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ZURICH-Swiss listed property group Zblin, based in Zurich, boosted operating cash flow by 7% last year, primarily by cutting costs. However it devalued its portfolio by CHF238 million or 12% due to the ongoing financial crisis, which resulted in a net loss for the year of CHF202 million.

The loss was equivalent to CHF3.05 per fully diluted share, compared with a net gain of CHF 44 million, or CHF 0.62 in the previous fiscal year. As a result, its net asset value per share fell to CHF6.57 in the year to end March from CHF10.53 12 months earlier. NAV in accordance with EPRA standards was CHF7.38 per share, and the fully-diluted equity ratio was 30.2% calculated on the same basis.

Zblin invests in energy efficient office properties in its core markets of Switzerland, France and Germany, where it concentrates on a few selected cities. It said rental income over the fiscal year fell by CHF4 million to CHF123 million solely due to the sale of 12 properties, in line with its revised strategy, on which the company realized a net gain of CHF4 million. Zblin said it continues to be in full compliance with all debt covenants, but added that the board will propose to the annual meeting that no dividend be paid for the year.

The largest impact of the depreciations was in France with a write-down of 21%. In Germany, values declined by 9%, and in the Netherlands by 15%. Overall, the gross yield on the portfolio moved out 90bp to 7.5% Zblin investment property portfolio was valued at CHF1.5 bn at the end of March, a decrease of CHF512 million from 12 months earlier and comprising 75 single assets. The decline arose from three factors: property divestments of CHF233 million, negative valuation adjustments and the impact of the CHF/Euro exchange rate. Its vacancy rate remained stable at below 10% despite the sale of fully-let buildings.

At year end, Zblin had outstanding mortgage financing of CHF1.1bn, representing a consolidated loan-to-value of 67%. The company has debt maturities of CHF107 million in the next 12 months, which it expects to be fully refinanced. The average contractual maturity of group mortgage financing is 4.4 years.

Zblin expects the global economy to remain in recession for an extended period, and said that in this difficult market environment its most important priority is securing cash-flows. “With the orientation towards its tenants, improvement in the vacancy rate, and a further reduction of operating costs, the company will continue to realise solid operational results and positive cash-flow,” it said. Additionally, it will direct efforts towards its new focus of divesting non-strategic assets and using the proceeds to boost its equity ratio.

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