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Helvetica Swiss Opportunity Fund shows strong first half of 2024 and lowers vacancy rate to 2.3

• Communication • 5 min

Zurich, September 3, 2024 – The Helvetica Swiss Opportunity Fund (HSO Fund) ended the first half of 2024 with an excellent and solid result. The preparations for the merger with the Helvetica Swiss Commercial Fund (HSC Fund) are on track.
 
·        Vacancy rate reduced from 5 percent to 2.3 percent as of June 30, 2024
·        WAULT is stable at a high level of more than five years
·        Net income in the first half of 2024 of CHF 4.5 million contributes CHF 2.90 to the distribution per unit
·        EBIT margin remains above 70 percent
·        Preparations for the merger with the Helvetica Swiss Commercial Fund (HSC Fund) are on track
 
Net income and dividend contribution
The HSO Fund’s portfolio generates stable income that is secure in the long term. The management fees, which have been reduced by 5 basis points since 2024 to 0.65 percent, have a supporting effect in this respect. Net income was CHF 4.5 million as of the balance sheet date. This results in a dividend contribution of CHF 2.90 per unit.
 
Portfolio management
In the first half of 2024, a property worth CHF 20 million was successfully sold at above market value. The site in Pratteln (Basel-Country) also lost around CHF 8 million in value due to market conditions, while the value of the rest of the portfolio remained stable. The total write-down at the portfolio level was consequently 3 percent. The portfolio’s market value as of June 30, 2024 was CHF 297 million. No new properties were acquired during the period under review.
 
As of the balance sheet date of June 30, 2024, the Fund comprised 17 well-positioned commercial properties in primarily suburban regions with optimal transport connections. The majority of the rental income comes from retail space (34 percent) and commercial premises (25 percent), with German-speaking Switzerland accounting for 95 percent of the rental income.
 
Active efforts by Asset Management and long-term tenant relationships increased the occupancy rate to a remarkable 98 percent. The vacancy rate fell sharply from 5 percent at the end of 2023 to 2.3 percent. This is reflected in the rent default rate, which was further reduced to 3.13 percent as of the balance sheet date. Moreover, the high WAULT of five years generates income that is secure in the long term. As of the balance sheet date, 99.5 percent of the leases were indexed and thus linked to inflation. The portfolio’s gross yield [target] was just under 6.0 percent as of June 30, 2024, underscoring the high profitability.
 
Debt financing strategy
In line with the adjusted financing strategy, the proportion of long-term debt financing (term >1 year) as of the balance sheet date increased minimally to 10 percent, compared with 9 percent at the end of 2023. The debt financing ratio at the end of June 2024 was 39.8 percent. During the second half of 2024, this will be brought below 33 percent and within the target range of 25 to 28 percent through the completion of the ongoing property sales. At the same time, the proportion of long-term borrowing will increase to more than 30 percent. As of June 30, 2024, the average interest rate was 2.07 percent, compared with 2.33 percent at the end of 2023, which will result in lower interest costs in the second half of 2024.
 
Sustainability
Helvetica is pursuing a net zero target for greenhouse gas emissions by 2050 and has enshrined this in the fund contract since 2023. Progress is monitored and actively managed on the basis of the CO2 reduction pathway in order to keep the interim targets on track and take targeted measures.
 
Currently, the HSO Fund causes 5.8 kg/CO2 per m2 pursuant to the AMAS key figures (based on REIDA). The CO2 energy intensity is based on a coverage rate of 73 percent, which will be continuously increased with further participation in the REIDA benchmarking. The current proportion of fossil-fuel heating (46 percent) will be greatly reduced in the next few years, primarily through heating refurbishments. There are clear business plans for this for each property.
 
IPO and merger with the Helvetica Swiss Commercial Fund (HSC Fund) are on track
The HSO Fund’s initial public offering (IPO) is scheduled for the fourth quarter of 2024, once it fulfills all regulatory requirements. The process is subject to approval by the Swiss Financial Market Supervisory Authority (FINMA). The merger with the HSC Fund is planned by the end of the first half of 2025, subject to approval by FINMA. The HSO Fund is the transferring fund and the HSC Fund the acquiring fund. This merger will create a more profitable, listed commercial real estate fund with an expected initial size of around CHF 750 million. The merger will offer investors in both funds improved diversification and increased profitability, and will lay the foundation for future fund growth.
 
Outlook for the second half of 2024
In the second half of the year, the focus will be on the stable income performance of the portfolio, the successful completion of the property sales that are currently underway and the IPO as preparation for the planned merger with the HSC Fund.
 
In the area of sustainability, the Fund will participate in the REIDA benchmarking for the second time, further PV systems will be commissioned and a tenant survey will be conducted for the first time.
 
Further details, facts and figures can be found in the HSO Fund's 2024 semi-annual report: Helvetica.com
 
 
Media contacts
Urs Kunz
Chief Commercial Officer,
Member of the Executive Board
T +41 43 544 70 95
urs.kunz@helvetica.com
 
 
Patricia Neupert
Head Marketing & Communications
T +41 43 544 70 98
patricia.neupert@helvetica.com

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