- Total fund assets increased by CHF 313 million to CHF 829 million
- Portfolio increased by 63% to CHF 818 million at year-end
- Proceeds from the capital increase were successfully invested in the acquisition of 21 properties and increased the portfolio to 62 properties
- Annualized rental income increased by 58% to CHF 28.9 million
- Net asset value increased by 2.7% from CHF 113.31 to CHF 116.37 per unit
- Performance of +2.8% versus the benchmark SXI Real Estate Funds Broad (-15.2%)
- HSL Fund is again an outperformer with a high distribution yield of 3.05%
- Distribution will be increased from CHF 3.40 to CHF 3.45 per share
Details of the 2022 financial year
The Helvetica Swiss Living Fund is one of the largest unlisted real estate funds in Switzerland with a focus on residential properties. Compared to the previous year, the fund has grown by more than 63% from around CHF 501 million to CHF 818 million. Additional high-quality properties were purchased in good locations, at the right time and at attractive prices. The number of residential properties increased further to 62 compared to 41 in the previous year. Annualized rental income increased by 58% from CHF 18.3 million to CHF 28.9 million. In addition, a further capital increase in the amount of CHF 126 million was successfully completed in the first half of the year. Due to strong investor demand, the fund was significantly oversubscribed, underlining its attractiveness. The proceeds from the issue were used to purchase 21 high-quality residential properties with over 660 apartments in good residential locations.
Income statement
The portfolio generated rental income of CHF 24.1 million. In the previous year, these amounted to CHF 11.4 million. Expenses totaled CHF 11.6 million, which corresponds to an increase of CHF 6.5 million compared to the previous year. The earnings potential of the acquired properties will only become fully apparent in 2023 - based on the annual rental income accruing to the fund.
Across the entire portfolio, under the item "unrealized capital gains", an appreciation of CHF 4.6 million was achieved on the portfolio of CHF 13.8 million compared to CHF 9.1 million in the previous year.
Balance sheet
The total fund assets of CHF 829 million reflect the acquisitions made in the past twelve months and the capital increase. As of the balance sheet date, the market values of the properties increased by 63% to almost CHF 818 million compared to the previous year's value of CHF 501 million. Cash and cash equivalents amounted to CHF 3 million and decreased by CHF 2 million compared to the end of the previous year. Other assets decreased by CHF 3 million from CHF 10 million to CHF 7 million. As at December 31, 2022, shares in other real estate funds amounting to approximately CHF 1 million are held. The increase of the portfolio by CHF 317 million is mainly explained by the acquired properties with an investment cost of CHF 303 million. After deduction of liabilities of CHF 376 million and liquidation taxes of just under CHF 7 million, net fund assets as at the balance sheet date were CHF 136 million higher at CHF 447 million compared with CHF 311 million at the end of the previous year.
Distribution and performance
Adjusted for the distribution, the fund units decreased by 2.2% from CHF 115.50 to CHF 113.00 per unit. Taking into account the distribution for the 2021 financial year of CHF 3.40 paid out in the first half of the year, this corresponds to a performance of 2.8%.
The HSL Fund is again an outperformer with a high distribution yield. Taking into account the distribution for the reporting year 2021 of CHF 3.40 per unit, the fund generated an extremely strong investment return of 5.9%, which is remarkable. The net asset value increased by 2.7% from CHF 113.31 to CHF 116.37 per unit during the reporting period.
For the 2022 financial year, a distribution of CHF 3.45 per unit will be made, which represents an increase of 1.5% compared to the previous year.
Outlook
The Helvetica Swiss Living Fund grew by 63% in the 2022 financial year and, with a real estate portfolio of CHF 818 million and around 1,850 first-class apartments, is one of the largest unlisted residential funds in Switzerland. The fund management assumes that housing in Switzerland will become substantially more expensive. Accordingly, HSL Fund is well positioned for an increase in market rents thanks to its low rent levels. On the one hand, the natural tenant fluctuation of around 15% per year means that the existing rents can be gradually adjusted to market rents in the long term. On the other hand, the further increase in the occupancy rate offers additional potential for increasing rental income. With an average rent quantile of a very low 39%, the level of rents is in the low-price segment and thus ensures good rentability and a high payout capacity in the long term.
The housing shortage is likely to continue to worsen, resulting in a strong increase in both existing and market rents. The fund management considers the timing to continue the fund's growth strategy to be ideal. Accordingly, further capital is being raised in order to benefit from the aforementioned factors. The focus continues to be on high-quality residential properties in easily accessible national economic centers with high population growth and good public transport connections. Further acquisition criteria are properties with low rent ratios, ideally between 30% and 50%. The aim is to invest mainly at yields that improve the portfolio ratios. If market conditions are good, the fund management will consider further capital increases to develop the fund along the planned growth strategy. A steady reduction of the leverage ratio is also targeted.
The fund management aims to further increase the distribution compared to the previous year and targets CHF 3.50 per fund unit. Accordingly, the fund is one of the highest-distributing residential funds in Switzerland.
The fund aims to be listed on the SIX Swiss Exchange by the end of 2024.
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 dedication to responsible ownership. Our firm is approved and regulated by the Swiss Financial Market Supervisory Authority FINMA.
About Helvetica Swiss Living Fund
The HSL Fund is a Swiss real estate fund open exclusively to qualified investors. The HSL Fund invests in residential real estate throughout Switzerland, primarily where regional and national economic centers are easily accessible. The investment focus of the fund is on older and newer properties with stable and sustainable revenues. The investment objective is primarily to preserve the fund's long-term value and to distribute reasonable profits. The fund share units can be traded over-the-counter. The HSL Fund is approved by the Swiss Financial Market Supervisory Authority, FINMA.
Ticker Symbol HSL; Valor 49 527 566; ISIN CH0495275668
