SF Commercial Properties Fund: Stable first half of 2021 despite challenging market conditions
Despite the challenging market conditions, the SF Commercial Properties Fund can reflect on a stable first half of 2021. Numerous successful lettings were achieved in the last six months. The WAULT increased slightly to a high 5.86 years. After the purchase of a property, the portfolio's market value equals to CHF 323.1 million as at 30 June 2021 (compared to CHF 306.8 million as at 31 December 2020) and the correspondingly increased annual target rental income at CHF 20.5 million (prior year CHF 19.8 million), resulting in a gross yield of 6.34%.
- Purchase of an attractive property in St. Gallen
- Market value of CHF 323.1 million
- Annual target rental income of CHF 20.5 million
- Vacancy rate maintained at the same level
- Average lease term increased on a high level
- Distribution of CHF 4.25 per unit for the year 2020
- Fund management considers capital increase
Real estate portfolio
Leases for rental space of 13 000 m2 were concluded in the first half of 2021, including the contract lease for the new property in St. Gallen. The portfolio was further optimised through this letting success and the purchase of a property in St. Gallen. As at 30 June 2021, it comprised 18 properties with a portfolio value of CHF 323.1 million. Despite an additional vacant site in Buchs, the letting success and various lease extensions helped maintain the vacancy rate at 18.3% as at 30 June 2021, almost unchanged on the previous year-end level, and the average lease term improved marginally to 5.86 years.
Financial result as at 30 June 2021
Compared to year-end 2020, the debt financing ratio increased slightly to 26.77% (31 December 2020: 20.69%). Especially due to the distribution for the year 2020 of CHF 10.20 million, net fund assets of CHF 236.59 million decreased marginally to CHF 230.41 million. A distribution of CHF 4.25 per unit was paid out to investors for 2020, equivalent to a distribution yield of 4.63%.
Impact of COVID-19
Most of the fund's tenants were not affected by the pandemic. The very individual enquiries about rental adjustments were resolved by mutual agreement thanks to partnership-based rental arrangements. Due to accruals and deferrals recognised in the previous year, the expenditure in this regard only amounted to around CHF 73 000 in the first half of 2021.
Outlook
The focus continues to be on rental and tenant retention measures in an effort to increase the tenancy rate. There are also plans for selective portfolio reallocation, with a focus on increasing usage in the logistics, commercial, storage and industry sectors. The fund management is considering a possible capital increase in the second half of 2021.
Contact
Portfolio Manager Real Estate Direct
SF Commercial Properties Fund