Swisscanto (CH) Real Estate Fund Responsible IFCA: Strong performance in fiscal year 2020

• Total income increased to CHF 78.7 million (2019: CHF 72.5 million) and return
  on investment boosted to 6.8% (2019: 6.4%)
• Stable, sustainably financed payout of CHF 3.30 per share
• Low rental income loss rate further reduced to 3.7% (2019: 4.3%)
• Internal growth advancing as planned, enlargement of portfolio through selective acquisitions

Net income boosted in fiscal year 2020

Swisscanto (CH) Real Estate Fund Responsible IFCA (ISIN: CH0037430946) once again posted a strong performance in fiscal year (FY) 2020 that included an increase in operating income via a further reduction in the rental income loss rate. The fund earned total income of CHF 78.7 million for FY 2020 (FY 2019: CHF 72.5 million) for a return on investment of 6.8% (FY 2019: 6.4%). The total income figure consisted of net income of CHF 37.5 million (FY 2019: CHF 36.8 million) plus unrealized capital gains amounting to CHF 41.2 million (FY 2019: CHF 35.7 million). The fund further reduced its already low rental income loss rate in FY 2020 from 4.3% to 3.7%. Against this backdrop, the fund will pay out CHF 3.30 per share for the eighth consecutive year, once again giving proof of the fund’s stable payout characteristics. The payout ratio stands at 92.9% (FY 2019: 94.7%). The payout will be disbursed to investors on 16 April 2021.

Progress made in optimizing the property portfolio

The fund continued to focus on its strategy of pursuing internal growth in FY 2020. One item particularly worth highlighting in this context is the progress made on the replacement construction project on Hintere Bahnhofstrasse in the center of Lachen, where four new five-story multifamily buildings with a total of 62 residential units are currently under construction (external link opens new pagewww.frida-lachen.ch) to replace the original elderly building with 44 apartments that were in need of renovation. The construction work progressed further in FY 2020, and the new apartments and spaces will be ready for occupancy by mid-2021 as originally planned. For an investment volume of around CHF 35 million, the project can reap the fund sustainable added income amounting to over CHF 1.3 million per annum. In addition, the fund pressed ahead with substantial renovation and fit-out work for the properties Pestalozzistrasse 85 in Thun, Solothurnerstrasse 44 in Basel, and Schwandenholzstrasse 234–240 and Engweg 1/3 in Zurich. These investment projects for existing portfolio properties are aimed at securing sustainable income and realizing rent-raising potential. They also make a valuable contribution to reducing the portfolio’s CO2 emissions footprint.

Property in St. Gallen acquired

As of end-2020, the fund was invested in 128 properties with a combined market value of CHF 1.7343 billion (end-FY 2019: CHF 1.6592 billion). The fund generated more than 90% of its income in the housing and parking sectors, focusing on the stable middle rent-price segment. The fund was only active very selectively in the transaction market in FY 2020. It acquired two renovated residential properties in a good location in the city of St. Gallen in June 2020. The fund did not sell any properties. The acquired multifamily buildings at Lehnstrasse 89/91 in St. Gallen comprise a total of 18 housing units with spacious floor plans and 20 parking spaces. The total investment cost for the acquisition amounted to CHF 10.4 million, for a gross yield of 4.0%.

Outlook

The fund still aims to maintain a stable payout for FY 2021. To achieve that, optimization of the existing portfolio continues to stand in the foreground. Renovation projects that have already been initiated will be rigorously carried out, and the fund will proceed with planning for new investments in portfolio properties. Potential acquisitions will continue to be examined only selectively. Current market conditions may also be used to divest properties that do not fit with the fund’s strategy.