UBS Hospitality: Last annual report before the merger
The hotel fund increases its return on investment to 7.0 %, but has to cope with a decline in rental income and a higher vacancy rate. It will be merged into the Living Plus fund in the fall.
Despite the sale of the EPFL congress center in Ecublens (VD) and the fact that the initial letting of the Zurich high-rise «Oerlikon One» has not yet been completed, UBS Hospitality achieved a return on investment of 7.0 % in the 2025 financial year (previous year: 4.2 %). This result was driven primarily by the completion of the total refurbishment in Oerlikon and revaluations in the portfolio, which together more than offset the portfolio losses from the partial sale in Ecublens.
The portfolio value fell slightly by 1.5 % to CHF 879.3 million, with the average discount rate remaining practically stable at 3.09 % (previous year: 3.14 %). Unrealized capital gains of CHF 29.8 million (previous year: CHF 11.2 million) made a significant contribution to the total income of CHF 42.1 million - a marked increase on the previous year (CHF 27.1 million). The net asset value per unit climbed by 3.5 % to CHF 80.85, while the distribution remains unchanged at CHF 2.50 per unit. However, with a ratio of 112.0 %, the distribution exceeds the net income, which would not be sustainable in the long term - an issue that is likely to be resolved with the forthcoming merger.
Rental income and vacancies
Rental income fell by 4.3 % to CHF 30.9 million. This is primarily due to the loss of income from the congress center in Ecublens, which was sold to the federal government at the beginning of January as part of an early reversion. EPFL's Centre Logement in the Quartier Nord with 253 student apartments remains in the portfolio; the rental agreement was extended by ten years until 2054.
More striking than the decline in rents is the increase in the rent default rate from 0.4 % to 3.8 %. The main reason for this is the Oerlikon One refurbishment project on Schulstrasse in Zurich, which was completed in mid-2025 after investments of around CHF 123 million. Of the 124 apartments, only 106 were let at the end of the year. The retail space on the first floor went to Starbucks, Vi Café and Tiny Fish; the last available commercial space was let to Migros Bank on a long-term basis as at February 1, 2026. The commercial space is therefore fully let.
Net income fell by CHF 13.2 % to CHF 19.0 million (previous year: CHF 21.9 million). In addition to the lower rental income, the standardization of the management fee to CHF 0.54 % of total fund assets had a negative impact on the operating result: remuneration to the fund management company rose from CHF 2.1 million to CHF 4.7 million after a temporary reduction was lifted. The EBIT margin fell accordingly from % 82.7 to % 74.4.
Debt financing and portfolio structure
The debt ratio rose by 2.6 percentage points to % 26.4, but remains below the contractual maximum limit of % 33. Mortgage debt amounts to CHF 232.1 million with an average interest rate of 1.3 % (previous year: 1.7 %) and a remaining term of 1.5 years. In the mortgage portfolio, it is noticeable that CHF 142 million is already due for refinancing in 2026.
Due to the harmonization of reporting as part of the CS integration, the property categories have shifted: Residential buildings now account for 24.0 % (previous year: 6.3 %), mixed buildings 30.0 % (previous year: 15.6 %) and commercial properties 46.0 % (previous year: 55.4 %). Regionally, Zurich dominates with a share of 46.1 % of the portfolio value (previous year: 40.6 %), while the share of the Lake Geneva region fell from 27.7 % to 20.8 % following the partial sale in Ecublens. The weighted average remaining term of the commercial rental agreements is 7.8 years.
The fund closed at CHF 100.00 on the stock exchange, which corresponds to a premium of % 23.7 (previous year: % 33.8). At -2.0 %, the performance was well below the benchmark SXI Real Estate Funds TR, which gained 10.6 %.
Merger in the fall
This is UBS Hospitality's last stand-alone annual report. As of September 30, the fund will be merged with Residentia into the Living Plus fund with retroactive effect to June 30. The relevant changes to the fund contract will come into force on June 30 after Finma rejected objections from investors at the beginning of the year. In future, the combined fund's financial year will run from July 1 to June 30. All three funds will continue to be traded in parallel on SIX until the fall.
Sales
- Ecublens (VD), EPFL - STCC, Les Blévallaires (partial sale, congress center; January 6, 2025) (aw)
