The Swiss Prime Site Solutions Investment Fund Commercial («SPSS IFC») achieved a cash flow yield of 2.75% in the first half of the 2023/2024 reporting period. The fund has thereby comfortably exceeded the target range of 1.75%–2.0% after six months. The high cash flow yield corresponds to earnings per share of CHF 2.74, which means more than 60% of the target dividend per share has already been reached at the halfway point of the year.
Relative outperformance of +12.77% versus SWIIT since launch
In a challenging market environment, the SPSS IFC has achieved a total return of +7.24% in the period from its launch on 17 December 2021 up to 31 March 2024. This represents a relative outperformance of +12.77% versus the SXI Real Estate Funds Total Return Index (SWIIT), which was down by 5.53% in the same period.
Low vacancy rate and increase in net revenue
The fund’s strong asset management is reflected in the vacancy costs. Vacancies, which had increased due to acquisitions, were almost halved in the past 12 months. As a result, the vacancy costs of the fund are currently very low at 1.7% (H1 2022/2023: 3.2%). Among other achievements, the «Centro Lugano Sud» property was fully let as of the balance sheet date for the semi-annual report. The rent default rate was further reduced to 1.6% (H1 2022/2023: 3.7%) and thus remains low.
Net revenue up by 2% and WAULT stabilised at a high level
Net revenue increased by 2% compared with the first half of 2022/2023. Among other things, this was due to the high indexing rate of ~95% and the further reduction in vacancies. The low vacancy costs made a significant contribution to a high EBIT margin of 86% at property level. The weighted average unexpired lease term (WAULT) stabilised in the first six months and stood at 5.5 years on the balance sheet date.
Implementation of the sustainability strategy
Sustainability is considered an integral component of the SPSS IFC’s asset management. Almost 60% of the energy mix is generated by heat pumps. The fund has created ten-year investment plans and a CO2 reduction pathway for all properties and integrated these into the portfolio and asset management. In addition, the fund has secured 17% of the target rent through «green leases» and further rolled out the installation of automated energy data readers. The fund is participating in a complete GRESB assessment in the current financial year and has signed the UN Principles for Responsible Investment.
Selective portfolio growth
No acquisitions or sales were made in the first half of the 2023/2024 financial year. The fund will selectively expand its portfolio through acquisitions, with a focus on generating an attractive and sustainable cash flow yield. The sourcing is focused on SMEs in order to open up interesting off-market acquisition opportunities. The fund is aiming to increase the share of properties in German-speaking Switzerland. There are currently some very attractive acquisition opportunities in the pipeline with a net return of over 4.5%.
Fund profile
The Swiss Prime Site Solutions Investment Fund Commercial is aimed at qualified investors and primarily invests in commercial real estate in established business locations throughout Switzerland. The investment focus is on broad diversification, high cash flow stability and attractive risk-return profiles. With an investment strategy that maintains an anti-cyclical focus on commercial properties, the SPSS IFC utilises attractive investment opportunities and offers enhanced protection from the effects of inflation with a high indexing rate of over 95%. SPSS IFC is the direct owner of the real estate; as such, taxes on income and capital gains are pre-paid by the fund itself, making them tax-free to investors (private and business assets) who are resident in Switzerland.
Detailed information and presentation
A recording of the presentation for the 2023/2024 semi-annual report can be found at the following link:
For additional information, see our website.
Swiss Prime Site Solutions AG
Swiss Prime Site Solutions is a group company of the listed Swiss Prime Site AG. The real estate asset manager, which has CHF 12.6 billion in assets under management and a pipeline of CHF 1.1 billion, develops tailor-made services and real estate solutions for third-party clients. Swiss Prime Site Solutions AG has been approved as a fund manager by FINMA pursuant to Art. 2 (1)(d) in conjunction with Art. 5 (1) FinIA.
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