SFP AST Swiss Real Estate: Qualitative growth and capital increase in 2020
SFP AST Swiss Real Estate succeeded in nearly doubling its portfolio value in the first half-year 2020 with high-quality properties situated in prime locations, with the new funds resulting from the capital increase fully invested in a very short time. The Investment Group plans to execute an additional capital increase in 2020 for the further expansion of the real estate portfolio in the current financial year.
Real estate portfolio
The market value of the portfolio surged by 93% to CHF 199.3 million since year-end 2019. The portfolio comprised 15 properties located in 7 cantons as at the reference date. The vacancy rate amounted to a low 1.8%, with a weighted average unexpired lease term (WAULT) of around 6.6 years. The current type of use allocation consists of 58% commercial and 42% residential properties. The focus of future growth is aimed at residential use properties, with long-term targets for type of use allocation of 40% and 60% for commercial and residential, respectively.
Financial results
Annual target rental income soared by approximately 95% to CHF 8.1 million since year-end 2019. Borrowed capital amounted to roughly CHF 50.4 million as at the reference date, corresponding to a debt financing ratio of 25.3%. Operating expenses increased by a disproportionately lesser extent, paving the way for the operating profit margin (EBIT margin) to climb from nearly 64% as at end-2019 to more than 72% as at mid-2020.
The impact of COVID-19 on the Investment Group was very modest thanks to the high 60% share of residential properties during the lockdown as well as broad and favourable tenant structure in terms of commercial types of use. Individual solutions were found and agreements concluded with the affected tenants on a mutually cooperative basis. The rent default rate is expected to waver at less than 1% of net rental income for the current financial year.
Outlook
SFP AST Swiss Real Estate Investment Group aims to execute a further capital increase in autumn 2020. The new funds are necessary for further expanding the high-value real estate portfolio as well as repaying borrowed capital. The debt financing ratio currently amounts to 22.5%. The focal point with regard to pipeline expansion and further acquisitions is directed at residential properties in urban locations and sustainable cash flows.
Further information regarding SFP Investment Foundation as well as SFP AST Swiss Real Estate and existing portfolio is available at https://www.sfp.ch/en/sfp-group/companies/sfp-investment-foundation/.
The Investment Group is open at any time. We would be happy to personally meet with interested new investors.