HSC Fund on course for growth

Total fund assets increased by 7% to CHF 703.4 million, according to Helvetica. The target rental income (annualized) amounts to 41.9 million. This is 7% more than at the end of 2019 or an increase of 42% compared to the previous year.

Rental income increased by 40% to 18.1 million within the year (previous year: 12.9 million). The increase was mainly due to acquisitions, Helvetica said. The fund acquired six properties in Ittigen, Lyssach, Triengen, Gwatt-Thun, Rorschach and Bischofszell in the second half of 2019, and two properties in Frauenfeld in the first half of 2020. As of May 1, a property in Versoix with an annual target rental income of 1.4 million was added to the portfolio. In the first half of 2020, the property contributed rental income of around 0.2 million for two months. The occupancy rate as of June 30, 2020 was 94.4% (12/31/2019: 94.1%; 06/30/2019: 93.6%).

The net income of the HSC Fund increased by 44% year-on-year from 8.9 to 12.8 million. The valuation of the portfolio resulted in an unrealized gain of 2.6 million (PY: 2.9 million). Total income in the first half of 2020 amounted to 13.3 million - an increase of 21% compared to the previous year (11.0 million).

Total fund assets as of June 30, 2020 amounted to 703.4 million (Dec. 31, 2019: 654.7 million). The value of the real estate portfolio increased from 628.9 million at the end of 2019 to now 678.4 million.

"Manageable" impact of the pandemic

The impact of the Corona pandemic on the rental income of the HSC Fund is currently manageable and lower than assumed in April 2020, Helvetica says. The fund has around 24% of retail space in the food or non-food sector, of which around a quarter is food space that was not affected by the lockdown or was only affected to a very limited extent. In the non-food areas, 78% of the rental income came from "rather creditworthy tenants with group character and longer lease terms".

If the HSC Fund were to make a proposal to all tenants affected by Covid-19 - irrespective of any legal entitlement - that would comply with the new legal framework, there would be a one-off provisioning requirement of around 1.6 million at the overall fund level for the 2020 annual results. Adjusted for tenancies that are not entitled to a rent reduction under the expected new legal framework (i.e. rents above CHF 20,000 per month), the provisioning requirement would only be around 0.5 million, which has been taken into account in the 2020 half-year financial statements. This would be around 1.3% of the Fund's total annual target rental income.

Additional purchase in Arbon

Helvetica further announces that HSC Fund has acquired a mixed-use, high-yield commercial property in Arbon worth 26.2 million with retroactive effect from July 1. The property is located in an "excellently developed, extremely business-intensive location not far from the highway" and has a leasable area of almost 22,500 sqm. According to the information, the annual target rental income amounts to approx. 1.4 million, the occupancy rate is 99%. The acquisition has increased the value of the real estate portfolio to currently around 705 million.

Also due to the acquisitions in Versoix and Arbon, the fund management expects a significant increase in rental income for the second half of the year compared with the same period of the previous year. A further capital increase is planned for September; the issue proceeds will be used to expand the real estate portfolio. (ah)