CS REF International lowers distribution
Credit Suisse's internationally investing real estate fund is suffering from devaluations of existing properties. More than 400,000 units in the fund have now been terminated.
Credit Suisse Real Estate Fund International (CS REF International) was unable to decouple itself from developments in the global real estate target markets in fiscal year 2022. According to Credit Suisse Asset Management (CSAM), the net asset value will be reduced from CHF 1,070.72 per unit to CHF 961.39/unit. The distribution will be lowered from CHF 40 to CHF 35 per unit.
Portfolio value falls sharply
In particular due to devaluations of portfolio properties in the US, the UK, the Netherlands and Poland as well as the sale of three properties in Chile no longer in line with the strategy, the fair value of the properties decreased, CSAM said. It decreased from CHF 4.21 billion to CHF 3.68 billion. The average real discount rate increased from 4.37% to 4.51% in the process. The rent default rate increased from 8.0% to 8.5%.
Performance clearly in the red
The discount increased from -1.5% in the previous year to -18.9%, and the performance came to -23.1% (previous year: 5.34%), clearly below the benchmark, the SXI Real Estate Funds Broad (-15.2%). Return on investment (-6.76%; previous year: 3.46%), return on equity (-6.35%; previous year: 3.37%) and return on invested capital (-4.19%; previous year: 2.98%) also turned negative.
Further, CSAM announces that as of December 31, 2022, notices of cancellation were received for 407,787 units, representing 13.3% of units outstanding. The cancelled shares are expected to be redeemed in April 2024 in accordance with the cancellation period.
New construction project in Australia is ready
The portfolio was optimized in the course of the year: The sale of the three properties in Chile reduced the portfolio to 54 properties. In Brisbane, the new construction project "Jubilee Place" was completed in March 2022, while in Dublin the total refurbishment of the commercial property "Dockline" was completed and received the NetZero Award. Both properties are now almost fully leased on good terms, CSAM said. In Seattle as well as in Frankfurt, vacancies have been significantly reduced, and the term of the corresponding leases will begin in fiscal year 2023.
The asset manager reiterates its aim to convert the fund into a NAV-based product. Preparatory work is at an advanced stage, and a conversion is expected in the second half of the year. (ah)
