SCCREF expands portfolio

With transfer of ownership at the end of June 2020, the Swiss Central City Real Estate Fund (SCCREF) has acquired a property in the centre of Lucerne with 56 individual apartments worth CHF 18.1 million. In addition, the purchase agreement for a portfolio of nine properties in Basel-Stadt in the order of 60 million has been notarised. According to the fund, these are existing properties in inner-city locations with around two-thirds residential and one-third commercial use. The economic change of ownership is to take place on 1 October.

As a result of the additional purchase in Lucerne and positive valuation effects, the fund's real estate portfolio has increased to a market value of 177.7 million as of June 30, 2020 (Dec. 31, 2019: 154.2 million). It reportedly currently consists of seven properties in very well-frequented city centre locations. Target rental income (annualized) is 6.9 million. In October, the portfolio grew to a market value of around 238 million due to the addition of the properties in Basel-Stadt, and the target rental income increased to over 9 million p.a., the SCCREF says.

The property at Grossmünsterplatz 7 / Laternengasse 5 in Zurich, which was extensively renovated last year, will be fully let again from November 2020, the statement continues. As a result of the repositioning, investments and future full occupancy, an increase in value of around 2 million has been achieved since the purchase in December 2018. As of 30 June 2020, the property was valued at 31.1 million.

Only minor pandemic effects on rental income

Rental income increased year-over-year from 0.3 million to 2.5 million as the portfolio expanded. The overall impact of the Covid-19 pandemic and lockdown on rental income was relatively small, the SCCREF said. To date, rent reductions totalling CHF51,000 had been granted, representing 0.7% of the portfolio's annual target rental income as at 30 June 2020, it said. Currently, three open requests are still being negotiated.

Total income for the period was 2.1m (prev. yr: 1.4m). The fund's operating profit margin for the first half of the year is put atTP1T 54.21. The rent default rate excluding projects was 7.6%. It said the market valuation of the properties as at June 30 had resulted in an overall appreciation of the portfolio ofTP1.2m.

Total fund assets increased to 186.1 million (31.12.2020: 160.8 million). Net fund assets were 124.8 million, corresponding to a net asset value of CHF 104.97 per fund unit.

For the second half of the year, SCCREF expects an increase in rental income due to the leasing in Zurich and the acquisitions in Lucerne and Basel. A capital increase is planned for the fourth quarter, it adds. Next year, the fund plans to convert to a mutual fund and go public on the SIX Swiss Exchange. (ah)