SF Retail Properties Fund with strong operating result

• Market value increased to CHF 882.9 million
• Net income increased to CHF 4.67 per unit (+3.0%)
• Successful sale of ten properties resulted in realised capital gain of CHF 2.24 million
• Distribution of CHF 4.35 per unit for 2022 financial year

Real estate portfolio

The portfolio's strategic focus on 'everyday consumer goods' once again proved itself in 2022, a financial year overshadowed by depressed consumer sentiment and rising inflation. During the year the Fund purchased two properties, one in Winterthur and one in Zurich-Wollishofen, with a total market value of CHF 7.7 million. It also acquired a new construction project in Flawil/SG with a planned construction volume of CHF 18.1 million. As part of the ongoing portfolio optimisation process, ten properties were sold in 2022, resulting in a realised capital gain of CHF 2.24 million or CHF 0.37 per unit. As at 31 December 2022, the portfolio comprised 84 properties in 18 cantons with a target rental income of CHF 46.4 million. The portfolio's gross yield was 5.44% at year-end.

The vacancy rate of 5.95% as at 31 December 2022 was slightly higher year-on-year by 0.46 percentage points.

Financial result as at 31 December 2022

Total income amounted to CHF 43.2 million in the 2022 financial year (previous year: CHF 43.2 million). The sale of the ten properties has already been compensated in full, in terms of earnings. This was due both to the property in Kirchberg (BE) purchased the previous year, which for the first time contributed rental income for twelve months, and to the properties purchased during the reporting period. The lower vacancy rate and higher other income also had a positive effect on the total income.

Expenses totalled CHF 14.8 million (previous year: CHF 15.6 million), The fund's total expense ratio (TER_REF [GAV]), an indicator of the operating expenses charge, was 0.85% (previous year: 0.96%). The decline is due to the reduction of the management fee from 0.75% to 0.65% with effect from 1^st January 2022. Net income amounted to CHF 28.4 million (previous year: CHF 27.6 million), which is equivalent to CHF 4.67 per unit for 6 075 000 units (previous year: CHF 4.54 per unit for 6 075 000 units).

Net fund assets increased by CHF 1.4 million to CHF 634.4 million (previous year: CHF 633.0 million) in the reporting period. This change derives from total income of CHF 27.8 million, minus the distribution of CHF 26.4 million paid out for the 2021 financial year.

The investment yield as at year-end was 4.59% (previous year: 6.51%) on a net asset value per unit of CHF 104.42 (previous year: CHF 104.19) and the same distribution of CHF 4.35 per unit, of which CHF 3.15 per unit will be paid out exempt of withholding tax. Due to the stock market price performance, the distribution yield increased to 4.30% (previous year: 3.47%).

Development, renovations and new construction projects (selection)

A new construction project in Flawil (SG) was acquired in July 2022. The property comprises 1 700 m² of commercial space on the ground floor and 18 apartments with a total area of around 1 020 m² on the upper floors. After completion, photovoltaic systems (total: 120 kWp) will be installed on the flat roof as well as the sloping roofs. Waste heat from the commercial refrigeration plant will be used to heat the commercial space, while heat pumps will be used for the apartments. The new construction project started in April 2022 and topping out was celebrated in January 2023. Completion is scheduled in phases between November 2023 and March 2024.

Outlook

As good relationships with our tenants are key, these are maintained on an ongoing basis. Realisation of the planned construction activities will have a positive effect on letting and reduce the vacancies. Several contracts have already been signed, which will increase the rental income by around 5% over the next 18 months and reduce the vacancy rate. The portfolio is constantly being developed in a targeted manner through feasibility studies, usage concepts and densification projects.

In the coming financial year, the portfolio of the SF Retail Properties Fund will be enlarged and developed in line with strategy. This should be achieved by making acquisitions and developing expansion potential.