Allan Saunderson is managing editor of Property Finance Europe and a contributor to GlobeSt.com.

ZURICH-Swiss listed group Zblin Immobilien Holding, which owns a majority stake in a French SIIC/REIT and an unlisted German subsidiary, has shifted its focus toward a portfolio of sustainable offices and cutting back non-core assets, says the group CEO.

Bruno Schefer told PIE in an interview that Zblin, whose origins reach back to the German tycoon who also founded a now-separate construction company, is the sole listed Swiss company with investments outside the Alpine nation. While this brought benefits in the past, it also meant net depreciations in 2008 of around 21% in France, 9% in Germany, and 15% in Benelux. However, Zblin holds firm to the aim set at foundation 10 years ago of being a pan-European investor.

"That was and is, from a Swiss point of view, our uniqueness," Schefer says. "We remain convinced it is the right strategy for the longer term--even if in the last two or three years it would have been better to invest only in Switzerland. Value creation can be bigger internationally than if you only stay in Switzerland."

The Zurich-based group retains 59% of equity in French REIT Zblin Immobiliere, though full conversion of an outstanding series of convertible bonds could cut this to under 50%. In Germany, the group had been poised to list Zblin Immobilien as a G-REIT, but was defeated by the crisis. At its financial year-end in March 2009, Zblin held investment and development properties worth CHF1.6 billion (€1.1 billion). Because of the depreciations, the net result came in at a loss of CHF202 million (€134 million), turning round a tidy profit in 2007-'08, and, although rental income was off marginally, its operating result was a slightly higher CHF35 million (€23 million). On the financing side, loan to value rose by a quite strong seven points to 67.2%--though the target is to cut this to 60% or perhaps 55%. However, gross and net yields across the portfolio rose, to 7.5% and 6.6% respectively, and the average vacancy rate held fairly steady at 9.6%.

Zblin aims to return to a pure office focus. "We are pretty much targeted today on prime office, but we still have certain interests in logistics and in retail, especially in Germany," Schefer says. "But the strategy we adopted 18 months ago is that within the next two years, 100% of the portfolio will be office at prime locations in a very few cities and that all the properties should be energy efficient. Of course the latter aspect is a long-term goal over five years but when we buy new assets we pick out energy-efficient buildings… or we upgrade existing assets."

The move is not about labels but achieving genuine reduction in energy assumption. "But to do that, first of all you have to measure it. And that is where transparency comes in. In our Annual Report we show how much energy we use per building and how we achieve this. We believe firmly that future tenants will demand this."

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Zblin Focuses on Sustainable Office Property,

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