SF Commercial Properties Fund – Successful financial year 2022 and increase in rental income

• Increase in rental income by 4.0%
• Vacancy rate reduced substantially to 14.1% (previous year: 15.7%)
• Attractive distribution yield of 5.04%
• Unchanged distribution of CHF 4.25 per unit, of which CHF 3.15 per unit to be paid out exempt of withholding tax
• Management fee reduced by 10 basis points to 0.65% from January 2022

Real estate portfolio

At the end of 2022 the portfolio comprised 18 properties (previous year: 18 properties) with rental space of 156 756 m² (previous year: 157 156 m²). At CHF 328.4 million (previous year: CHF 326.7 million), the market value as at the end of the reporting year increased by CHF 1.6 million or 0.5%.

Lettings and lease renewals for around 14 200 m² were recorded in the 2022 financial year, reducing the vacancy rate to 14.1% (previous year: 15.7%) as at the end of the reporting year. The stable letting situation and the high rate of indexation of leases at 90% ensure a solid earnings structure.

There were no transactions in the reporting year. However, the property at Weststrasse 15 in Weinfelden was sold after the balance-sheet date, for a selling price of CHF 7.15 million (market price: CHF 7.10 million).

Financial result as at 31 December 2022

Total income amounted to CHF 16.8 million (previous year: CHF 16.1 million) in the 2022 financial year. Rental income increased by CHF 0.6 million to CHF 16.6 million (previous year: CHF 16.0 million). This 4.0% increase in rental income was due to the reduction in the vacancy rate and rent adjustments due to indexation.

Expenses totalled CHF 6.9 million (previous year: CHF 6.4 million). The fund's total expense ratio (TER_REF [GAV]), an indicator of the operating expenses charge, was 0.91% (previous year: 0.99%). The decline is explained by the reduction of the management fee from 0.75% to 0.65% with effect from 1^st January 2022. Net income amounted to CHF 9.9 million (previous year: CHF 9.7 million), equivalent to CHF 4.12 per unit for 2 400 000 units (previous year: CHF 4.04 per unit for 2 400 000 units).

Net fund assets decreased by CHF 3.4 million to CHF 232.0 million (previous year: CHF 235.4 million) in the reporting period. This change derives from total net income of CHF 6.8 million and the distribution of CHF 10.2 million paid out for the 2021 financial year.

The investment yield was 3.00% as at year-end (previous year: 3.98%) on a net asset value per unit of CHF 96.65 per unit (previous year: CHF 98.08 per unit) and an unchanged distribution of CHF 4.25 per unit. Due to the stock market price performance, the distribution yield increased to 5.04% (previous year: 4.59%).

Thanks to the stable result, the SF Commercial Properties Fund will pay an unchanged distribution to investors for the 2022 financial year of CHF 4.25 per unit, of which CHF 3.15 per unit will be exempt from withholding tax.

Outlook

In the current year, rental agreements have already been concluded for around 1 800 m² in various properties with an annual rental income of around CHF 250 000. This reduces the vacancy rate to below 13%.

For a development project in Möhlin, a tenant interested in a long-term lease for the entire property has been found. Currently, the layout of the new property is refined and the set-up for the rental agreement is revised.

The management company will change on 1^st April 2023. From this date, the properties of the fund will be managed by H&B Real Estate AG, Zurich.

The improved letting situation and current good demand for rental space leads us to expect higher net income. The goal is to secure a stable distribution.