SF Retail Properties Fund: Good half-year result in a challenging environment

• Expected rental income increased to CHF 46.9 million
• Stable figure for unexpired contract terms of 6.6 years thanks to new business and targeted extensions
• Market value increased by 6.36% (CHF 51.2 million) to CHF 856.1 million

Real estate portfolio
As at 30 June 2021, the SF Retail Properties Fund owned a property portfolio with a market value of CHF 856.1 million comprising 91 properties in over 20 cantons. Lettable space totalled 236 820 m², the largest portion accounted for by retail space at 76.7%, followed by storage and ancillary space at 9.1% and office/restaurant space at 6.9%. The residential portion equals to 2.7%. The tenant base remains stable, with the largest tenants being Coop, Migros, MediaMarkt, Aldi Suisse, Lidl Schweiz and Denner.

Financial result as at 30 June 2021
The rental income increased by CHF 2.2 million in the first half of 2021, which equals to an increase of 11.47% compared to the first half of 2020. This was achieved through property acquisitions and successful letting activities. Compared to 31 December 2020, net fund assets (NAV) decreased by CHF 7.0 million from CHF 620.6 million to CHF 613.6 million. This reduction resulted from the distribution of CHF 26.4 million in April 2021, equivalent to CHF 4.35 per unit. As at 30 June 2021, net income increased - compared to first half of 2020 - by 6.67% to CHF 14.1 million and total profit went up in the same period by 56.51% to CHF 19.4 million.

Impact of COVID-19
Due to the pandemic, the Federal Council ordered the closure of individual sectors between December 2020 and May 2021, affecting individual tenants of the SF Retail Properties Fund such as fitness centres, restaurants and non-food formats. However, a maximum of 6% of rental income was affected by closures thanks to the focus on "daily necessities". The fund management company was in constant contact with affected tenants and operators, formulating suitable solutions to avert long-term consequences. As at 30 June 2021, agreements were concluded with around twenty tenants. The reductions in rental income of around CHF 0.26 million were linked to contract extensions with an equivalent value of around CHF 4.7 million.
The measures to curtail the pandemic also meant that individual retail formats, particularly in the food sector, were able to post record sales in the last six months.

Outlook
The aim is to pursue a forward-looking strategy to optimise and stabilise the portfolio. As such, the focus is on letting to achieve higher operating income and guarantee the distribution on the basis of net income. Profitability and target rental income should be boosted by the acquisition of more properties.