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Investor Relations

Independent valuer’s report
Jones Lang LaSalle (JLL)


On behalf of the management of Züblin Immobilien Holding AG, the Swiss subsidiary of Jones Lang LaSalle (“JLL“) has valued all investment properties of Züblin Immobilien Holding AG or its af liated companies (“Züblin Group“) in Switzerland for accounting purposes as at 31 March 2017.

  • Valuation standards

    • The valuers hereby con rm that the valuations have been performed in accordance with national and international standards and guidelines as set out in the International Valuation Standards (IVS) and the standards of the Royal Institution of Chartered Surveyors (RICS / Red Book).

  • Accounting standards

    • The market values determined for the investment properties represent Fair Value as de ned in the International Financial Reporting Standards (IFRS) on the basis of revised IAS 40 (Investment Property) and IFRS 13 (Fair Value Measurement).

  • Definition of “Fair Value”

    • The Fair Value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

      An exit price is the selling price as stated in the purchase contract on which the parties have agreed.

      The Fair Value valuation assumes that the hypothetical transaction for the asset being valued takes place on the market with the greatest volume and the largest business activity (principal market), as well as transactions of suf cient frequency and volume occur so that suf cient pricing information is available for the market (active market). If such a market cannot be identi ed, a market for the asset is assumed that maximises the selling price.

  • Realisation of “Fair Value”

    • The Fair Value is determined on the basis of the best possible use of a property (highest and best use). The best use is the use that maximises the property’s value. This assumption of use must be technically / physically possible, legally permissible and nancially feasible. As a maximisation of utility is assumed in the determination of Fair Value, the best use may differ from the actual or planned use. Future capital expenditures that will improve or increase the value of a property are taken into account appropriately in the Fair Value Measurement.

      The application of the highest and best use approach is based on the principle of materiality of the potential difference in value in relation to the value of the individual property and of the total real estate assets, as well as in relation to the possible absolute value difference. Potential increased real estate values that lie within the usual valuation tolerance of a single valuation are considered to be insigni cant and neglected as a result.

      The determination of Fair Value is dependent on the quality and reliability of measurement parameters, with decreasing quality and reliability: Level 1 market price, level 2 modi ed market price and level 3 model-based valuation. For a Fair Value appraisal of a property, different levels for different application parameters can be applied simultaneously. The entire valuation is classi ed according to the lowest level of the Fair Value hierarchy, which contains the main valuation parameters.

      The valuation of investment properties of the Züblin Group are performed with a model-based valuation in accordance with level 3, on the basis of input parameters not directly observable on the market. Based on this level, adapted level 2 input parameters are used (e.g. market rents, operational and maintenance costs, discount / capitalisation rates). Not observable inputs are only used when relevant observable inputs are not available.

  • Valuation Method

    • Valuation procedures have been applied that are appropriate in the particular circumstances and for which suf cient data are available to determine the Fair Values, in which the use of relevant observable inputs are maximised and those unobservable inputs are minimised.

      The market valuations of properties that are completely or partially vacant are calculated on the assumption that a re-letting takes a certain period of time. Loss of rent, rent-free periods and other incentives for new tenants that meet the market standard are taken into account in the valuation.

      To determine the market value across all countries an income-based approach was applied. In this case, the potential yield of a property is determined on the basis of future revenues and expenditures. The resulting cash ows correspond to the current and projected cash ows after deducting all non-recoverable costs to the tenant (before taxes and borrowing costs). The interest rate used is based on the rate of long-term, risk-free investments and a speci c risk premium, which re ects the current situation on the transaction market, the local real estate market and the characteristics of the property.

      The discounted cash ow method (DCF method) was used where the annual cash ows are discounted to the valuation date. At the end of the period in which the cash ows are projected in detail, a residual value (exit value) is determined on basis of a perpetual annuity of the exit cash ow. The market value is calculated as the sum of the discounted net cash ows. The market value is the sum of the net cash ows discounted to the valuation date beyond the detailed analysis period and the discounted residual value.

  • Basis of the Valuations

    • All properties are known to JLL due to the inspections carried out and the documents provided. JLL conducted a detailed analysis in terms of quality and risks (attractiveness and lettability of the rented premises, construction and condition, micro and macro location). The properties are visited by JLL at acquisition and every three years or upon completion of larger refurbishments thereafter.

  • Results

    • A total of 5 properties were valued as at 31 March 2017. The Fair Value of the properties according to IAS 40 and IFRS 13 is estimated as at the valuation date as follows:

      CHF 198,480,000 (Gross Fair Value)

      Gross Fair Value: The Fair Value according to paragraph 25 IFRS 13 is not corrected by the transaction costs incurred by the purchaser. This corresponds to the Swiss valuation practice.

  • Independency and Purpose

    • JLL con rms that the valuations have been created independently and neutrally and are intended only for the aforementioned purpose. JLL assumes no liability to third parties.

      JLL Switzerland 
      Zurich, 3 May 2017

      Daniel Schneider MRICS
      Senior Vice President 

      Daniel Macht MRICS
      Vice President 

  • Appendix – Valuation Assumptions

    • The following general assumptions apply for the valuations of the properties.

      • The valuations are based on rent rolls of the Züblin Group as at 1 April 2017.
      • In the valuation models, unless otherwise speci ed, an in ation rate of 0.50% is assumed.
      • With regard to operating expenses, it is assumed that ancillary expenses are treated separately and thus tenant related costs are borne by the tenants.
      • The discount rate and capitalisation rate is based on a risk-adjusted interest rate. The respective rate is determined individually for each investment property by use of benchmark data from arm’s-length transactions. In case there are not suf cient comparable transactions, the discount and capitalisation rates are determined taking into account the current market environment, the macro and micro location, type of use, cash ow risk and any other speci c factors.
      • As at 31 March 2017 the following rates have been applied:
        • The discount rates are between 3.50% and 5.20%, amounting to a capital-weighted discount rate of 3.95%.
        • The capitalisation rates are between 3.00% and 4.70%, amounting to a capital-weighted capitalisation rate of 3.45%.