Press release March 9, 2023

Press release (PDF)

Zurich, March 9, 2023 – The Helvetica Swiss Opportunity Fund enjoyed a year of strong growth and now comprises 17 high-quality properties in good locations with a market value of around CHF 322 million.

• Total fund assets increased by 39% to CHF 342 million
• Portfolio increased by 38% to CHF 322 million at year-end
• Acquisition of six properties with a total of around 37,500 square meters of rental space
• Significantly oversubscribed capital increase generated encouraging inflow of new funds
• Actual rental income (annualized) increased by 35.5% to CHF 16.8 million within one year
• Performance of -2.4% compared to the benchmark SXI Real Estate Funds Broad (-15.2%)
• Distribution increased from CHF 6.10 to CHF 6.15 per unit
• Indexed leases of around 98%

Details to the financial year 2022

In a challenging market environment, the Helvetica Swiss Opportunity Fund again recorded a high-growth financial year. The capital increase carried out in the first half of the year was successfully completed. Due to the high demand from investors, the fund was oversubscribed, which underlines the quality of the fund. The proceeds from the issue were used to purchase 6 properties with tenants with strong credit ratings covering around 37,500 square meters, which corresponds to an increase in rental space of around 46%. As a result, annualized rental income increased by 35.5% from CHF 12.4 million to CHF 16.8 million. As a result, the fund's portfolio has grown to CHF 321.8 million with 17 properties and around 120,000 square meters of rental space in attractive locations in Switzerland.

The occupancy rate increased by a gratifying 0.9 percentage points from 96.7% to 97.6% due to acquisitions of fully leased properties with long-term rental income, which will contribute to stable and high distributions.

Income statement

In the reporting period, rental and building lease income of CHF 14.8 million was generated, which represents an increase of CHF 5.8 million. Expenses of CHF 5.9 million were incurred in the reporting year, which corresponds to an increase of CHF 2.0 million.

In terms of unrealized capital gains, a reduction in fair values of CHF 1.0 million was recorded on the overall portfolio. This is mainly the result of cost increases for planned refurbishment projects. However, the fund management is con-vinced that it will be able to generate higher rental income in the future with the revised investment planning.

Balance sheet

Total fund assets amount to CHF 342 million. The market values of the properties increased by CHF 88 million from CHF 234 million to CHF 322 million. Cash and cash equivalents increased by CHF 6 million and amount to almost CHF 14 million. Shares in other real estate funds and real estate investment companies as well as other assets increased by CHF 2 million to CHF 6 million compared to the previous year. 

After deducting liabilities of CHF 137 million and liquidation taxes of CHF 16 million, net fund assets increased by CHF 37 million year-on-year to CHF 189 million.

The debt financing ratio is 40.9% and thus below the limit of 50% stipulated in the fund contract, which applies for the first five years from launch in accordance with the exemption regulation.

Distribution and performance

Compared to listed Swiss real estate funds, which have fallen disproportionately, the price of HSO Fund units has remained relatively stable. The price of the fund units fell by 7.3% from CHF 123 to CHF 114 per unit. Taking into account the distribution of CHF 6.10 paid out in the first half of the year, this corresponds to a performance of minus 2.37%.

The HSO Fund is an outperformer with a distribution yield of 5.4% as of 31.12.2022. As a result of the distribution for the 2021 financial year of CHF 6.10 per fund unit and the overall performance, the net asset value decreased by CHF 0.97 from CHF 122.12 to 121.15 per unit.

The investment return generated in the financial year is 4.4%, this after deduction of the distribution in the first half of the year and as a result of the slight devaluation of the portfolio. For the financial year 2022, a distribution of CHF 6.15 per unit will be made, which represents an increase of 0.8% compared to the previous year.

Outlook

We expect the fund to continue to grow sustainably in 2023, thanks to increases in rental income and a further reduction in vacancies. The fund management expects demand for commercial rental space to remain high. With around 98% indexed leases in the fund, investors are very well protected against inflation, which means that rental income can be continuously increased through rent adjustments.

The portfolio is also to be further expanded in 2023. There are currently several attractive properties in the pipeline, the acquisitions of which can further significantly increase the quality and distributive capacity of the portfolio. If market conditions are good, a further capital increase will be considered.

The fund management aims to further increase the distribution compared to the previous year and is targeting CHF 6.20 per fund unit, which would mean an increase of 5 centimes. Accordingly, the fund remains one of the highest-distributing Swiss real estate funds.

¹ The figures were calculated according to the SFAMA’s specialist information factsheet on the key figures of real estate funds dated September 13, 2016, issued by Asset Management Association Switzerland (AMAS). The imputed rent default rate as of December 31, 2021, is negative (-0.1 percent) because reversals of overstated valuation adjustments resulted in earnings from collection losses. Including the rent reductions, the rent default rate would amount to 2.7 percent.

The annual report 2022 of the HSO Fund is available on the company’s website or also under Swiss Fund Data.

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About Helvetica
Helvetica Property Investors AG is a leading real estate fund management company and asset management firm. We deliver sustainable value to our clients through active, long-term ownership of safe and stable real estate investments. With a fully integrated real estate investment platform, we are able to provide both standardized investment products and customized investment plans. We are proud of our longstanding reputation for outstanding client service and dedi-cation to responsible ownership. Our firm is approved and regulated by the Swiss Financial Market Supervisory Au-thority FINMA.

About Helvetica Swiss Opportunity Fund
The HSO Fund is a Swiss real estate fund open exclusively to qualified investors. The HSO Fund invests in special purpose properties in the Swiss economic centers. The focus is on fully let properties with long-term leases and few tenants generating stable income. The investment objective is mainly the long-term preservation of value and the distri-bution of reasonable profits. The fund share units can be traded over-the-counter. The HSO Fund is approved by the Swiss Financial Market Supervisory Authority, FINMA.

Ticker Symbol HSO; security 43 472 505; ISIN CH0434725054

Disclaimer
This media release does not constitute a prospectus within the meaning of Art. 35 et seq. of the Federal Act on Finan-cial Services nor does it constitute a Key Investor Information Document (KIID) within the meaning of the Swiss Collec-tive Investment Schemes Act or a Key Information Document. It does not constitute an offer or a recommendation to subscribe for or redeem fund shares, but is intended solely for information purposes. This media release may contain forward-looking statements that are subject to uncertainties and risks and may change. Historical performance is no guarantee of current or future performance. The performance data do not take into account any commissions and costs charged on the subscription and redemption of shares. The documents that are solely relevant for an investment decision, the prospectus with integrated fund contract as well as the current annual report can be obtained free of charge from the fund management company. This media release is not addressed to persons resident and/or domi-ciled outside Switzerland. In particular, this media release may not be made available or handed over to US persons within the meaning of the US Securities Act or US tax regulations, nor may it be distributed in the USA.