Swisscanto (CH) Real Estate Fund IFCA: Strong overall performance in 2019

• Total income increased to CHF 72.5 million (2018: CHF 68.3 million) and return
  on investment boosted to 6.4% (2018: 6.2%)
• Stable, sustainably financed payout of CHF 3.30 per share
• Rental income loss rate reduced to 4.33% (2018: 5.07%)
• Concentration on investments in existing portfolio properties, selective
  acquisitions in focus regions

Payout of CHF 3.30 per share for seventh consecutive year

The Swisscanto (CH) Real Estate Fund IFCA (ISIN: CH0037430946) once again achieved a solid performance in fiscal year (FY) 2019. The fund earned total income of CHF 72.5 million for FY 2019 (FY 2018: CHF 68.3 million) for a return on investment of 6.4% (FY 2018: 6.2%). The total income figure consisted of net income of CHF 36.8 million (FY 2018: CHF 36.6 Mio.) plus unrealized capital gains amounting to CHF 35.7 million (FY 2018: CHF 31.8 million). The net asset value (NAV) per share as of end-FY 2019 amounted to CHF 113.8 (end-FY 2018: CHF 110.3). The good income result will enable the fund to maintain a payout of CHF 3.30 per share. The payout ratio stands at 94.7% (FY 2018: 95.4%). The payout is thus sustainably financed and unchanged since 2013, once again giving proof of the fund’s stable and reliable payout characteristics. The payout will be disbursed to investors on 17 April 2020.

Selective expansion of the portfolio

As of end-2019, the fund was invested in 127 properties with a combined market value of CHF 1.66 billion (end-FY 2018: CHF 1.55 billion). In accordance with its strategy, the fund generated more than 90% of its income in the stable housing sector and the associated parking sector. The portfolio mainly consists of well-maintained residential properties in the middle rent-price segment. Due to selective acquisition activity, the makeup of the portfolio didn’t change substantially. Two attractive residential properties in good locations were acquired in the first half of 2019. The property Winkelriedstrasse 56 is situated in a central location in the historic city center of Lucerne. The building houses commercial premises on its lower floors and features seven upper floors of modern 2.5- to 3.5-room apartments with high-quality fit-outs. Its market value stands at CHF 40.2 million for a gross yield of 3.2%. The property Badenerstrasse 99-101 in Schlieren is a dual apartment building complex with a total of 27 housing units. Its market value stands at CHF 14.4 million for a gross yield of 3.3%.

Focus on investments in existing portfolio properties

In addition to those successful acquisitions, the fund also expedited internal growth, as planned. The replacement construction project in Lachen (Hintere Bahnhofstrasse 10) particularly made a major contribution to that end. It is proceeding on schedule, and the property is slated to be ready for tenancy in the second quarter of 2021. The newbuild complex will comprise four five-story apartment buildings with a total of 62 housing units. The groundwork for a number of targeted investments in existing portfolio properties for the aim of securing sustainable earnings and realizing rent-raising potential was also laid in 2019. Specifically, substantial renovation and fit-out work was initiated for the properties Pestalozzistrasse 85 in Thun, Solothurnerstrasse 44 in Basel, and Engweg 1–3 and Schwandenholzstrasse 234-240 in Zurich. Lastly, the fund undertook maintenance measures in 2019 to bolster the quality of the property portfolio. Altogether, the fund invested around CHF 8.6 million in building structure maintenance (2018: CHF 8.0 million).

Outlook

For FY 2020, the fund aims to maintain a stable payout even in the current uncertain market climate. Optimization of the existing portfolio and implementation of the prepared renovation measures stand in the foreground. Selective acquisitions will continue to be evaluated. The goal is to further enhance the quality of the portfolio while safeguarding income security through internal growth. Thanks to its broad regional diversification, its positioning in the stable middle rent-price segment and its very low exposure to commercial properties, the fund faces only a marginal direct impact from the COVID-19 crisis. However, developments surrounding the coronavirus and its longer-term effects on the housing sector in general and on the fund in particular will be analyzed continually and appropriate measures will be initiated and implemented.