SF Commercial Properties Fund – A consistently good financial year 2018

The SF Commercial Properties Fund can look back on a good financial year 2018. By borrowing capital, the fund continued to expand and now comprises 19 properties. The acquisition of six properties boosted the fund's value to CHF 323.5 million. The average gross yield is 6.5%. The vacancy rate fell in the reporting period from 9.4% to 7.3%. With vacancies of 6.9% on the reporting date, the vacancy rate is at a good and reasonable level. The average lease term rose from 5.2 years to 5.4 years through contract extensions by existing tenants and new acquisitions. Realised profit stood at CHF 11.3 million. The dividend from earnings per share is a consistent CHF 4.25.

Property portfolio

The capital received in 2017 was fully invested in 2018. The portfolio continued to be geographically well diversified through new acquisitions in Buchs (AG), Allschwill, Aarau as well as Castione and Lamone. By borrowing capital, the portfolio grew from CHF 208.2 million to CHF 323.5 million and now comprises 19 properties. The fund also successfully achieved the target reduction in office space from 29.1% to 27.2% and increased logistics, storage and industrial usage from 68.2% to 72.0%.

Many new tenants were found in 2018. Three leases were signed with new tenants in Dietikon. Along with other rentals, this brought down the vacancy rate in the reporting period from 9.4% to 7.3%. The vacancy rate on the reporting date 31 December 2018 stood at 6.9%. Numerous discussions with existing tenants helped strengthen relationships and also resulted in lease extensions. This boosted the average remaining lease term further from 5.2 to 5.4 years..

Financial result

Realised profit stood at CHF 11.3 million (2017: CHF 10.3 million) a year-on-year increase of 10.6%. With a payout ratio of 89.9% (2017: 99.5%), this produced an amount of CHF 4.25 per share from the 2018 result. Borrowings as at 31 December 2018 totaled CHF 77.2 million, which corresponds to a borrowing ratio of 23.8%.

Outlook

The fund is continuing with the successful tenant loyalty and rental measures in order to leverage the potential in 2019, in particular in properties in Dietikon, Frenkendorf and Thal. To do so, further acquisitions are also planned as part of selective portfolio switching.

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