SF Retail Properties Fund – Stable financial year 2023 and capital increase

• Portfolio's market value increased to CHF 885.6 million
• Expected net rents increased to CHF 47.2 million (previous year: CHF 46.4 million)
• Vacancy rate (as at reporting date) reduced to 5.39%
• Same distribution of CHF 4.35 per unit
• Capital increase by CHF 40.9 million in March 2024

Real Estate Portfolio

The portfolio's focus on "everyday consumer goods" once again proved successful in 2023. The market value of the 83 properties in the portfolio totalled CHF 885.6 million as at 31 December 2023. Due to discount rate adjustments, the property portfolio was devalued (like for like) by CHF 19.2 million. The portfolio's gross yield was 5.48% as at 31 December 2023. The vacancy rate declined by 0.56 percentage points year-on-year to 5.39% as at 31 December 2023, which is low compared to the benchmark.

In keeping with the fund's strategy, the property at Rue de la Nods 1 in Boncourt was sold for CHF 2.05 million as at 31 December 2023. An adjacent property of 484 m² was acquired for the new replacement construction project at Dorfstrasse 31/33 in Schöftland for a purchase price of CHF 0.35 million.

Construction and Development Projects

The Pré-Guillaume centre at Rue de l’Avenir 3/5 in Delémont was commissioned in early summer 2023 after the completion of the renovations. 13 apartments had already been let and several contracts for commercial space concluded by the end of 2023.

A new building will be constructed to replace the single-storey Coop building on plot 948 at Dorfstrasse in Schöftland. The project comprises a two-storey parking garage, a new Coop supermarket on the ground floor, and three-point blocks housing a total of 36 apartments on the upper floors. The building permit was issued in January 2024. The replacement building will be constructed in two phases, and completion is planned for 2027. 

In 2022, a new construction project scheduled for completion in March 2024 was acquired at Wilerstrasse 111-117 in Flawil. The project comprises 1 700 m² of commercial space on the ground floor and 18 apartments with a total area of 1 020 m² on the upper floors. The fully let spaces will be commissioned by March 2024.

Financial Result

The target rent of CHF 47.2 million could be increased by CHF 0.8 million on the previous year, primarily due to the adjustment of rents to inflation under indexed rental contracts. Total income amounted to CHF 43.4 million in the 2023 financial year (previous year: CHF 43.2 million).

Expenses totalled CHF 16.8 million (previous year: CHF 14.8 million). As in the previous year, the fund's total expense ratio (TER_REF (GAV), an indicator of the operating expenses charge, was 0.85%. Net income amounted to CHF 26.7 million (previous year: CHF 28.4 million), which is equivalent to CHF 4.39 per unit for 6 075 000 units (previous year: CHF 4.67 per unit for 6 075 000 units).

Net fund assets decreased by CHF 18.6 million to CHF 615.8 million (previous year: CHF 634.4 million) in the reporting period. This change derives from total income of CHF 7.8 million, minus the distribution of CHF 26.4 million paid out for the 2022 financial year.

The investment yield as at year-end was 1.29% (previous year: 4.59%) on a net asset value per unit of CHF 101.36 and the same distribution of CHF 4.35 per unit, of which CHF 2.45 per unit will be paid out exempt of withholding tax. At 4.07% (based on the price as at 31 December 2023), the distribution yield is stable at a high level (previous year: 4.30%).

Outlook

Since the turnaround of the interest rate environment, the real estate investment market has seen an increase in the supply of attractive retail properties. In order to benefit from this situation, the portfolio of the SF Retail Properties Fund will be expanded by acquisitions made in line with the strategy in the coming financial year. At the same time the current portfolio will continue to be developed in a targeted manner through feasibility studies, usage concepts and densification projects.

CHF 40.9 Million Capital Increase in March 2024

Swiss Finance & Property Funds Ltd will carry out a capital increase of CHF 40.9 million for the SF Retail Properties Fund from 7 March to 15 March 2024 (12:00 CET). Fifteen (15) existing units entitle the holder to purchase one (1) new unit for a net issue price of CHF 101.00 each. The issue will be carried out on a commission basis ('best-effort basis'), within the framework of a public rights offer in Switzerland. Subscription rights can be traded on the SIX Swiss Exchange between 7 March and 13 March 2024. The number of new units to be issued is limited to 405 000. It is possible that unsubscribed units, if any, will not be issued, which will reduce the issue amount. The exact number of new units to be issued will be determined after expiry of the subscription period, based on the subscriptions received. The fund management company will inform investors of the final number of new units to be issued by 21 March 2024 at the latest. The subscription paid-up date for the new units to be issued is 22 March 2024. The issue proceeds will be used to further expand the real estate portfolio as well as to exploit the potential of the investment properties and repay interest-bearing loans.

Issue Conditions