Swiss Central City Real Estate Fund expects loss in the first half of 2023
While the fund was successful in operational terms, the turnaround in interest rates had a negative impact. This resulted in lower market valuations and higher borrowing costs.
The Swiss Central City Real Estate Fund saw light and shade in the first half of 2023: two residential construction projects in St. Gallen and Zurich were completed, space in Geneva was re-let and a lease extension was secured for a large retail space in Basel.
The annualized target rental income from investment properties increased by 7% to CHF 20.8 million as at 30 June 2023 (end of 2022: 19.5 million), as the fund announced when it published its preliminary results for the first half of the year. Just over half of rental income is attributable to residential use. Rental income increased by 17% year-on-year to CHF 9.7 million (H1 2022: CHF 8.3 million).
The bottom line is a minus
By contrast, the half-year result was negatively impacted by the current interest rate environment. According to the fund, this has led to higher discount rates in the valuation of properties and correspondingly lower market valuations as well as higher borrowing costs. According to preliminary figures, the fund's net income fell from CHF 5.3 million in the previous year to CHF 4.2 million. The valuation of the real estate portfolio led to an unrealized revaluation result of CHF -8.9 million, following an appreciation of CHF 4.4 million in the first half of the year. The Swiss Central City Real Estate Fund therefore expects a loss of CHF -3.1 million in the first half of the year. In the previous year, the fund made a profit of CHF 7.3 million. Total fund assets as at June 30, 2023 amounted to CHF 615.2 million (previous year: CHF 622.2 million) and net fund assets to CHF 409.4 million (previous year: CHF 422.0 million).
The Swiss Central City Real Estate Fund plans to publish the full half-year report on August 21. (ah)
