ANNUAL REPORT 2013 Swiss Finance & Property Investment AG Swiss Finance & Property I Page 1
AGENDA Swiss Finance & Property Investment AG Portfolio Financial Statements Outlook 2014 Key Facts Swiss Finance & Property I Page 2
SWISS FINANCE & PROPERTY INVESTMENT AG Focus on Swiss Real Estate with strong cash flow and long-term enhancement potential Geographic concentration on investments in urban areas of Zurich and Bern. Other locations may be opportunistically covered. Long-term growth by exploiting unrealized value potential through active management Swiss Finance & Property I Page 3
HIGHLIGHTS 2013 Acquisitions Acquisition of three residential properties, a building project in Ascona and one plot in Zurich with a total value of CHF 54 830 000 Developments Investment in development properties totaling CHF 15.4 million Fully occupation in the first construction project «Hubertus» in Zurich Portfolio consolidation Non-strategic property in Rheinfelden sold above market value Share of restaurant properties reduced / conversion to reduce longtime vacancy rate Vacancies / new lettings Vacancies at existing properties kept at low level 2.64% (PY 2.30%). 16% renewals of existing commercial leases Borrowed funds management The term of interest was extended from 6.13 years to 8.84 years. The average interest rate is 1.42% (PY1.47%) Swiss Finance & Property I Page 4
AGENDA Swiss Finance & Property Investment AG Portfolio Finances Outlook 2014 Key Facts Swiss Finance & Property I Page 5
AQUISITIONS Three existing properties, one building project and one plot acquired, all in good locations Bürglistrasse 6, 8 and 10 in Zurich Brandschenkestrasse 171 in Zurich Badenerstrasse 425 in Zurich (50% co-ownership) Building project «Residenza Parco d Oro» including 13 approved freehold flat Manegg in Zurich (plot) Swiss Finance & Property I Page 6
ZURICH, BÜRGLISTRASSE 6, 8 UND 10 Existing property with 17 flats, commercial space and 35 parking spaces Purchased as sole owner on 30 June 2013 Purchase price CHF 24.7 million Target rental income p.a. CHF 1 046 000 (51% quantile) / gross actual return 4.23% Measures: in coming years partial renovation, conversion of offices and improvements ofresidential space Target rental income p.a. upon completion: CHF 1 218 000 (70% quantile) / gross return 4.45% Swiss Finance & Property I Page 7
ZURICH, BRANDSCHENKESTRASSE 171 Existing property with 7 flats and 2 parking spaces Purchased as sole owner on 25 April 2013 Purchase price CHF 3.7 million Target rental income p.a. CHF 137 000 (32% quantile) / gross actual return 3.6% Measures to increase income: Partial renovation and loft conversion Target rental income p.a. on completion: CHF 201 000 (66% quantile) / gross return 4.68% Swiss Finance & Property I Page 8
ZURICH, BADENERSTRASSE 425 Addition of Badenerstrasse 425 as co-owner (50%) on 13 June 2013 to existing properties at Badenerstrasse 427 431 for the purpose of redeveloping the area together with Ledermann Immobilien AG Purchase price CHF 2.5 million Target rental income CHF 72,000 annually / Current Gross actual return 2.8% Project Planning has been started in 2013 / First consultations with authorities in 2014 Swiss Finance & Property I Page 9
COMPLETED PROJECTS Letzigraben 101, Albisriederstrasse 170/172, Zurich Renovation of building under historic protection with 36 flats, commercial space and 35 parking spaces (85% residential) Ready for occupation in November 2013 / Fully rented Target rental income TCHF 1 186 annually / gross return 4.5% Valuation gain ca. TCHF 5 800 / Total investments (19Mio) vs. market value per year end 2013 (24.8Mio) Swiss Finance & Property I Page 10
CURRENT PROJECTS Klausstrasse 4, Zurich Purchase price TCHF 20 500 for 40% Co-ownership. SFPI s share of construction price for complete renovation approx. CHF 8.1 million Construction project for roughly 4,700 m2 of office space Completion early 2014 Current contract negotiations with prospective tenants for sub-areas from 1,000 m2 should soon lead to full occupancy Swiss Finance & Property I Page 11
CURRENT PROJECTS Zeltweg 67, Zurich Net construction price CHF 3.8 million (top floor converted to residence, renovation of windows & utility infrastructure, expansion of ground floor) Set for reoccupation early 2014 The two flats have been let (11.2%). Negotiations are under way with prospective tenants for commercial spaces Swiss Finance & Property I Page 12
CURRENT PROJECTS Ascona, Parco d Oro Plot (9 618 m 2 ) with construction permit acquired for 2 100. CHF/m 2 on 10. 12. 2013 General contractor agreement for the construction of 13 condominiums of 170-270 m 2 and 34 parking spaces with a cost ceiling of TCHF 23 000 Sales will start in March 2014 starting from 15 500.- CHF/m 2. Ownership of first flats to be transfered by late 2014. Swiss Finance & Property I Page 13
CURRENT PROJECTS Manegg, Greencity, Zurich Plot of more than 3,405 m2 for CHF 1,000/m2 acquired on 2 April 2013 from GDZ AG, printer. Agreement with Steiner AG on developing land and resale for CHF 1,376/m2 by no later than 5 January 2016 with additional 1.75% stake in developer's profit. Swiss Finance & Property I Page 14
PROJECTS Growth horizon / total invested until 2013 2014 2015 Total completed projects Zurich Letzigraben 101 MCHF 13.6 MCHF 1.8 MCHF 15.4 renovation of old building, new construction current projects Zurich, Klausstrasse 4 renovation of old building Zurich, Zeltweg 67 repositioning, loft conversion Ascona, Parco D Oro new projects Zurich, Witikonerstrasse 15 renovation, conversion Zurich, Limmatstrasse 65 renovation, repositioning MCHF 6.3 MCHF 3.3 MCHF 1.8 MCHF 0.6 MCHF 21.0 MCHF 15.0 MCHF 7.0 MCHF 0.3 MCHF 4.8 MCHF 4.8 MCHF 1.9 Total MCHF 44.5 MCHF 25.9 MCHF 11.8 MCHF 8.1 MCHF 3.9 MCHF 43.0 MCHF 9.9 MCHF 1.9 MCHF 82.2 Swiss Finance & Property I Page 15
VACANCY DEVELOPMENT 2008-2013 The vacancy rate as of the reporting date receded from 13.87% at year-end to 10.67% The vacancy rate of existing properties continued at a low level at 2.64% (PY2.30%) Vacancy is attributable to development if the BoD has approved a project and a legally valid building permit has been issued Swiss Finance & Property I Page 16
VACANCY 2013 The vacancy rate attributable to development as of the reporting date declined from 11.57% to 8.03% Market value of development properties: CHF 36.0 million, 9.2% of market value of portfolio Swiss Finance & Property I Page 17
PROACTIVE RENTAL PROFITS 16% OF TOTAL RENTAL INCOME Chasseralstrasse 156, Spiegel b. Bern General contract for retail with Migros from 01.07.2014 for 10 years plus 3 x 5 years Rent increase, tenant has first-class credit rating, reduction of vacancies Bohl 4, St. Gallen General contract office with 2B Visions AG from 01.01.2014 for 7 years plus 1 x 5 years Rent increase, maintenance of restaurant fittings outsourced Hutgasse 6, Basel Restaurant lease with Tapas AG renewed for 10 years from 1 April 2013 Rent increase, maintenance of restaurant fittings outsourced Lagerstrasse 1, Zurich Restaurant Clipper rented for 15 years plus 5 years to Candrian Catering AG Rent increase, maintenance of restaurant fittings outsourced, tenant has first-class credit rating Lease with SKV immobilien (KV Verein Switzerland) renewed for 5 years from 1 July 2014 Rent increase, tenant has first-class credit rating Malerweg 4, Thun Lease with Basler Insurance AG renewed for 5 years from 1 January 2013 Rent increase, tenant has first-class credit rating Swiss Finance & Property I Page 18
PROACTIVE RENTAL PROFITS 16% OF TOTAL RENTAL INCOME Picassoplatz 4, Basel Lease with Galerie Laleh June from 01.05.2013 prolonged for 5 years Retaining a representative tenant Rue de Lausanne 29-31, Morges Lease with OPTI (Canton of Vaud) renewed for 5 years from 1 July 2013 Largest tenant retained Uitikonerstrasse 17, Schlieren Restaurant lease with Noli Gastro GmbH renewed for 5 years from 1 April 2013 Maintenance of restaurant fittings outsourced Witikonerstrasse 15, Zurich Lease with Rotary International renewed for 5 years from 1 April 2013 Major tenant with top credit rating and reputation retained Contract with notary Hottingen prolonged for 6 years, starting 1.10.2013 Retaining an important tenant with top rating and top reputation Swiss Finance & Property I Page 19
WEIGHTED MATURITIES OF LETTINGS IN COMMERCIAL PROPERTIES The proportion of existing medium- to long-term leases of business properties has increased as a result of successful re-rentals and lease renewals The proportion of leases of business properties with no fixed term has increased Swiss Finance & Property I Page 20
STRUCTURE OF PORTFOLIO 84.3% of total market value and 80.9% of target net rental income originate in the three metropolitan areas - Zurich (21 properties) - Basel (10 properties) - Bern (5 properties) Change in composition of target net rental income: - Income from residential properties increased (PY 22.9%) - Income from restaurant properties decreased (PY 11.9%) Swiss Finance & Property I Page 21
PROPERTY AND LOCATION QUALITY Portfolio expansion in line with strategy High-quality locations Properties with development potential Highlights at end of 2013 Acquisitions in 2013 Sales in 2013 Swiss Finance & Property I Page 22
KEY PORTFOLIO FIGURES 31 DEC 2013 31 DEC 2012 Number of properties Units 41 39 Total property portfolio CHF 1 000 391 008 341 725 Gross return % 5.18 5.31 Ø Real discount rate % 3.98 4.14 Ø Nominal discount rate % 5.01 5.18 Acquisition of three existing properties and two plots (Manegg / Ascona) Sale of one property Of the 41 properties, 2 are under development Vacancy rate of existing properties at low level of 2.64% Vacancy rate at end of period % 10.67 13.87 Vacancy rate attributable to development at end of period % 2.64 2.30 Vacancy rate of existing properties at end of period % 8.03 11.57 Ongoing vacancies during reporting period % 12.27 12.97 Swiss Finance & Property I Page 23
AGENDA Swiss Finance & Property Investment AG Portfolio Financial Statements Outlook 2014 Key Facts Swiss Finance & Property I Page 24
KEY FIGURES INCOME STATEMENT Operating income before revaluation Profit from revaluation Operating income after revaluation Operating costs Earnings before interest and taxes (EBIT) 1 JAN TO 31 DEC 2013 1 JAN TO 31 DEC 2012 CHANGE IN % CHF 1 000 16'537 15 186 + 8.9 CHF 1 000 3 112 11 042 71.8 CHF 1 000 19 649 26 229 25.1 CHF 1 000 5 904 5 364 + 10.1 CHF 1 000 13 745 20 865 34.1 EBIT margin % 69.95 79.55 12.1 Financial result (net) Earnings before taxes (EBT) Taxes Net profit incl. Revaluation Net profit excl. revaluation CHF 1 000 2 293 1 901 + 20.6 CHF 1 000 11 452 18 963 39.6 CHF 1 000 2 813 4 048 30.5 CHF 1 000 8 639 14 916 42.1 CHF 1 000 8 337 7 488 *(7 921) + 11.3 *(5.3) Increased income from properties (+10%) through purchase of three properties; effect CHF +1.5 Mio. Profit from revaluation +CHF 3.1 Mio, CHF 1.5 Mio through purchase of new properties Operating costs TCHF +540 (+10%) due to larger portfolio and higher costs for Facility Manager, Asset Manager, Administration and Consulting Financial result TCHF +390 (+20%) due to elimination of trading activities (TCHF 150) and higher interest rate payments (TCHF 200) Taxes TCHF -1 200 due to TCHF 700 reduction of deferred taxes and TCHF 400 positive tax effect through SWAP valuations *Net Profit excl. revaluation: CHF 8.3 Mio in 2013, adapted by tax effects from SWAPS and other deferred taxes; effects CHF 0.4 Mio. compared to preceding year (2012 restated: TCHF 7 921 ) Swiss Finance & Property I Page 25
KEY FIGURES BALANCE SHEET Total property portfolio Equity 31 DEC 2013 31 DEC 2012 CHANGE IN% CHF 1 000 391 008 341 725 +14.4 CHF 1 000 212 322 205 556 +3.3 Equity ratio % 49.22 57.07 7.9 Total debt subject to interest CHF 1 000 191 670 127 866 +49.9 Total debt subject to interest as % of total assets % 44.43 35.50 + 8.9 Borrowing ratio % 50.78 42.93 + 7.9 Debt ration per property % 49.02 37.42 + 11.6 Return on equity incl. revaluation % 4.13 8.84 4.7 Return on equity excl. revaluation % 3.99 4.44 0.5 Portfolio: Purchases CHF 31 Mio. SalesCHF -1.1 Mio. Investments CHF 16.2 Mio. Revaluation effects CHF 3.1 Mio. Debt increased by CHF 63 Mio after full investment of money from the capital increase (2012) Return on equity excl. Revaluation : reduced from 4.44 to 3.99% due to limited contribution of new properties and increased amount of development properties (9%) in the portfolio Debt Management: Increase of interest duration from 6.13 to 8.84 years, reduction of interest rate from 1.47 to 1.42% Average interest rate % 1.42 1.47 0.05 Average period for fixed interest rates Years 8.84 6.13 + 44.2 Swiss Finance & Property I Page 26
KEY FIGURES PER SHARE 1 JAN TO 31 DEC 2013 1 JAN TO 31 DEC 2012 Earnings per share (EPS) at CHF 37.85 / 40.85 nominal incl. revaluation CHF 3.46 6.69 Earning per share excl. Revalutaion: Operative result adapted by tax effest from SPAS and deferred taxes; effect CHF 0.4 Mio. compared to 2012 (restated: 3.55/share in 2012), total amount of shares in 2012 still lower than in 2013 due to capital increase Earnings per share (EPS) at CHF 37.85 / 40.85 nominal excl. revaluation CHF 3.34 3.36 *(3.55) 31 DEC 2013 31 DEC 2012 Net asset value (NAV) per share at CHF 37.85 / 40.85 CHF 85.12 82.41 Net asset value (NAV) per share at CHF 37.85 / 40.85 before deferred taxes CHF 91.78 87.31 Net Asset Value increased by 3.2% despite capital increase in 2012 Proposal to pay out a dividend of CHF 3.00 to be approved at the general assembly on April 10th 2014 Share price CHF 78.50 81.00 Permium (+) / discount (-) compared to NAV % -7.78-1.71 Swiss Finance & Property I Page 27
AGENDA Swiss Finance & Property Investment AG Portfolio Finances Outlook 2014 Key Facts Swiss Finance & Property I Page 28
OUTLOOK 2014 Renovation of the property Limmatstrasse 65 in Zurich, and the renovation and expansion of Witikonerstrasse 15 in Zurich will start this year Realization and marketing of the construction project Residenza Parco d'oro in Ascona will be started With the previously made purchases SFPI has further strengthened its strategic focus on the centers of Zurich and Basel Through our continuous investment strategy, we are increasingly able to offer new premises at prime locations At the same time we will continue to take advantage of the very low interest rate environment for a continuous extension of our interest rate duration Swiss Finance & Property I Page 29
AGENDA Swiss Finance & Property Investment AG Portfolio Finances Outlook 2014 Key Facts Swiss Finance & Property I Page 30
KEY FACTS Acquisition of three properties and a property in the last twelve months First promotion business building project Residenza Parco d'oro - 13 approved condos at Monte Verità in Ascona in a prime location in the upscale segment Complete renovation and new construction of Letzigraben 101 in Zurich (Hubertus), fully rented Projects Klausstrasse 4 and Zeltweg 67 in Zurich are well advanced. Focus is on renting representative areas to reputable tenants Extension of important commercial leases, 16% of rental income in the portfolio for at least 5 more years secured Remaining funds from the capital increase in 2012 successfully invested Increase in net income excluding revaluation of CHF 7'488 to 8'337 CHF (+11.3%) Swiss Finance & Property I Page 31
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DISCLAIMER The information in this document is confidential and may not be disclosed to any other person without our prior approval. This presentation does not constitute a prospectus in the sense of Art. 652a or Art. 1156 of the Swiss Code of Obligations or Art. 50 of the Swiss Investment Fund Act. This document is a product of Swiss Finance & Property and is not research. We have prepared this document based upon information that we believe to be reliable but we make no representation or warranty, express or implied, that it is accurate, complete or up to date and accept no liability, other than for fraudulent misrepresentation, if it is not. Any proposed terms in this document are indicative only and remain subject to contract. Nothing in this document shall constitute or form part of any legal agreement, or any offer to sell or the solicitation of any offer to buy any securities. Investments in funds should only be undertaken following a thorough study of the latest corresponding sales prospectus, the fund regulations, and the basic legal information that these regulations contain. Past performance does not guarantee or indicate current or future value or earnings. The performance shown does not take account of any commissions and costs charged when subscribing and redeeming units. Swiss Finance & Property does not provide legal, accounting or tax advice. You must obtain your own independent advice on any legal, tax or accounting issues relating to these materials or any decision to undertake any of the actions, investments or transactions discussed or recommended herein. We may from time to time have positions in, and buy or sell, securities and investmens identicial or related to those mentioned in this document and may possess or have access to non-public information relating to matters referred to in this document which we do not intend to disclose. No person shall be treated as a client of Swiss Finance & Property, or be entitled to the protections afforded to clients of Swiss Finance & Property, solely by virtue of having received this document. Neither this document or any copy thereof may be sent to or taken into the United States or distributed in the United States or to any US persons. Copyright 2003 2014 Swiss Finance & Property Investment AG. All rights reserved. Swiss Finance & Property I Page 33
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