Scope publishes rating for Swiss Life Living and Working

The initial rating for the open-ended real estate fund Swiss Life Living and Working thus achieves the third-best possible rating after aaa and aa. The rating is currently only provisional because the fund was launched in December 2016 and therefore does not yet have the minimum history of two fully completed financial years, Scope reports.

The rating agency assesses the targeted sectoral diversification in the build-up phase as "already very consistently implemented". In a second phase of portfolio development, regional diversification is now to be further advanced. Scope also sees the integration into the Swiss Life Group as positive: with around 1,300 employees at 26 locations, Swiss Life Asset Managers Real Estate has a very broad-based network and the transaction teams can support the timely implementation of the investment strategy.

Scope assesses the acquisition policy to date as positive. Although purchases have also been made in peripheral areas of conurbations, these are predominantly characterized by population growth and have good transport links.

Performance above plan, but still room for improvement in sustainability

According to the asset manager, the fund is expected to perform at more than 2.5% p.a. using the BVI method. The first short financial year (22.12.2016 to 30.06.2017) ended with a return of 0.5%. At the end of the first full financial year on June 30, 2018, the planned target was clearly exceeded with a return of 3.6%. The return was also driven by increases in value, which amounted to 170 basis points in the last financial year. The BVI annual return as at October 31, 2018 is currently 3.7%, according to Scope.

However, the sustainability rating is significantly below the peer group average, according to Scope. However, sustainability aspects are to be given greater consideration in future, both in the risk management approach and in investment decisions. In the summer of this year, Swiss Life Asset Managers signed the UN Principles for Responsible Investment (UNPRI) and also became a member of the Global Real Estate Sustainability Benchmark (GRESB).

In terms of its financial structure, the fund achieved a slightly above-average rating compared to the peer group of open-ended mutual funds, according to Scope. The liquidity investment is low-risk. At 19.9%, the leverage ratio is slightly above the average for open-ended mutual funds investing in Europe. There is no exchange rate risk due to the current investments being limited to eurozone countries and financing in euros in matching currencies.

According to Scope, the rating is based on extensive data provided by the asset manager and an additional interview with the fund management. (ah)