EDMOND DE ROTHSCHILD REAL ESTATE SICAV PRESENTATION OF AUDITED - - PowerPoint PPT Presentation

PRESENTATION OF AUDITED RESULTS 31 MARCH 2019

EDMOND DE ROTHSCHILD REAL ESTATE SICAV

EDMOND DE ROTHSCHILD, L’AUDACE DE BÂTIR L’AVENIR.

www.edr-realestatesicav.ch

EDMOND DE ROTHSCHILD, L’AUDACE DE BÂTIR L’AVENIR. 2

MAIN CRITERIA

ERRES - SWISS

March 2018 March 2019

 NAV : 878 Mio CHF 894 Mio CHF  Real Estate GAV : 1’243 Mio CHF 1’211 Mio CHF  NAV / share: 114.97 117.08  Share Premium : 18.99% 18.64%  LTV Ratio : 28.47% 29.18%  EBIT margin: 73.44% 71.74%  Rental loss rate: 3.03% 3.14%  TER(GAV): 0.70% 0.70%  Investment yield: 4.96% 4.94%

EDMOND DE ROTHSCHILD 3

66 buildings

CHF 58 mio rental status 2’085 apartments

TER evolution

From 01.04.2017 to 31.03.2018 From 01.04.2017 to 31.03.2018 CHF CHF Income Rental income 54'095'482 57'003'797 2'908'315 5.4% Other rental income 436'277 162'310

• 273'967
• 62.8%

Bank interest

• 62'402
• 158'784
• 96'381

154.5% Interim interest 926'780 699'127

• 227'652
• 24.6%

Subscriber's participation to accrued income 2'227'975

• 2'227'975
• 100.0%

Other income 1'199'106 1'510'599 311'493 26.0% Total 58'823'217 59'217'050 393'833 0.7% Changes in CHF Changes in %

P&L - 31 MARCH 2019

INCOME

4 EDMOND DE ROTHSCHILD



Increase of rental income due to the contribution of the new buildings: Promenade des Artisans (GE), Chatel- Saint-Denis (FR) et Satigny (GE)



Extraordinary income 2017/2018 : capital increase 2.2 MCHF, Veyrot early termination indemnity: 0.6 MCHF



Dissolution of unallocated accounting provisions booked during the voluntary liquidation of Orox Capital Investment in 2015, resulting in an income of more than 1 MCHF

9 8

From 01.04.2017 to 31.03.2018 From 01.04.2017 to 31.03.2018 Expenses CHF CHF Maintenance and repairs 2'191'598 3.73% 3'064'068 5.17% 872'470 39.8% Mortgage interest 5'017'437 8.53% 5'142'925 8.68% 125'488 2.5% Other interest 19'076 0.03% - 0.00% -19'076

• 100.0%

Property management a) Property charges (water, electricity, caretaker service, cleaning, insurances, property tax, etc.) 3'947'781 6.71% 3'506'928 5.92% -440'854

• 11.2%

b) Administration costs (management fees) 1'826'372 3.10% 1'820'558 3.07% -5'815

• 0.3%

Direct Taxes 11'616'049 19.75% 12'119'945 20.47% 503'896 4.3% Valuation and audit costs 298'305 0.51% 283'237 0.48% -15'068

• 5.1%

Lawyers 54'123 0.09% 4'159 0.01% -49'964

• 92.3%

Editing, printing costs 30'000 0.05% 18'625 0.03% -11'375

• 37.9%

Other expenses 384'116 0.65% 408'595 0.69% 24'479 6.4% Statutory compensation paid: to the manager 4'800'000 8.16% 5'090'000 8.60% 290'000 6.0% to the management 885'756 1.51% 960'270 1.62% 74'514 8.4% to the custodian 352'093 0.60% 379'189 0.64% 27'096 7.7% Assignment(s) to provisions for risky debtors 133'874 0.23% 446'438 0.75% 312'563 233.5% Total expenses 31'556'581 53.65% 33'244'936 56.14% 1'688'356 5.4% Net income 27'266'636 46.35% 25'972'113 43.86% -1'294'523

• 4.7%

Profit/loss on investments made 2'280'153 20'229'167 17'949'013 787.2% Earnings 29'546'790 46'201'280 16'654'490 56.4% Profit/loss of unrealised capital (variation) 13'126'148

• 4'153'719
• 17'279'867
• 131.6%

Financial year earnings 42'672'938 42'047'561

• 625'377
• 1.5%

Changes in CHF Changes in % % total income % total income

P&L - 31 MARCH 2019

EXPENSES & EARNINGS

5 EDMOND DE ROTHSCHILD 

Increase in the maintenance and repairs item compared to the previous financial year but at a consistent level over the medium term



The amount of direct tax increases by 72 bps following the increase in income in the Canton of Geneva



Realized capital gains generated by the sale of Agora and the sale

• f 7 apartments in Malters



The negative variation in the unrealized capital gain is related to the booking of the realized capital gain following the sale of Agora.



Net value increase : + 18.2 MCHF



Net value decrease : - 8.0 MCHF



Offset realized gain : - 15.4 MCHF



Deferred taxes : + 1.1 MCHF



Total :

• 4.1 MCHF

9 8

HISTORICAL DATA

ERRES - SWISS

6

1.35 0.75 2.8 0.2 0.2 3 3.12 3.30 3.40

EDMOND DE ROTHSCHILD

NAV evolution

 Growth of dividend and NAV since inception  Build up of a carry-forward for 3 consecutive years, of which CHF 2.65 per share in 2018/19 related to the sale of Agora  As at 31.03.2019, distribution proposal as follows, subject to approval by General Assembly  Distributable income to investors 51’394’935 CHF CHF 6,73 /share  Distribution 2018/19 26’730’074 CHF CHF 3.50 /share Distribution net income: 25’966’357 CHF CHF 3.40 /share Distribution capital gain: 763’716.40 CHF CHF 0.10 /share  Net carry-forward 24’664’861 CHF CHF 3.23 /share

DISCOUNT RATE / VALUE CHANGES

 Market value increase 40.7 MCHF  Including CAPEX 30.5 MCHF  Net unrealised capital gain 10.2 MCHF

8

4,52% 4,51% 4,42% 4,28% 4,11% 4,02% 3,93% 3,77%

2,00% 2,50% 3,00% 3,50% 4,00% 4,50% 5,00%

2012 2013 2014 2015 2016 2017 2018 2019

*excluding construction works

Capital gain in CHF Capital gain in % Rental income change Discount rate change Artisans (GE) 6’025’000 21.1% 0.1%

• 5.4%

Meyrinoise (GE) 2‘025'000 3.0% 5.9%

• 5.5%

Petite Prairie (VD) 1‘000'000 2.2% 0.3%

• 5.1%

XXXI Décembre 26 (GE) 920’000 4.4% 0.0%

• 5.9%

 Main capital gains*:  Main capital losses:

› Casino 51 – Montreux (VD) : value decrease of 2’543’000 CHF resulting from negociation with the main tenants › Cantonale 18 – Conthey (VS) : value decrease of 2’290’000 CHF to take into account the poor rental market conditions › Maladière 23 – Neuchatel (NE) : Decrease of 480’000 CHF

EDMOND DE ROTHSCHILD

TENANCY SCHEDULE EVOLUTION

COMPARED TO MARCH 2018

9

648 KCHF

• 200 000
• 150 000
• 100 000
• 50 000
• 50 000

100 000 150 000 200 000

+678 KCHF on a comparable basis Main increases related to significant CAPEX Improvement in Nyon and Feldmeilen Rent adaptation in Uznach (SG) and La Roche (FR) Specific situation in Conthey (VS)

EDMOND DE ROTHSCHILD

FOCUS ON VACANT SPACES

Top 5 vacant spaces at 31.03.2019 Vacant space evolution

 Promenade des Artisans – Meyrin : Only 260 sqm vacant i.e 80 KCHF out of 1.6 MCHF rental income (5%)

• Freiburgstrasse 555-556 – Niederwangen : Commercial centre

with difficult rental situation. Study of residential conversion still in process  Meyrinoise – Meyrin : Renovation, apartment rotations and vacancy in the newly created storages  Gachoud 8 – Fribourg : Apartment rotations  Cantonale 18 – Conthey : Stable situation even though markets rents were dropped.

EDMOND DE ROTHSCHILD 10

FINANCING

11

Maturity

4.34 years

Average cost

1.37%

Counterparties

8

31.03.15 31.03.16 31.03.17 31.03.18 31.03.2019 Debts in progress CHF 242.8 Mio CHF 267.8 Mio CHF 337.1 Mio CHF 354 Mio CHF 353 Mio Weighted average rate 1.60% 1.58% 1.46% 1.41% 1.37% Weighted average maturity 5.22 ans 4.88 ans 4.40 ans 4.31 ans 4.34 ans Debt ratio 28.57% 26.39% 30.22% 28.47% 29.18% EDMOND DE ROTHSCHILD

34 460 000 47 500 000 40 115 000 39 810 000 43 000 000 34 860 000 34 300 000 39 500 000 30 975 000 8 900 000

• 2019

2020 2021 2022 2023 2024 2025 2026 2027 2028 > 2028

54% 33% 13%

Residential Commercial Mixed

51% 30% 19%

Residential Commercial Mixed

SECTOR ALLOCATION

12

31.03.2018 31.03.2019

51% 30% 19% 54% 33% 13%

EDMOND DE ROTHSCHILD

Geneva Vaud Fribourg Zürich Neuchâtel Basel Argovie Others Geneva Vaud Fribourg Zürich Neuchâtel Basel Argovie Others

GEOGRAPHIC ALLOCATION

13

31.03.2019 31.03.2018 35% 25% 16% 6% 5% 3% 3% 7% 37% 28% 10% 6% 5% 3% 3% 8%

EDMOND DE ROTHSCHILD

AGORA – FRIBOURG (FR)

SALE

15

84.1 MCHF 21.0 MCHF 4.0 MCHF

Transfer of ownership 1st december 2018 Realized capital gain after taxes 19.6 MCHF Manage portfolio risk (concentration, rental value)

EDMOND DE ROTHSCHILD

2 residential buildings dedicated to condominium › 20 apartements sold as at 31/03/2019 › 2 apartements reserved with transfer of ownership in Q3 2019 › Realized capital gain 2’480’078 CHF › Remaining capital gain (2019/20) 215’156 CHF 2 residential buildings dedicated to rental › Fully rented since September 2018 › Cost : 11’008’013 CHF › Rental income : 435’636 CHF › Gross yield : 3.96%

HALDENRAIN - MALTERS (LU)

SALES

16 EDMOND DE ROTHSCHILD

ASSET MANAGEMENT FOCUS

18

BIOPÔLE IV – EPALINGES (VD) Office building and laboratories for life sciences tenants

 Additional storey: › 1’787 m² of additionnal rental space › Total cost: CHF 9.9 Mio › Rent /m2: CHF 335/m2 › Gross yield of the additionnal storey: 6.1% › Current gross yield of the building: 6.57%  Works completed and 100% rented

SOMMERHALDSTRASSE – BRUGG (AG) 2 Residential buildings with 102 apartements

 General Contractor Implenia : 12.83 MCHF  Complete renovation

• f

the building and 102 apartments on the occupied site  Works are already completed on the 1st building

EDMOND DE ROTHSCHILD

RENOVATION / EXTENSION

SAINT GALLER RING – BÂLE (BS)

RENOVATION / EXTENSION

19

Heavy renovation completed for a total cost

• f CHF 3.1m

› Creation of 4 apartements › Roof and façade replacement › Lift replacement › New heating system › Electricity renovation › Solar panel installation › Renovation of common areas and existing apartments 100% completed and rented Tenancy schedule increase: + CHF 125’000 Works gross yield above 4%

EDMOND DE ROTHSCHILD

VACANCY REDUCTION

21

BASLERSTRASSE – OLTEN – SO

Bankruptcy of OVS, letting and fit out works : › 2 new leases in January 2019 › 655 m² of commercial space leased in the ground floor and ground floor +1 Multy-year renovation plan › Lift replacements › Renovation of the facade › Pipes Replacement › Electricity renovation Net yield after renovation and new leases : 4,27%

PETIT FLON – MONT-SUR-LAUSANNE – VD

Departure of the main tenant and reletting : › 2’805 m² of vacant area › New lease in force since March 1, 2019 › Renovation work of 520 KCHF › Annual rent : 445 KCHF ─ 128 CHF/m² hall part ─ 200 CHF/m² office part Net yield after renovation and new leases : 4,87%

EDMOND DE ROTHSCHILD

NEW CONSTRUCTIONS

23

PROMENADE DES ARTISANS – MEYRIN – GE

66 fully rented appartments with controlled rents 1’300 m² of commercial space › 466 m² signed with the Hôpital de la Tour › 575 m² signed with the State of Geneva (DIP) › 260 m² available Cost: 34’407’000 CHF Rental income: 1’676’800 CHF Gross yield: 4.87 %

LES VERGERS – MEYRIN – GE

Ongoing construction of 4 Minergie buildings with rental apartments under state controlled regime (ZD-loc), storage and indoor parking spaces. › Start of work in June 2018 › Confirmed completion during the last quarter in 2020 › Gross yield 4.63%

EDMOND DE ROTHSCHILD

ACQUISITIONS

25

GARE 7 – ROMONT (FR)

Commercial asset 100% rented to MIGROS › 25 years fixed lease › Rental income 1.24 MCHF › Total cost 28.8 MCHF* Gross yield: 4.30 % Net yield: 4.13 %

JOSEPH-GIRARD 40 – CAROUGE (GE)

Commercial asset 100% rented › 10 years fixed leases › Rental income 593 KCHF › Total cost 11.6 MCHF* Gross yield: 4.88 % Net yield: 4.03 %

EDMOND DE ROTHSCHILD

SUBSEQUENT EVENTS

* Including all transaction costs

ACQUISITIONS

26

BLÄUACKER 2 – KONIZ (BE)

Mixed used construction project › Rental area 3’742 m2 › Rental income 1.1 MCHF › Total cost 21 MCHF* Gross yield: 4.41% Net yield: 3.79%

SINSERSTRASSE 65/67 – CHAM (ZG)

Office building 100% rented with potential › Rental area 2’825 m2 › Current rental income 546 KCHF › Targeted rental income 766 KCHF › Total building cost 14.4 MCHF* Current net yield: 3.26 % Targeted net yield: 4.65 %

EDMOND DE ROTHSCHILD

SUBSEQUENT EVENTS

* Including all transaction costs

ESG POLICY

CRITERIA

28

The Environmental and

Social parameters are assessed in 2019 on the portfolio on the basis of the 13 criteria established by the «Observatoire de l’Immobilier Durable» (OID)

EDMOND DE ROTHSCHILD

ESG POLICY

MEASUREMENT OF ENERGY CONSUMPTION AND CO2 EMISSIONS

29

Inventory (residential entries or commercial assets):

128 units

Energy reference area:

258’879 m²

Energy consumption corrected DJU:

24'712’189 kWh

Average Heat Spending Index (IDC):

386 MJ/m²

CO2 emissions for heating:

5’748 tons eq. CO2

CO2 emissions for building’s electricity:

410 tons eq. CO2

CO2 emissions for inhabitants’ electricity:

1’119 tons eq. CO2

Total CO2 emissions:

7’277 tons eq. CO2

Average CO2 emission:

32.04 kgCO2/m²

EDMOND DE ROTHSCHILD

ESG POLICY

MEASUREMENT OF ENERGY CONSUMPTION AND CO2 EMISSIONS

30

 Building distribution across

the portfolio in relation to IDC, CO2 and the surface in relation to Confederation’s

• bjectives for 2030 and 2050

 Benchmark of the ERRES

portfolio against other portfolios analysed by Signa- Terre

EDMOND DE ROTHSCHILD

ESG POLICY

CONFEDERATION’S THRESHOLDS IN 2030 AND 2050

31

Reduction of CO2 emissions

2,5% per year

›

Use of renewable energy, new heat production, self-consumption of electricity

Improvement of the IDC

4,0% per year

›

Insulation of facades and roofs, new windows, heating control

ESI CO2 Emissions 2 years (end 2020) 363 MJ/m² 31.1 kgCO2/m² 5 years (end 2023) 331 MJ/m² 27.5 kgCO2/m² Confederation Objectives (2030) 220 MJ/m² 30 kgCO2/m²

EDMOND DE ROTHSCHILD

GENEVA TAXES

RATES REDUCTION

33

Approval by the Geneva population of the RFFA and anticipation of the positive vote in FR and BE Reduction of income tax rate at around 14% from 01.01.2020 Off-setting of capital tax gradually over 5 years Impact on current taxes for ERRES SICAV (at constant scope) Impact on the ERRES SICAV’s liquidation tax provision :

• 2’798’500 CHF

2020 2021 2022 2023 2024

Current tax reduction 429’210 639’046 860’229 1’093’707 1’340’534 i.e. CHF/share per year 0,05 0,08 0,11 0,14 0,18

EDMOND DE ROTHSCHILD

CONCLUSION

PERSPECTIVES

35

Well positioned portfolio in terms of location, vacancy risk and environmental profile Value generated by selective sales to complement regularly the income distribution Debt level to be reduced between 25% and 28% without affecting dividend level Improvement of the tax treatment in Geneva is a positive driver for ERRES Maintain portfolio growth with selective acquistions of high quality or with mid-term potential Capital increase between 100 and 160 MCHF expected mid-september 2019 Sector allocation : The objective is to keep the commercial proportion of the portfolio below 33%

EDMOND DE ROTHSCHILD

EDMOND DE ROTHSCHILD, BOLD BUILDERS OF THE FUTURE. www.edmond-de-rothschild.com