![[Translate to Englisch:]](/assets/_processed_/2/8/csm_IMG_5318_d29c4172ca.jpg "[Translate to Englisch:]")
With almost 20 years of experience in the real estate industry, Helvetica has built a reputation for its capacity to deliver sustainable returns. Despite rising interest rates and inflation, the Helvetica Swiss Living Fund remains a compelling choice for investors looking to capitalize on the current cooling real estate market. We sat down with Salman Baday, Sales and Marketing at Helvetica, to discuss the Fund's strategy and the opportunities it presents in today's market.
Interview: Andreas Benz, Special Projects bei Helvetica
Salman, what do you mean by opportunistic investing?
We are experiencing that the prices in the Swiss residential market are cooling slightly. We are taking advantage of the current market conditions to acquire undervalued residential properties with the potential for long-term value appreciation and stable cash flow. We believe this is a compelling time to invest. And our network ensures access to the best buying opportunities.
Could you tell us about the upcoming capital increase for the Helvetica Swiss Living Fund?
We plan to raise up to CHF 150 million in the second quarter of 2023 to further expand the portfolio along our growth strategy. In a cooling market, Helvetica has continued to seize opportunities and make targeted investments, helping investors achieve long-term financial goals. We see this as an opportune time to act opportunistic.
Can you tell us about the Funds investment strategy?
The Helvetica Swiss Living Fund invests in undervalued residential properties with low rent levels in regions with fast-growing populations. Most recently, these regions have been identified as the most attractive according to a JLL market study, further supporting our investment strategy.
Why is now a good time to Invest?
Furthermore, as we have been saying all along, market experts now also agree that the Swiss residential market is poised for a sharp rise in rents due to declining construction activity over almost two decades and record high population growth. With rising construction costs and inflation, now is the ideal time to seize opportunities in the market and invest with us. According to Wüest Partner there is a shortage of over 50,000 flats.
With inflation and interest rates on the rise, as well as concerns about potential banking collapses, are you worried about the impact on your investments?
While we are monitoring the situation closely, we believe that being in an environment where interest rates and inflation are increasing can be fantastic for long-term investors. While there may be some short-term reduction in net cash flow, the long-term benefits of investing in real estate are clear. Additionally, the fundamentals of the Swiss residential market speak for themselves, with reduced construction activity over nearly two decades, strong demand, and deflationary rental prices over nearly twenty years.
What kind of properties does the HSL Fund invest in?
We invest mostly in existing yielding properties with low rent quantile, ideally around 30% to 50% with upside potential located in fast-growing population growth regions.
What is the current rent quantile, and how does it impact the long-term performance?
The current rent quantile is 39 percent, which indicates that the Fund is undervalued and offers significant potential for increasing rents and value. This, in turn, provides investors with an attractive, safe, and stable dividend distribution capacity over the long term. Despite the volatility in the market environment, we believe that the natural fluctuation rate of around 15 percent and inflation outperform the rising interest rates.
Why invest in the HSL Fund?
The Fund offers one of the highest distribution yields in the Swiss residential market and presents an opportunity to benefit from the expected sharp rise in market rents. Additionally, the fund is planning a listing on the SIX Swiss Exchange, providing potential for further growth and liquidity. Overall, we are confident in the Fund's ability to deliver strong long-term performance for our investors.
Could you tell us about the fund's dividend distribution policy?
Yes, for the 2022 financial year, the fund pays a record dividend distribution of CHF 3.45 per unit, representing an increase of 1.5% compared to the previous year. For the 2023 financial year, we aim to increase the dividend distribution by a further 5 centimes per unit. We also believe the dividend capacity can be further strengthens in the future.
Do you expect this to be sustainable?
Yes, we do. We have a solid track record of generating sustainable returns even in a difficult market environment. Additionally, the Helvetica Swiss Living Fund is well-positioned for an increase in market rents due to its low rent levels and natural tenant fluctuation, on top comes inflation. It's worth noting that the Swiss residential market has experienced deflationary rental prices for almost two decades, which creates favorable conditions for potential rent increases.
What makes the Fund stand out?
The HSL Fund is one of the largest unlisted residential funds in Switzerland with a real estate portfolio of over CHF 800 million and 1,850 first-class apartments, offering attractive upside potential. Our Hands-on approach to value creation and optimization, combined with a proven track record and experienced team, make it a compelling choice for investors seeking stable cash flow and long-term value appreciation in the Swiss market.
What are the fund's plans?
We plan to list on the SIX Swiss Exchange by the end of 2024, which will enable us to further grow and optimize our portfolio. Our focus will remain on generating sustainable growth for our investors through strategic investments and value increasing initiatives.
How can investors participate in the upcoming capital increase?
Existing investors can participate by using their subscription rights, while new investors will need to obtain subscription rights. The exact terms of the capital increase will be announced prior to the start of the subscription period. The Helvetica Swiss Living Fund is intended for qualified investors and is traded over the counter through our longstanding partner Bank J. Safra Sarasin. Terms will be announced in due course.
Can foreign investors invest in the Helvetica Swiss Living Fund capital increase?
Yes, foreign investors can invest in the Fund. Swiss law does prohibit foreign investors from investing in the Swiss residential market, but because the fund is traded OTC and the fund management firm is held in majority by Swiss residents, foreign investors are able to invest. This makes the fund a unique opportunity for foreign investors looking to invest in the Swiss real estate market. We encourage interested investors to speak with their financial advisors or our team to determine whether they are eligible to invest in the fund or not.
What message do you have for potential investors?
The Fund presents an attractive opportunity for long-term value appreciation and attractive returns. With our experienced team and our hands-on approach, we are committed to generating sustainable growth for our investors. Get in and join us for a profitable journey!
What sets Helvetica apart from other investment managers?
Our investment strategies and hands-on approach, combined with our almost 20 years of successful investment experience in the Swiss real estate market and our independence from banks, make us a compelling choice for investors seeking long-term safe and stable returns. At Helvetica, we believe that customer service is not just a department, but rather an essential aspect of our overall approach to doing business.
With inflation and interest rates on the rise, how does the Fund compete with other asset classes that are becoming more compelling?
While rising interest rates may make other asset classes more appealing in the short-term, we believe that our Funds remain a compelling investment option for those seeking stable and secure returns over the long-term.
Does rising interest rates impact the construction activity?
Yes, rising interest rates typically lead to a decline in construction activity, which further strengthens the Fund's investment strategy and the value of its assets.
As someone who has been with Helvetica for over five years, what do you like about the Firm?
Helvetica is my dream place to work. Being operated and managed by its owners, the Firm is deeply committed to long-term thinking that prioritizes building enduring value. I am proud to be part of a team that also takes a hands-on approach to investing. Our independent structure allows us to be agile in responding to market changes, which gives us a real competitive edge. Overall, working at Helvetica has been an incredibly rewarding experience and I believe we are well-positioned for continued success in the future.
One last question: You mentioned that customer service is not a separate department. Can you elaborate on that?
This means that every employee at Helvetica is empowered and encouraged to provide excellent customer service, regardless of their job title or position. From the receptionist who greets visitors at the front desk to the CEO who interacts with clients during high-level negotiations, everyone is expected to treat customers with respect, attentiveness, and professionalism. We see customer service as a mindset and a company-wide philosophy.
About the person
Salman Baday
ex. Sales and Marketing at Helvetica, an independent Real Estate Fund and Asset Management Firm regulated by the Swiss Financial Market Authority FINMA.
