A new investment foundation, why now?

In the midst of the turbulent financial markets, Helvetica launches the new Helvetica Life Investment Foundation. For Hans R. Holdener, founder of Helvetica, which is entrusted with the management of the Investment Foundation, this is not something of a high-wire act, but a rational decision.

Interview: Fredy Gilgen

From left to right: Michael Knoflach Managing Director, Victor Meyer (Member), Andreas Spahni (Chairman), Theodor Härtsch (Member and Vice Chairman) and Salman Baday as Deputy Managing Director for Helvetica Life Investment Foundation

Fredy Gilgen: The financial markets could hardly be in more difficult shape. Why is Helvetica launching a new investment vehicle now?
Hans R. Holdener: Because the timing is quite simply good. Helvetica has always shown courage and launched new products in a difficult market environment. With the negative interest rate environment gone and the ongoing market corrections, we consider the timing to be good for launching an investment foundation with a long-term focus. Swiss pension funds now have the opportunity for the first time to invest in a new tax-exempt Helvetica investment vehicle and to benefit from Helvetica's long-standing real estate expertise.

What? Interest rates are rising. Surely that argues against further real estate investments?
On the contrary. The return to a normal interest rate environment is good and will lead to a cooling of transaction prices. This is positive for portfolio build-up. We are convinced that Swiss residential real estate will remain crisis-resistant in the long term.

You need to explain that a bit more.
Higher interest rates also imply rising rents. Housing, for example, is becoming more expensive. We expect rents to rise by up to 30 percent in the next few years, plus inflation. The reason for the cost explosion in one's own four walls is the reference interest rate, which is rising for the first time since its introduction in 2008. The facts speak for themselves. The Swiss rental housing market has been showing deflationary trends for almost 15 years. As a result, housing has become cheaper in terms of disposable income compared with the rest of Europe. This cannot continue. Declining construction activity and high immigration will have to lead to rising market rents and very low vacancy rates.

Which investors can invest in the new vehicle?
The investment foundation is only open to tax-exempt pension funds from Switzerland.

And when can these investors start investing in the investment foundation?
We are watching the market very closely. We would like to see a launch this year. Realistically, it will probably last until the first quarter of 2023, maybe even longer. Of course, an exact launch date depends on the capital markets.

What investment volume do you expect?
We hope to raise 60 to 100 million Swiss francs of equity in the initial offering. Our goal is to build up a portfolio of as-new residential properties worth more than in excess of 500 million Swiss francs by 2025.

In which area do you intend to invest?
With the new investment group "Residential Real Estate Switzerland", we are focusing primarily on newly built or as-new properties in well-developed growth regions around the major economic centers. There where population growth is expected and where a good public transport connection is available or planned. However, we have the possibility to add a small share of up to 35% of commercial properties.

Why should a pension fund invest in Helvetica Life?
Pension funds can benefit from our many years of real estate expertise. With its previous investment vehicles, Helvetica has clearly proven that it can create added value both for the properties and for the investor - and this over almost two decades.

Have you proven it before?
Yes, Helvetica has repeatedly proven that it can achieve sustainable growth even in a difficult market environment. A good example of this is the Helvetica Swiss Living Fund, which has grown to over CHF 750 million in around 2.5 years, generating solid investment returns and attractive distributions. Just as we promised our investors.

What other advantages does Helvetica offer with the new investment foundation?
The advantages are clear. We are building a future-oriented portfolio with as-new and sustainable residential properties in good locations. Thus, the investor clearly benefits. Why? First, because the timing is optimal for an entry into the Swiss residential real estate market. Second, because the expected slowdown will offer attractive buying opportunities, and third, because we are building a new CO2-neutral portfolio. Investors will thus gain broad diversification in new residential properties, a tax-efficient vehicle and access to professional asset management.

What makes Helvetica special?
As a strictly regulated FINMA fund management company, we offer very high investor protection. We have access to very attractive real estate opportunities in Switzerland and can unlock the potential of a real estate portfolio thanks to our many years of expertise. At the same time, we offer full transparency in reporting. The investment foundation is managed in line with Helvetica's entrepreneurial and client-centric approach, with independence, integrity and responsibility at its core. 

What do you have over your competitors?
Our basic approach: independent with a entrepreneurial, hands-on approach, coupled with excellent market knowledge, resulting in above-average investment performance compared to our competitors.

What about sustainability, what role does it play?
An important one. Because we invest for the long term, with a focus on value preservation. Helvetica Life takes a pragmatic approach to sustainability: ideally no fossil fuels and CO2 neutrality. The entire portfolio will be provided with a certification of sustainability. All in line with our sustainability promise: it must be smart, it must make sense, it must stand the test of time.

Who sits on the Board of Trustees?
The members of the Board of Trustees of Helvetica Life Investment Foundation are proven real estate and pension fund experts: Dr. Andreas Spahni (Chairman), Chairman of the Board of Directors of various real estate investment companies with many years of experience in real estate investment and development, Theodor Härtsch (Member and Vice Chairman), Partner at Walder Wyss Attorneys-at-Law as well as member of various Boards of Directors in the financial and real estate sector, and Victor Meyer (Member), former Partner at PwC, tax expert with more than 30 years of experience in the financial and real estate sector. All our trustees are proven experts in their field.

Are contributions in kind planned and if so, up to what volume?
Yes, in the medium term this will be possible - once the portfolio has reached a critical size. However, investors can contribute their real estate to one of our real estate funds.