SFP Investment Foundation: successful financial year 2024

• Overall strong performance of the SFP Investment Foundation
• Successful financial year for SFP AST Swiss Real Estate with convincing portfolio growth and unchanged distribution
• SFP AST Global Core Property investment groups well-positioned thanks to their allocation
• Pleasing GRESB point scores across all investment groups

SFP AST Swiss Real Estate Investment Group

Real Estate Portfolio 
The assets of the SFP AST Swiss Real Estate investment group increased to CHF 848.7 million in 2024 (previous year: CHF 684.0 million). This growth was achieved in particular through the integration of seven properties, meaning that the investment group comprised 44 properties as at the balance sheet date. Target rental income increased by 22.5% to CHF 31.0 million in the past financial year (previous year: CHF 25.3 million). The core/core+ strategy was consistently pursued as the company continued to grow and is reflected in a long WAULT of seven years. Vacancy was kept very low and stood at 0.7% as at the balance sheet date. The key figures underline the good location and qualities of the properties and ensure sustainable income for investors. The investment group published the GRESB (Global Real Estate Sustainability Benchmark) report for the second time with a pleasing result of three out of five stars. It was also able to increase its overall GRESB score from 77 to 81 points compared to the previous year.

Financial Result
The net asset value per entitlement rose by 1.7% compared to the end of 2023 to CHF 1 181.68 (previous year: CHF 1 161.98). The investment yield increased to 4.21%. An attractive EBIT margin of 70.8% was also achieved thanks to the active portfolio management approach and the integration of high-quality properties. Net income per entitlement increased by 7.6% to CHF 32.60 (previous year: CHF 30.30), enabling an unchanged distribution yield of 2.4% and a lower distribution payout ratio of 85.9% (previous year: 92.4%) while maintaining a sustainable distribution at the previous year's level of CHF 28.00. The total expense ratio (TER ISA GAV) now stands at 0.53% (previous year: 0.54%) and the TER ISA NAV at 0.65% (previous year: 0.64%). In the 2024 financial year, the investment group received CHF 51.5 million in capital, of which CHF 38.5 million came from capital raised and CHF 13.0 million from the ”reinvestment” option. As at year-end, 115 pension funds were invested in the investment group.

Outlook
SFP AST Swiss Real Estate aims to keep the vacancy rate in the portfolio low through active management. The growth strategy is to be continued in the year 2025, with the aim of taking the investment group to a market value of CHF 1.0 billion. The funds for this growth were raised with an initial capital increase at the first quarter of 2025. The new funds will be used to acquire new, high-quality properties and for investments in existing properties. The investor base is to be expanded as the company continues to grow, while maintaining the strategic borrowing ratio of 20%. The investment group will continue to diversify geographically and endeavour to tap into new regions. The focus will remain on Switzerland's major cities and their agglomeration belts in order to maintain the current ratio of properties in city centre locations of over 85%. The target allocation remains 60% residential and 40% commercial use. The investment group has numerous development potentials in the existing portfolio. In the past financial year, the planning phases for various construction projects were initiated for the first properties, which will lead to building permits in the 2025 financial year.

SFP AST Global Core Property Investment Groups

Review
2024 marked a phase of stabilisation after two challenging years, triggered by the most aggressive interest rate hikes in the last 40 years. Core funds have proven to be largely resilient due to their solid cash flows, low loan-to-value ratios and well-let portfolios. Several sectors have seen strong rental growth, partially offsetting the impact of interest rate rises. The SFP AST Global Core Property investment groups remained well positioned due to their high allocation to logistics, residential and the alternative sectors. Both the US and European allocations within the SFP AST Global Core Property Hedged CHF outperformed their respective benchmark indices. In addition, the four-star GRESB rating of SFP AST Global Core Property Hedged CHF with 85 out of 100 points (well above the benchmark and the global average of 76) once again demonstrates the strong focus on ESG. The total volume of the SFP AST Global Core Property investment groups amounts to CHF 171.2 million. The management costs (TER ISA NAV) were further reduced and amount to 1.63% for the SFP AST Global Core Property Hedged CHF (Class C) and 1.67% for the SFP AST Global Core Property (Class B) for 2024, for example.
 
Outlook
Historically attractive real estate returns, stable fundamental data, declining construction starts and the prospect of further interest rate cuts clearly point to the beginning of a new real estate cycle, the start of which could already be in the second half of 2024. Targeted strategic positioning will be crucial in order to make the most of the opportunities that arise in the global real estate market. The portfolio management is characterised by an active allocation strategy and selectively invests in sectors that are supported by specific and/or demographic growth drivers. Targeted reallocations over the last two years have strategically positioned the portfolio to benefit from the upcoming growth phase in the property cycle. Examples include investments in a European student housing fund and a US fund focussing on medical facilities, retirement and student housing. The SFP AST Global Core Property investment groups are expected to return to solid growth following the correction of the investment class over the past two years.

Ordinary General Meeting of Investors
The Foundation Board will propose to the ordinary general meeting of investors on 7 May 2025 that the 2024 annual report, including the audited annual financial statements and the distribution proposals, be approved. You can find the 2024 annual report on our website www.sfp-ast.ch.