- Total fund assets increased by 121% to CHF 246 million as of December 31, 2021
- Market value of properties increased by 112% to CHF 234 million at year-end
- Purchase of seven properties with a fair market value of CHF 119 million
- Two significantly oversubscribed capital increases generate inflow of new money
- Target rental income (annualized) increased by 110% to CHF 12.8 million within
- Net asset value per share increases by 9.2% to CHF 122.12 at the end of 2021
- Outperformance of +21.5% versus the benchmark of SXI Real Estate Funds Broad (+7.32%)
- Distribution increased from CHF 6.0 to 6.10 per share
Details to the financial year 2021
The demand for special-use properties was further accentuated in 2021, while interest rates remained low. The transaction market is correspondingly competitive. The fact that the HSO Fund was able to carry out two capital increases totaling CHF 58 million and purchase seven attractive properties in this market environment is the result of the fund management company's successful growth strategy.
The value of the existing portfolio more than doubled from CHF 110.3 million at the end of 2020 to CHF 234.0 million at the end of 2021. Along with the newly acquired properties in Pratteln, Canton Baselland, Buchs, Canton Zurich, and Sion, Canton Valais, this results in an investment focus of the fund in the Zurich area and in Northwestern Switzerland. In terms of primary uses, the portfolio is comprised of retail (39%), logistics and commercial (48%) and other uses such as education and parking (13%).
As a result of the acquisitions, target rental income increased by 110% to 12.8 million at the end of the year. As a result of the purchase of the properties in Pratteln, the occupancy rate of the overall portfolio decreased from 99.0% to 96.7% mid-year compared to the end of the previous year. However, the fund management company expects the occupancy rate to increase again in the course of the current year.
Corresponding measures, such as planned investments in the portfolio to realize potential and increase the attractiveness of the properties, have already been initiated. These measures will also help to ensure that rental agreements can be extended ahead of schedule. Weighted average unexpired lease term (WAULT) at year-end was 7.0 years (previous year: 8.3 years).
Income statement
The increase in rental income had a positive impact on profitability: Rental income increased to approximately CHF 9.0 million (previous year: CHF 5.7 million). In addition to the increase from operating activities, revaluations amounting to CHF 13.2 million were recorded under the item "unrealized capital gains". After deducting the change in liquidation taxes, the total profit of CHF 18.7 million was more than doubled compared to the previous year (CHF 8.3 million).
Balance sheet
The total fund assets of the fund reached CHF 246.1 million at the end of 2021 and thus also more than doubled compared to the end of 2020 (CHF 111.6 million). After deducting liabilities of CHF 79.0 million (previous year: CHF 25.1 million) and liquidation taxes of CHF 14.4 million (previous year: CHF 2.6 million), net fund assets amounted to CHF 152.6 million (previous year: CHF 83.9 million). The debt financing ratio is 31.0%.
Distribution and performance
The fund closed the successful financial year with a net asset value per share of CHF 122.12 (previous year: CHF 111.82), which, adjusted for the distribution, corresponds to a pleasing return on investment of 15.4%. The trading price of the shares also increased significantly by 14.95% to CHF 123.00. Therefore, performance in the past financial year amounted to a high 21.53%, which is a clear outperformance compared to the Benchmark SXI Real Estate Funds Broad. The latter achieved a performance of 7.32% in the same period. The fund recognized the very good business performance by increasing its distribution to investors from CHF 6.0 to CHF 6.10 compared to the previous year. With a distribution yield of 5.0%, the HSO Fund is one of the highest distribution real estate funds with a commercial focus in the Swiss market. The ex-date for the distribution is April 27, 2022 and the distribution will be paid on April 29, 2022.
Outlook
In the current financial year, the focus will remain on further expanding the portfolio. The fund management company aims to further increase the fund volume and acquire additional attractive properties. This is intended to further diversify the portfolio. Attention will be paid to third-party usability, flexible use, location quality and tenant creditworthiness. The Asset Management team continues to focus on increasing the occupancy rate and on early lease extensions. The aim is to increase the portfolio to CHF 400 million in the mid-term. To achieve this, a capital increase is planned in the first half of 2022.
