AFIAA: Good operating result, but currency losses
The AFIAA investment foundation, which specializes in international real estate investments, was able to increase the quality of its portfolio through acquisitions and sales in the 2014/2015 financial year. However, the operating performance was diminished by currency losses following the abandonment of the CHF/EUR minimum exchange rate in January 2015.
AFIAA generated a net result of CHF 62.9 million (previous year: CHF 51.6 million) with invested equity of CHF 1.11 billion - according to the investment foundation, this is the best liquidity result since its foundation. The highest occupancy rate ever achieved and various special effects contributed to the record result. The rent default rate fell from 8.25 percent in the previous year to 6.61 percent.
The direct investment portfolio grew only slightly by 7.66 percent in the year under review due to currency developments and portfolio streamlining. In total, properties with a volume of around CHF 250 million were purchased and five properties were sold for total net sales proceeds of around CHF 80 million.
The properties "Arch Square", Washington D.C., and "Congress Avenue", Austin, were acquired. Already in December 2014, AFIAA acquired the trophy property "Brondankulma" in Helsinki. The properties "Rohr Road", Groveport, Ohio (USA), "Market Street", Philadelphia (USA), the two "Datacolor" properties in Lüneburg and Öhringen (DE) and "Tele Haase" in Vienna were sold. The sale of the Spanish logistics property "Poligono Industrial" in Casabermeja near Málaga also took place after the balance sheet date. For the 2015/2016 financial year, AFIAA is planning further purchases of core commercial properties in metropolitan locations close to city centers and at the same time the further sale of non-strategic properties.
Return on equity rises to 6.85 percent
Taking into account the revaluation gains, this resulted in a currency-adjusted return on equity of 6.85 percent (previous year 6.31%). However, the good operating performance in the reporting year was impacted by the abandonment of the minimum euro exchange rate in 2015 and the associated currency loss. As an unhedged investment product for foreign investments, AFIAA is fully exposed to translation risk. Currency hedging is conceptually the responsibility of investors. Margins were only slightly affected. The operating profit margin reached 84.05 percent (85.14% as of September 2014).
Against the backdrop of increasing pressure on acquisition yields and a clear commitment to the quality and growth strategy, the Board of Trustees commissioned the Executive Board to develop a new, dynamic target yield model.
The Board of Trustees now provides for an adjustment of the issuing commission for all capital commitments accepted after the 2016 Investors' Meeting. A further differentiation is made via the launch of a new tranche A-II with higher management fees of up to 25 basis points on the invested equity.
Personnel changes in the Board of Trustees
The Board of Trustees proposes Max-Eric Laubscher, Head of Asset Management of the Basel-Stadt Pension Fund and representative of the second largest investor, for election to the Board of Trustees at the Investors' Meeting on January 28, 2016. He replaces Beat Bommer, who accepted a new professional challenge as Head of Real Estate of the City of Biel in summer 2015. Marçal Decoppet, Director of the Copré Foundation, will be proposed to the investors' meeting as a representative from French-speaking Switzerland for election to the Foundation Board.
The number of investors rose from 35 to 40 pension funds. AFIAA was able to attract three new funds each in German-speaking and French-speaking Switzerland. On the other hand, one smaller, public-law fund withdrew from the investment foundation. (ah)
