The “Swiss Life REF (LUX) Commercial Properties Switzerland” real estate fund is planning a capital increase with a subscription period from 8-19 June 2020. A total of CHF 85 million will be raised to finance the purchase of a high-quality real estate portfolio with five properties.
Both current and new investors1 may participate in the capital increase. The issue will proceed on a best-effort basis with a maximum issue volume of CHF 85 million. The actual number of newly issued units is defined by the fund management at the end of the subscription period.
Purchase of a high-quality property portfolio
The capital increase and the borrowing of funds are to finance the acquisition of a high-quality new portfolio with five properties at around CHF 100 million. The portfolio is currently owned by Swiss Life Ltd and distinguished by its very high location and property quality and high rental rate. The properties from the new portfolio are in Zurich (two properties, about 45% of the market value), St. Gallen (two properties, about 25% of the market value) and Montreux (one property, about 30% of the market value). All the properties have a very good micro location. The cumulative revenues exceed 70% from office use with a weighted average lease term of 3.7 years.
At home in good locations
Swiss Life REF (LUX) Commercial Properties Switzerland has invested in first-class commercial properties since its launch in November 2015. Thanks to the very good quality of the properties and locations, the fund has performed well in recent years (annual performance based on net asset value since launch: 4.91%). In addition to several extensive renewals, the focus has mainly been on consistent rental rate improvement (rental rate as at 31 March 2020: 97.1%). The property portfolio comprises 34 high-quality properties with a market value of around CHF 1069 million as at 31 March 2020.
High-quality commercial real estate still attractive
The real estate economy slowdown due to COVID-19 is also affecting the domestic real estate market. However, core properties in good locations with stable cash flows are less exposed to current developments. In particular, high-quality properties will remain in demand in the long term.
Around 56% of the rental income of Swiss Life REF (LUX) Commercial Properties Switzerland is from offices and around 29% from retail tenants. The properties are in excellent locations, which ensure sustainable mid and long-term letting, even accounting for the expected impact.
1 Professional investors in accordance with Annex II of Directive 2014/65/EU and/or qualified investors in accordance with the Swiss Federal Act on Collective Capital Investments (CISA).
Details of capital increase
|Name||Swiss Life REF (LUX) Commercial Properties Switzerland, FCP-SIF
|ISIN | Swiss security number||LU0820924123 | 19328638|
|Legal form||FCP – SIF (Specialised Investment Fund)
|Issue volume||About CHF 85 million
||Monday, 8 June 2020 to Friday, 19 June 2020, 4:00 p.m.
|Allocation of fund units
||Key date for the allocation of units and simultaneous dispatch of the notice to pay is Monday, 13 July 2020.
||NAV valuation date: Tuesday, 30 June 2020; plus issuing commission (1.0%) and investment fee (1.5%)
|Subscription fee (issuing commission, investment fee)||The issuing commission for the new units is 1.0% for the fund management company, custodian bank and/or distributor. An investment fee of 1.5% is charged in favour of the fund assets
|Payment under subscription
||Payment no later than Monday, 20 July 2020, for value date 20 July 2020. The new shares will be issued on Friday, July 24, 2020.
||The new units are eligible for distribution for the fund's full business year (1 October 2019 to 30 September 2020).
|Nature of issue
||The issue will be on a best-effort basis.
|Appropriation of issue proceeds||The issue proceeds will be used to purchase a high-quality portfolio of five commercial properties owned by Swiss Life Ltd.