CSA Real Estate Switzerland Residential 2020 opening...2019/06/30 · CREDIT SUISSE ASSET MANAGEMENT (Switzerland) Ltd. The disclaimer at the end of this document also applies to

CSA Real Estate Switzerland Residential2020 opening

Switzerland: Only open to Swiss tax-exempt employee benefits insurance plans and Swiss tax-exempt social insurance and compensation funds

CREDIT SUISSE INVESTMENT FOUNDATION

CREDIT SUISSE ASSET MANAGEMENT (Switzerland) Ltd.Real Estate – Switzerland

May 2020

2The disclaimer at the end of this document also applies to this page. CREDIT SUISSE ASSET MANAGEMENT (Switzerland) Ltd. May 2020

5

Key figures4

2020 opening3

Real estate market2

Key facts, profile and strategy1

Overview

6 Reasons to invest

Properties held by the investment group


Planned opening

In conjunction with CS AM Global Real Estate, CSA management has decided to open the investment group CSA Real Estate Switzerland Residential, Swiss security no. 2522609, for subscriptions.

The investment group will be closed as soon as the target

volume of CHF 120 million has been reached.

The capital will be used to reduce the debt ratio, complete current construction projects, make ongoing investments in

existing portfolio positions, and further expand the portfolio.

The group has CHF 118 million of ongoing projects and CHF 133 million of properties it is intending to buy.

Both existing and new investors will have the opportunity to

subscribe during the opening.

CSA Real Estate Switzerland ResidentialKey information on the opening

Source: Credit Suisse Asset Management (Switzerland) Ltd.


The real estate investment group has total assets of approximately

CHF 976 mn and owns around 109 properties.

Only tax-exempt Swiss pension funds are permitted as investors.

The investment group is exempt from income and capital taxes

for its around 220 investors.

Claims are valued daily based on the net asset value (NAV) – no premium/discount

Focus on sustainability (Minergie ®, greenproperty, GRESB, energy optimization program, etc.)

Securitizations with or without tax-neutral restructuring under the Swiss Merger Act (FusG)

The claims are accumulating (i.e. there is no distribution of income)

CSA Real Estate Switzerland ResidentialProfile and investment strategy


Profile

The CSA RES Residential investment group invests exclusively

in Switzerland and mostly direct in properties with a high proportion of residential units.

Investments in other types of use such as office, retail and commercial are also permitted as secondary portfolio positions.

The investment group invests with the aim of holding the properties in the long term, generating a high level of income, and producing an attractive risk-optimized return.

In addition, the group can build up limited indirect real estate exposure through collective real estate investments (fund units,

claims on investment foundations), real estate investment companies, and real estate companies.

Investment policy

5The disclaimers mentioned at the end of this document also apply to this page.CREDIT SUISSE ASSET MANAGEMENT (Switzerland) Ltd. May 2020

CSA Real Estate Switzerland ResidentialSustainability approach and key figures

55

98 9265

83 8965

79 84

E S G

Fund score Peer group GRESB average

Sustainability initiatives Global Real Estate Sustainability Benchmark

ESG distribution GRESB

Electricity:

+15%

Energy:

-8%

CO2 emissions:

-16%

Heat:

-11%

Source: Credit Suisse Asset Management (Switzerland) Ltd. | Last data point: June 30, 2019

Energy efficiency and CO2 emissions 2011-2018

Building certificates Building optimization ESG performance

Internal standard

External standards

Energy efficiency

CO2

reduction ESG performance and

benchmark

Internal standard:greenproperty quality seal applies ESG criteria

External standards:e.g. Minergie, SNBS,

DGNB, LEED, Energy

Star, BREEAM, etc.

Collaboration with

Siemens Switzerland

to improve energy efficiency and reduce CO2 emissions

Short-term building

optimization measures

(low capex)

Long-term

refurbishments

depending on building life cycle (high capex)

Annual measurement of ESG performance in the environment (E), social (S), and governance (G) categories, as well as benchmarking versus the market and peer group with Global Real Estate Sustainability Benchmark (GRESB)


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Key figures4

2020 opening3

Real estate market2

Key facts, profile, and strategy1

Overview

6 Reasons to invest



Market outlook for rental sectorImpact of COVID-19 on the rental market

• Decrease in immigration by 15,000 (-30%) • Recession, downturn in consumer confidence, and fewer small

households owing to budget constraints will lead to a softening of demand within Switzerland

• Residential construction activity was already falling before COVID-19 – further slowdown likely

• Average vacancy rate in the rental segment expected to rise from 2.64% to over 2.9% (forecast from Swiss Real Estate Economics)

• Rents expected to fall moderately

Impact on the rental accommodation market Sharp increase in vacant rental properties expected

• COVID-19 will have an impact on residential property markets in a variety of ways

• Exceptional number of uncertainties make quantifying the impact unusually difficult

• The impact of the lockdown is not reflected in WüestPartner's valuations yet

• With rent reductions and holidays amounting to 0.2% of net budgeted rental income, CSA RES Residential is substantially less affected on the revenue side than other real estate investment vehicles (data at April 25, 2020)

Impact on CSA Real Estate Switzerland Residential

Source: Swiss Federal Statistical Office, Credit Suisse, 2020

Source: Credit Suisse, Wüest Partner "Coronavirus – How the pandemic may impact the real estate market"

• Despite declining demand, there are various stabilizing factors on the rental market: Demand for residential property is not substitutable Supportive impact of the social security systems

(short-term working, unemployment benefits) and the federal government's direct financial assistance

Rents in existing rental agreements are protected and linked to the reference interest rate

Growing importance of quality of accommodation due to increasing use of home offices

Reduced supply of new builds

Outlook

Difference in no. of vacant rental properties yoy (r. scale)

Vacancy rate rental properties


5

Key figures4

2020 opening3

Real estate market2


Overview

6 Reasons to invest



CSA Real Estate Switzerland ResidentialSummary data on the opening


Security no.: 2522609

Investor eligibility: Tax-exempt pension funds domiciled in Switzerland

Open for subscriptions: From May 14, 2020, 8:00 a.m. (open-ended until the investment volume is reached)

Investment volume: CHF 120 mn

Minimum subscription (nominal)/ No minimum subscription

maximum subscription (nominal): Maximum subscription CHF 20 million per transaction date

Closing date: Subscriptions are possible on a daily basis (cut-off time 12:00 noon). The forward pricing

method applies. As soon as the proposed investment volume is exceeded on a transaction

date, the subscription orders registered for this date will be reduced proportionately and the investment group will be closed again for subscriptions. The subscription orders from

the prior transaction dates will not be affected by the reduction.

Issue price: NAV plus issue premium of 3.00%1)

Brokerage fee: 1.50% charged by the custodian bank to cover its costsValue date: Trade date plus two bank working days

1) The issue premium is included in the issue price and is paid into the investment group's assets (anti-dilution protection)


CSA Real Estate Switzerland ResidentialPipeline

The expected yield is not a projection, prediction or guarantee that a particular return will be achieved. The expected yield is based on analysis by the manager when assessing investment opportunities and on various investment-specific assumptions, which could differ from actual future market conditions and thus have a significant effect on the investment outturn.

Proposed purchases

Current projects

Total current and proposed projects and

proposed purchasesCHF 293 mn CHF 89 mn 3.7%

Location Use Total volumeResidual

volume

Expected

gross yield

Completion

dateProbability

Neuhausen, Wildenstr. 8 Residential CHF 22 mn CHF 19 mn 4.4% Q2 2022

Basel, Klybeckstr. 58 / Haltingerstr. 5, 7

Residential, commercial

CHF 9 mn CHF 3 mn 4.2% Q3 2020

Olten, "Bahnhof Nord" areaResidential, office, commercial

CHF 87 mn CHF 67 mn 4.0% Q2 2023

Region Use Total volumeExpected

gross yield

Completion

date

Canton of Vaud Residential CHF 48 mn 3.0% 2022 25%

Canton of Schwyz Residential CHF 60 mn 3.8% 2023 / 2024 25%

Canton of ZurichResidential, commercial

CHF 25 mn 3.4% Existing invstmt 25%

Proposed projects

Location Use Total volume

Zurich, Hardturm area Residential CHF 42 mn 4.3% 2024 50%


CSA Real Estate Switzerland ResidentialExamples of ongoing projects

Neuhausen am Rheinfall,

Chilesteig / Wildenstrasse 8

Project development of an existing property

Type of use: Residential/commercialNo. of apartments: 67Acquisition date: Q3 2013

Completion date: Q2 2022

Investment: CHF 23 mnGross yield: 4.43%*Market value: CHF 28.8 mn*

* = after completion

Olten,

Gösgerstrasse, rail way station area

Acquisition of project development

Type of use: Residential/office/commercialNo. of apartments: 155Acquisition date: Q4 2018

Completion date: Q2 2023Investment: CHF 87 mn

Gross yield: 3.94%*Market value: CHF 86.6 mn*

* = after completion



CSA Real Estate Switzerland ResidentialExamples of recently completed projects

Wetzikon,

Vogelsang area

Renovation with horizontal and vertical extensions

Type of use: ResidentialNo. of apartments: 146Acquisition date: Q4 2014


Gross yield: 4.3% **Market value: CHF 77.2 mn*Current vacancy rate: 8.6%

* = as at June 30, 2019

** = since completion

Rorschach,

Pestalozzistrasse

New build



Gross yield: 4.40% **Market value: CHF 21.8 mn*Current vacancy rate: fully let

* = as at June 30, 2019


Roggwil,

Castania development

Renovation. Partial demolition and new build



Gross yield: 4.50% **Market value: CHF 20.7 mn*Current vacancy rate: 44.4%

* = as at June 30, 2019




CSA Real Estate Switzerland ResidentialProposed purchases

Canton of Vaud

______________________________________________

Type of use: Residential

Property / project: Project

No. of apartments: 61

Completion date: 2022

Purchase price: CHF 48.0 mn

Expected GY: 3.0%

Status: Non-binding offer

Canton of Schwyz

______________________________________________


Property / project: Project


Completion date: 2023 / 2024


Expected GY: 3.8%


Canton of Zurich

________________________________________________


Property / project: Property


Completion date: 1973


Expected GY: 3.4%


*) Architect's impression

*) *)*)


5

Key figures4

2020 opening3

Real estate market2


Overview

6 Reasons to invest



CSA Real Estate Switzerland ResidentialKey financial figures

Historical performance and financial market scenarios are not reliable indicators of future performance.


Last data point: Data report as of 30.6.2019

Annual financial statements as of 30.06.2017 30.06.2018 30.06.2019

Total assets in CHF mn 801.93 924.27 976.12

Net assets in CHF mn 606.50 690.37 711.54

Asset value per unit in CHF 1’652.84 1’729.64 1’802.54

Rate of loss of rental income 8.17% 9.46% 11.44%

Debt financing ratio 20.01% 21.18% 21.46%

Debt ratio 24.37% 25.31% 27.11%

Operating profit margin (EBIT margin) 74.67% 73.36% 69.4%

Operating expense ratio (TERISA) GAV 0.59% 0.56% 0.55%

Operating expense ratio (TERISA) NAV 0.76% 0.75% 0.74%

Return on equity (ROE) 5.55% 4.12% 5.17%

Return on invested capital (ROIC) 4.37% 3.20% 3.98%

Investment return 4.84% 4.65% 4.21%

Average discount rate, real/nominal 3.59% / 4.11% 3.47% / 3.99% 3.36% / 3.88%


CSA Real Estate Switzerland ResidentialKey figures (1/2)

Source: Credit Suisse Asset Management (Switzerland) Ltd. | Last data point: Data report as of 30.6.2019 / Cumulative investment return: 31.03.2020

For quarterly returns over the last five years, see slide 22 – Historical performance and financial market scenarios are not reliable indicators of future performance.Cash flow return = Asset value at the end of the financial year (overall profit adjusted for realized and unrealized capital gains/losses and changes in liquidation taxes) in relation to the

asset value at the start of the financial year

Cumulative investment return

0.7% 1.6% 1.6%

4.8%

15.0%

26.4%

0.5% 1.0% 1.0%

6.0%

17.8%

31.8%

0%

5%

10%

15%

20%

25%

30%

35%

1 Monat 3 Monate YTD 1 Jahr 3 Jahre 5 Jahre

CSA RES Residential Benchmark

4.70%

5.28%4.84% 4.65%

4.21%

0%

1%

2%

3%

4%

5%

6%

14/15 15/16 16/17 17/18 18/19

Investment return

3.69%

6.03%

3.19%

3.81%

2.88%

0%

1%

2%

3%

4%

5%

6%

7%

14/15 15/16 16/17 17/18 18/19

Cash flow return

5.87%

8.73%

8.17%

9.46%

11.44%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

14/15 15/16 16/17 17/18 18/19

Rent default rate


3.45%2.25%

0.80%

1.40%

84.60%

1.45%

6.05%

Office

Retail

Cinemas/hotels/restaurants

Warehouses

Residential

Other

Parking

CSA Real Estate Switzerland ResidentialKey figures (2/2)

Source: Credit Suisse Asset Management (Switzerland) Ltd. Last data point: 30.6.20191 Weighted data based on annual rent

Five largest tenants

Intersport 31.12.2020 1.30%

Migros 28.2.20211 1.20%

Public institutions SH 31.7.2021 0.40%

Public institutions BE 30.6.2023 0.40%

AROMA GmbH 31.8.2023 0.20%

Remaining life of rental agreements

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%

Structural allocation by actual net rental income

34.40%

12.10%

2.65%

21.10%

17.60%

1.25%8.35%

Zurich

Eastern Switzerland

Central Switzerland

Northwest Switzerland

Bern

Southern Switzerland

Lake Geneva

Western Switzerland

Regional distribution by market value


CSA Real Estate Switzerland ResidentialChanges in vacancy rates

Source: Credit Suisse Asset Management (Switzerland) Ltd. Last data point: annual report at June 30, 2019

5.60%

3.60% 3.63%

4.77%

0.80%

2.90%

0.66%

1.04%

0.52%

0.98%

2.32%1.70%

4.64%

4.61%8.73%

8.17%

9.46%

11.40%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

15/16 16/17 17/18 18/19

Erstvermietung

Neuausrichtung

Total- oder Teilsanierung

Sockelleerstand

CSA RES Residential

Past years

High renovation and new build activity in the portfolio

The focus was on diversifying and expanding the portfolio throughout Switzerland.

Number of renovations declining (peak during the

financial year 2018/2019)

Continuing to diversify and expand the portfolio

Aiming to reduce the residual vacancy level through

active management

Current vacancy rate: 10.2% (April 2020)

Ongoing expansion and diversification of the portfolio

Continuously review the need to restructure the portfolio

Declining vacancy rate for initial lets

Reduce the residual vacancy rate on a sustained basis

Currently Outlook / objectives

First-time rentalRealignmentTotal or partial renovationResidual vacancy rateTotal


5

Key figures4

2020 opening3

Real estate market2


Overview

6 Reasons to invest

Properties held by the investment

group


Pfungen,

Vorbruggenstrasse

Type of use: ResidentialForm of ownership: Sole ownershipAcquisition: Q2 2010Construction year: 2011Gross yield: 4.05%Market value: CHF 25.9 mn*Share in portfolio: 2.6%

CSA Real Estate Switzerland ResidentialProperties in the assets (extract)


Chiasso,

Corso San Gottardo


Amriswil,

Weidwiesen Etappe Süd


Romanshorn,

Carl-Splitter-Strasse


* = Market value as of 30.6.2019



CSA Real Estate Switzerland ResidentialProperties in the assets (extract)


Bern,

Viktoriastrasse

Type of use: MixedForm of ownership: Sole ownershipAcquisition: Q4 2007Construction year: 1930Gross yield: 4.21%Market value: CHF 8.2 mn*Share in portfolio: 0.8%

Bienne,

Bözingenstrasse


Neuhausen am Rheinfall,

Wildenstrasse 6


Russikon,

Madetswilerstrasse 2


* = Market value as of 30.6.2019



CSA Real Estate Switzerland ResidentialAn attractive investment group



Launched July 1, 2006Contributions in

kind are possible

Market value of all properties is

around CHF 915 mn

Profit appropriation through

reinvestment

Broadly diversified portfolio with

around 109 properties

Around 220 investors

Stable investment return of

4.65% in 2017/2018

financial year

Balanced regional

distribution within

Switzerland

Investment group a GRESB

score of three stars


CSA Real Estate Switzerland ResidentialYour contacts

Key figures as per financial statements

Past performance and financial market scenarios are not reliable indicators of future performance.


Portfolio Manager

Murat SaydamProduct ManagementSihlcity – Kalandergasse 48070 Zurich

[email protected]

Tel. +41 44 334 43 26*

Real estate strategy and advice

Ulrich BraunGlobal Real EstateSihlcity – Kalandergasse 48070 Zurich

[email protected]

Tel. +41 44 332 58 08*

* Please note that telephone calls to our numbers may be recorded. By making a call, you acknowledge that you are in agreement with this.

Key figures from financial statements (June 30, 2019)

Currency CHFFinancial year-end June 30Initial issue date July 3, 2006

Management fee 0.40% p.a.TERISA GAV 0.55%TERISA NAV 0.74%

Total assets (in CHF mn) 976.1Net assets (in CHF mn) 711.4

Yield 4.21%No. of properties 109

(including building land and building projects at completion)

Rental income loss rate 11.4%

Debt ratio 27.11%

Swiss security no. 2522609

ISIN CH0025226090

The investment group CSA Real Estate Switzerland Residential will

open for subscriptions on May 14, 2020.


CSA Real Estate Switzerland ResidentialKey figures – quarterly returns

Source: Credit Suisse / DatastreamLast data point: 31.03.2020


Q1 Q2 Q3 Q4

quarterly returns net BM rel. net BM rel. net BM rel. net BM rel.

2015 1.10% 1.22% -0.11% 1.24% 1.12% 0.12% 1.36% 1.52% -0.17% 1.17% 1.82% -0.65%

2016 1.07% 1.15% -0.08% 1.60% 1.14% 0.45% 1.04% 1.69% -0.64% 1.03% 1.73% -0.70%

2017 1.02% 1.12% -0.10% 1.66% 1.21% 0.45% 1.18% 1.37% -0.20% 1.14% 1.61% -0.47%

2018 1.12% 1.00% 0.12% 1.13% 1.01% 0.12% 1.06% 1.16% -0.10% 1.08% 2.34% -1.26%

2019 1.00% 0.97% 0.03% 1.02% 1.05% -0.03% 1.07% 1.20% -0.13% 1.04% 2.71% -1.67%

2020 1.56% 1.01% 0.55% n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

1 month 3 months YTD

net BM rel. net BM rel. net BM rel.

2020 0.72% 0.49% 0.23% 1.56% 1.01% 0.55% 1.56% 1.01% 0.55%


Mitigation

Thorough due diligence prior to purchase of any property Continuous monitoring of individual investments, rental markets,

and the macroeconomic environment by the Global Real Estate

Strategy team

Local internal and external experts on regulatory framework conditions and taxes

Broad portfolio diversification through carefully selected properties

Investments primarily through equity and a carefully selected level of debt capital absorb negative interest rate developments

Risk

Limited liquidity compared with larger listed investment products

The values of properties may fluctuate, for example due to the

following factors:

Unfavorable changes in supply or demand that negatively impact the acquisition/sale or rental of properties

Interest-rate development Taxes or changed regulatory conditions in the respective

markets Environmental risks Disasters Force majeure and terrorism

CSA Real Estate Switzerland ResidentialRisks and risk mitigation


Disclaimer

The information provided herein constitutes marketing material. It is not investment advice or otherwise based on a consideration of the personal circumstances of the addressee, nor is it the result of objective or independent research. The information provided herein is not legally binding and it does not constitute an offer or invitation to enter into any type of financial transaction. This document was produced by Credit Suisse Group AG and/or its affiliates (hereafter "CS") with the greatest of care and to the best of its knowledge and belief. The information and views expressed herein are those of CS at the time of writing and are subject to change at any time without notice. They are derived from sources believed to be reliable. CS provides no guarantee with regard to the content and completeness of the information and does not accept any liability for losses that might arise from making use of the information. If nothing is indicated to the contrary, all figures are unaudited. The information provided herein is for the exclusive use of the recipient.Neither this information nor copies of it may be sent to, taken into, or distributed in the United States or distributed to any US person (within the meaning of Regulation S of the US Securities Act of 1933 in its applicable form). This document may not be reproduced, either in part or in full, without the written permission of CS. The key risks of real estate investments include limited liquidity in the real estate market, changing mortgage interest rates, subjective valuation of real estate, inherent risks in respect of the construction of buildings, and environmental risks (e.g. land contamination). Credit Suisse Investment Foundation, Zurich, is the issuer and manager of CSA products. The custodian bank is Credit Suisse (Switzerland) Ltd., Zurich. The articles of incorporation, regulations, and investment guidelines, as well as the most up-to-date annual report and fact sheets, may be obtained free of charge from the Credit Suisse Investment Foundation. Only pension funds domiciled in Switzerland that are not subject to tax are permitted as direct investors.

Your Personal Data will be processed in accordance with the Credit Suisse privacy statement accessible at your domicile through the official Credit Suisse website https://www.credit-suisse.com. In order to provide you with marketing materials concerning our products and services, Credit Suisse Group AG and its subsidiaries may process your basic Personal Data (i.e. contact details such as name, e-mail address) until you notify us that you no longer wish to receive them. You can opt-out from receiving these materials at any time by informing your Relationship Manager.”

Copyright © 2020 Credit Suisse Group AG and/or its affiliates. All rights reserved.

https://www.credit-suisse.com/

Documents

CSA Real Estate Switzerland Residential 2020 opening...2019/06/30 · CREDIT SUISSE ASSET MANAGEMENT (Switzerland) Ltd. The disclaimer at the end of this document also applies to