For its fourth financial year, Helvetia (CH) Swiss Property Fund is again able to report an encouraging set of results, in a challenging market environment. With solid net income of CHF 22.59 million as well as the strategic focus on residential usage accounting for 78% of rental income, a stable development produced total income of CHF 0.16 million. This represents an investment yield of 0.41%.
Active management of the investments increased rental income to CHF 36.93 million (2021/22:CHF 27.36 million), while the rent default rate declined to 2.48% (2021/22: 2.53%). This had a positive impact on earnings capacity, with the EBIT margin increasing to 66.19%, versus 65.05% in the previous year.
Higher net income per unit
The net income available for distribution registered a substantial year-on-year increase, rising from CHF 17.94 million to CHF 22.59 million. This represents net income per unit of CHF 2.78 (2022: CHF 2.76). The previous year's distribution of CHF 2.75 per unit was maintained for the year under review, despite higher financing costs. Accordingly, a total of 94.53% of the income available for distribution is being distributed to investors, which corresponds to a payout ratio of 98.90%. Based on the OTC price of CHF104.00 as at 30 September 2023, the dividend yield is a gratifying 2.64%.
The slight, market-related drop in property portfolio value is offset in part by the positive operating result. Unrealized capital losses amount to CHF22.02 million (2021/22: unrealized capital gains of CHF 8.45 million). This value adjustment is attributable to higher interest rates over past months and the resultant rise in the discount rates applied by independent appraisers. This led to a decline in market values in the portfolio.
Successful capital increase
In the fourth financial year (1 October 2022 to 30 September 2023), attention was focused on the capital increase that took place in spring 2023 for a gross amount of CHF 172 million. Subsequent to the capital increase, eight high-quality properties were acquired from the portfolio of Helvetia Insurance, with an approximate market value of CHF 229.5 million. At CHF 1,078 million, the portfolio's market value has thus topped the one-billion mark, and offers our investors ideal diversification in terms of macro- and microlocations, economic year of construction and tenant structure.
Successful first-time participation in GRESB
The financial year under review marked the first-ever participation in the Global Real Estate Sustainability Benchmark (GRESB), which was rewarded with a Green Star distinction. The Helvetia (CH) Swiss Property Fund also won three stars in the relative peer comparison. Alongside incorporation into the fund agreement in September 2023, they also serve to underpin the relevance of ESG considerations in the investment process. Responsible investment is one of the four focal points of Helvetia's sustainability strategy. By 2050, the company intends to gradually shift its investment portfolio to net-zero emissions, fulfilling the requirements of the Paris Climate Agreement.
Outlook for financial year 2023/24
Given the rise in the reference interest rate on 1 June 2023 and the adjustment of indexed rental agreements for apartments, additional rental income of CHF 1.12 million is expected for the current financial year. This corresponds to an increase of 2.95% versus target rental income. Similarly, the rise in the reference interest rate with effect from 1 December 2023 is likely to have a further positive impact on rental income.
With a market value in excess of one billion Swiss Francs, the Helvetia (CH) Swiss Property Fund is one of the largest non-listed real estate funds in Switzerland. In favourable market constellations, it thus meets the requirements for listing on SIX Swiss Exchange. This is planned for the first half of 2024.
About Helvetia Asset Management Ltd
Helvetia Asset Management Ltd is regulated by the Swiss Financial Market Supervisory Authority, FINMA, and provides fund management and asset management services. It offers collective investment schemes and is an independent fund manager operating in the interests of its investors. The company also handles investment advice and asset management, client representation and transaction management for employee benefit institutions, namely for real estate portfolios. Helvetia Asset Management Ltd has its registered office in Basel, Switzerland, and is a wholly owned subsidiary of Helvetia Holding Ltd, St. Gallen, Switzerland.
Disclaimer
The Helvetia (CH) Swiss Property Fund referred to in this media release is exclusively for qualified investors as defined in Art. 10 (3) and (3ter) of the Swiss Act on Collective Investment Schemes (CISA) in combination with Art. 4 (3-5) and Art. 5 (1) and (4) of the Financial Services Act (FinSA) resident in Switzerland. The details given of the real estate fund are intended exclusively as information and do not constitute legal, tax or financial advice, nor are they an offer or a recommendation to buy or sell investment instruments or other financial services or a solicitation or invitation to submit an offer. The sole binding basis for the purchase of or subscription to fund units is the fund agreement, including the appendix, and the latest annual report. These documents can be obtained free of charge from the fund management company, Helvetia Asset Management Ltd, Steinengraben 41, 4002 Basel, Switzerland, or the custodian bank, Zürcher Kantonalbank, Bahnhofstrasse 9, 8001 Zurich, Switzerland.
