrictive supply could benefit price rises for second homes in Breil/Brigels in the long-term Other Swiss vacation apartment markets Price category two: Price per square meter below 8,000 Swiss francs Prices Location characteristics Vacation destination Annual growth Level in CHF/m² 1yr 5yr 10yr Villars-Gryon-Les Diablerets Samnaun Anniviers Val-d'Illiez Hasliberg Flumserberg Breil/Brigels/Obersaxen Wildhaus Nendaz/Veysonnaz Leysin-Les Mosses Aletsch-Arena Ovronnaz Anzère Evolène Disentis/Mustér Leukerbad Weit above überdurchschnittlich Well average Überdurchschnittlich Above average Market size Accessibility Durchschnittlich Average Market outlook Tourist facilities Occupancy Unterdurchschnittlich Below average Rental perspective Population growth Weit Well unterdurchschnittlich below average Restrictive supply ka Angaben keine No data Source: UBS 9

10 Appendix Ski slopes Altitude (m asl) Number of second homes Length in km Highest point Principal town in ski area Size Place Vacation 2018 destination Country: Region Closest large airport City Traveling time 2h 40min 1 Engadin/StMoritz Gstaad CH: Bern Courchevel FR: Savoy Lyon 4 St Anton am Arlberg AT: Tyrol Kitzbühel AT: Tyrol Munich 1h 50min 6 Verbier h 50min 7 Val d'isère FR: Savoy Lyon 2h 50min 8 Méribel FR: Savoy Lyon 9 Lenzerheide h 50min 10 Jungfrau Region CH: Bern Zermatt h 40min 12 Cortina d'ampezzo IT: Belluno Venice 13 Flims/Laax h 50min 14 Davos/Klosters Megève FR: Upper Savoy h 10min 16 Courmayeur IT: Aosta Valley < h 30min 17 Engelberg CH: Obwalden h 15min 18 Andermatt/Sedrun CH: Uri h 30min 19 Saas-Fee h 40min 20 Adelboden/Lenk CH: Bern Basel 21 Chamonix-Mont-Blanc FR: Upper Savoy h 10min 22 Crans-Montana Scuol h 50min 24 Arosa Villars-Gryon-Les Diablerets CH: Vaud h 25min 26 Samnaun h 10min 27 Anniviers Val-d'Illiez h 20min 29 Hasliberg CH: Bern h 30min 30 Flumserberg CH: St Gallen h 10min 31 Breil/Brigels/Obersaxen Wildhaus CH: St Gallen h 25min 33 Nendaz/Veysonnaz h 50min 34 Leysin-Les Mosses CH: Vaud h 25min 35 Aletsch-Arena Milan 2h 20min 36 Ovronnaz < h 40min 37 Anzère Evolène Disentis/Mustér h 20min 40 Leukerbad

11 List of sources Variable Soures Property prices (current and historic) Wüest Partner (Switzerland); Éditions Callon (France); Nomisma (Italy); immiat, UBS (Austria) Rents Wüest Partner Market size ARE (Switzerland); Insee (France); Istat (Italy); Statistik Austria, Statistik Tyrol, Statistik Vorarlberg (Austria) Conversion potential of first homes Information from municipalities Accessibility by private transport Google Maps Accessibility by public transport SBB, rome2riocom Occupation (vacancy and offer rates) FSO, comparisch (Switzerland); Insee, selogercom (France); immobiliareit, casait (Italy); immosuchmaschineat, immobilienscout24at, immodirektat (Austria) Ski slopes, facilities, cross-country ski routes Official websites and/or information of the destinations, Bergfex, myswitzerlandch Altitude of the resort, proximity to the glacier Official websites and/or information of the destinations, Bergfex Certainty of snow Official websites and/or information of the destinations, skiresortde, snowplazade, skigebiete-testde Thermal spas Official websites and/or information of the destinations and thermal spas, swissthermech Golf courses Official websites and/or information of the destinations and golf courses, Swiss Golf Facilities open in the summer Official websites and/or information of the destinations Building applications and approvals Docu Media Building zones Federal Office for Spatial Development (ARE) Development investment Federal Statistical Office (FSO) Overnight stays and hotel rooms Federal Statistical Office (FSO) Hotel prices Hotelleriesuisse Rental statistics Airbnb AirDNA Popoulation growth (forecasts) Federal Statistical Office (FSO), UBS Tax burden Swiss Federal Tax Administration (FTA) Regional economic potential UBS 11

12 Appendix Research publications from Chief Investment Office Global Wealth Management, formerly known as CIO Americas, Wealth Management, are published by UBS Global Wealth Management, a Business Division of UBS AG or an affiliate thereof (collectively, UBS) In certain countries UBS AG is referred to as UBS SA This publication is for your information only and is not intended as an offer, or a solicitation of an offer, to buy or sell any investment or other specific product The analysis contained herein does not constitute a personal recommendation or take into account the particular investment objectives, investment strategies, financial situation and needs of any specific recipient It is based on numerous assumptions Different assumptions could result in materially different results We recommend that you obtain financial and/or tax advice as to the implications (including tax) of investing in the manner described or in any of the products mentioned herein Certain services and products are subject to legal restrictions and cannot be offered worldwide on an unrestricted basis and/or may not be eligible for sale to all investors All information and opinions expressed in this document were obtained from sources believed to be reliable and in good faith, but no representation or warranty, express or implied, is made as to its accuracy or completeness (other than disclosures relating to UBS) All information and opinions as well as any prices indicated are current only as of the date of this report, and are subject to change without notice Opinions expressed herein may differ or be contrary to those expressed by other business areas or divisions of UBS as a result of using different assumptions and/or criteria At any time, investment decisions (including whether to buy, sell or hold securities) made by UBS and its employees may differ from or be contrary to the opinions expressed in UBS research publications Some investments may not be readily realizable since the market in the securities is illiquid and therefore valuing the investment and identifying the risk to which you are exposed may be difficult to quantify UBS relies on information barriers to control the flow of information contained in one or more areas within UBS, into other areas, units, divisions or affiliates of UBS Futures and options trading is considered risky Past performance of an investment is no guarantee for its future performance Some investments may be subject to sudden and large falls in value and on realization you may receive back less than you invested or may be required to pay more Changes in FX rates may have an adverse effect on the price, value or income of an investment This report is for distribution only under such circumstances as may be permitted by applicable law Distributed to US persons by UBS Financial Services Inc or UBS Securities LLC, subsidiaries of UBS AG UBS Switzerland AG, UBS Deutschland AG, UBS Bank, SA, UBS Brasil Administradora de Valores Mobiliarios Ltda, UBS Asesores Mexico, SA de CV, UBS Securities Japan Co, Ltd, UBS Wealth Management Israel Ltd and UBS Menkul Degerler AS are affiliates of UBS AG UBS Financial Services Incorporated of PuertoRico is a subsidiary of UBS Financial Services Inc UBS Financial Services Inc accepts responsibility for the content of a report prepared by a non-us affiliate when it distributes reports to US persons All transactions by a US person in the securities mentioned in this report should be effected through a US-registered broker dealer affiliated with UBS, and not through a non-us affiliate The contents of this report have not been and will not be approved by any securities or investment authority in the United States or elsewhere UBS Financial Services Inc is not acting as a municipal advisor to any municipal entity or obligated person within the meaning of Section 15B of the Securities Exchange Act (the "Municipal Advisor Rule") and the opinions or views contained herein are not intended to be, and do not constitute, advice within the meaning of the Municipal Advisor Rule UBS specifically prohibits the redistribution or reproduction of this material in whole or in part without the prior written permission of UBS UBS accepts no liability whatsoever for any redistribution of this document or its contents by third parties Version as per April 2018 UBS 2018 The key symbol and UBS are among the registered and unregistered trademarks of UBS All rights reserved 12