Portfolio Germany

Portfolio development

The portfolio performed very strongly during the year under review. Through active asset management we were able to boost annual rental income by EUR 0.6 million on a like-for-like basis and reduce the vacancy rate from 13.8% to 6.4% on a like-for-like basis. These positive trends combined with the fall in the capitalisation and discount rate due to the negative interest rate environment, the hunt for yield and the international inflow of funds led to an upward revaluation in the German portfolio by EUR 4.5 million. As at the reporting date its value increased to EUR 123.9 million.

The reduction in vacancies in the German portfolio can be illustrated by the property at Mittlerer Pfad 2 – 4, Stuttgart. Further space was let compared with the prior year, bringing the vacancy rate down from 13.2% to 9.7%. Only 1 604 m² of office space now remains to be marketed. We expect the downward trend in vacancies in this property to continue in financial year 2016/2017. The head office of E&Y was situated in the business park Weilimdorf until the beginning of 2016 and Porsche AG has now taken out a long-term lease on these offices. This move will further enhance the attractiveness of Mittlerer Pfad 2–4 and 9.

The properties in Neumünster, Halle and Jettingen were sold from the non-strategic portfolio during the year under review. As a result there is now only one non-strategic retail property left in the portfolio in Marl. Due to our part-ownership of this property we are not expecting a sale in the short term. As a result we are reporting this property as part of the overall property portfolio and will no longer differentiate between strategic and non-strategic properties.

Market development

Commercial property transactions rose for the sixth year in a row to EUR 55.1 billion in 2015, representing a further 30% increase from 2014. The fourth quarter alone contributed over 30% of the annual total with just under EUR 17 billion of transactions. Investors continue to favour large-volume assets or portfolios.

Based on the generally healthy fundamental data and the attractive financial environment 2016 should be another positive year for the commercial investment property market. Transaction volumes are expected to at similar levels to 2015.

Office properties are the asset class in greatest demand, accounting for 41% of transaction volumes (around EUR 23 billion).

Germany has established itself an international commercial property centre. Foreign investors account for more than half of transaction volumes.

Portfolio overview

Major tenants

Lease contract analysis EUR in million

Prop. No.	City, address	Property certificates	Züblin EMS	Date of acquisition	Year of construction/ renovation	Annual rental income CHF 1000	Vacancy (CHF) %	Capitalisation rate in %	Discount rate (nominal) %	Ownership	Plot size m2	Office m2	Retail m2	Trade/ logistics m2	Other space m2	Total usable space m2	Vacancy m2	Vacancy (m2) %	No. of parking spaces
Office
6	Hamburg, A.-Einstein-Ring 17–21			1.1.1999	1992	1 835	5.3	7.00	8.25	□	7 538	13 590	−	−	340	13 930	729	5.2	246
7	Hamburg, Nagelsweg 37, 39			1.1.1999	1986	1 370	1.4	6.25	7.50	□	4 616	8 873	−	−	490	9 363	−	0.0	191
8	Hamburg, Wandsbeker Zollstr. 11–19			1.1.1999	1970 2002	967	4.6	6.25	7.25	□	2 901	6 531	−	−	782	7 313	332	4.5	100
	Total region of Hamburg					4 173	3.9				15 055	28 994	−	−	1 612	30 606	1 061	3.5	537
9	Dusseldorf, Rossstrasse 96			1.11.2001	1984 2009	1 086	0.8	7.00	8.25	□	1 315	6 393	−	−	46	6 439	39	0.6	75
10	Dortmund, Hansastrasse 30	DGNB		1.7.2004	1986 2011	564	0.0	6.00	7.00	□	627	3 015	544	−	286	3 845	−	0.0	–
11	Witten, Marktstrasse 2			1.7.2004	2002	374	15.2	7.00	8.50	□	687	1 780	1 110	−	620	3 510	1 026	29.2	–
	Total region of Dusseldorf					2 023	3.6				2 629	11 188	1 654	−	952	13 794	1 065	7.7	75
12	Stuttgart, Vor dem Lauch 14			1.1.2000	1982	1 023	8.1	8.50	9.00	□	6 880	7 788	−	547	333	8 668	1 023	11.8	180
13	Stuttgart, Mittlerer Pfad 2–4			1.12.2000	1991	1 938	8.3	7.25	8.25	□	8 521	15 816	−	−	710	16 526	1 604	9.7	414
14	Stuttgart, Mittlerer Pfad 9			1.6.2000	1991	912	7.1	7.25	8.50	□	3 620	7 348	−	375	123	7 845	582	7.4	121
	Total region of Stuttgart					3 873	7.9				19 021	30 952	−	922	1 166	33 039	3 209	9.7	715
15	Wiesbaden, Kreuzberger Ring 24			1.8.2001	2001	358	25.5	7.50	8.00	□	2 372	3 631	−	−	77	3 708	1 067	28.8	98
16	Munich-Germering, Streiflacher Strasse 7			1.3.2002	1999	417	0.0	6.00	7.25	□	2 512	2 954	−	−	449	3 403	180	5.3	70
	Total others regions					776	13.7				4 884	6 585	−	−	526	7 111	1 247	17.5	168
	Total office					10 844	6.1				41 589	77 719	1 654	922	4 256	84 550	6 582	7.8	1 495
Retail
17	Marl, Marler Stern 1–80			1.7.2004	1974	302	16.4	10.00	12.50	○	2 222	−	2 563	−	−	2 563	504	19.7	–
	Total retail					302	16.4				2 222	−	2 563	−	−	2 563	504	19.7	−
	Total German portfolio					11 146	6.4				43 811	77 719	4 217	922	4 256	87 113	7 086	8.1	1 495

□ Ownership of 100%

○Condominium ownershipDGNB Deutsche Gesellschaft für Nachhaltiges Bauen

Energie-Monitoring-Systems (EMS) existing

Energie-Monitoring-Systems (EMS) in planning