CS REF International depreciates massively
Devaluations and sales reduced the fund portfolio by around 30% within a year, and a good fifth of the units were redeemed.
Credit Suisse Real Estate Fund International announces a "significant valuation adjustment" in a preliminary announcement. As at December 31, 2023, the net asset value will be reduced from CHF 961 million to CHF 727 million. The distribution will be reduced from CHF 35 to CHF 27. In November 2023, the fund was converted to a NAV-based product (IB reported).
CS Asset Management writes that it was unable to escape the developments on the global real estate markets. The previous year's return on investment of -6.8 % deteriorated to -21.5 %. The market value of the properties fell by around CHF 30 % from CHF 3.7 billion to CHF 2.5 billion. The decline is due on the one hand to devaluations in the existing portfolio and on the other to the sale of several properties. The average real discount rate rose significantly from % 4.51 to % 5.39. The rental loss rate increased slightly from 8.5 to 8.7 %. Rental income fell by % 9.6 to CHF 191.6 million, which was due to currency effects and the sale of properties. By contrast, total expenses rose by CHF 13.2 million to CHF 120.0 million, mainly due to higher maintenance expenses, increased taxes on profit and capital as well as mortgage interest. The debt ratio rose from 26.7 to 31.4 %.
Due to the switch to a NAV-based product in November 2023, CS REF International no longer has a premium or discount (previous year: discount of 18.9 %). "The provision of an option to broker fund units is still being examined," according to a statement.
As of December 31, 2023, notices of termination were received for 687,228 shares, which corresponds to 22.5 % of the shares outstanding. "The terminated shares are expected to be redeemed in April 2025 in compliance with the ordinary notice period," according to the announcement. The 407,787 shares redeemed at the end of the 2022 financial year will be repaid on April 24, 2024.
CS REF International reduced its real estate portfolio by seven to 47 properties in the 2023 financial year. One property each in Rotterdam, Arnhem, Cardiff, Brisbane and Tokyo and two properties in Yokohama were sold. "Only properties that no longer fit the property portfolio from a future risk/return perspective were sold," writes the fund management. (aw)
