How Switzerland’s Helvetia Investment Foundation acquired its CHF 182 million residential portfolio

How Switzerland's Helvetia Investment Foundation acquired its CHF 182 million residential portfolio

Investment foundations are organizations under Swiss law that specialize in asset management for pension funds. The Helvetia Investment Foundation in Basel serves precisely this purpose. It invests in various asset classes in accordance with the provisions of investment foundation law, which includes real estate. As part of its investment strategy, the Helvetia Investment Foundation recently acquired another residential portfolio worth CHF 182 million. This was made possible by a capital increase.

Helvetia Investment Foundation was founded in 1993, but it was known as the Patria Investment Foundation until 2007. It belongs to the Helvetia Insurance Group, one of the largest and oldest insurance companies in Switzerland, which has a history of around 160 years. The investments are made within the framework of investment groups in separately managed portfolios. There are investment groups for shares, mixed portfolios, mortgages and real estate. Helvetia Investment Foundation manages the assets of around 260 Swiss pension schemes and pension funds. As a major real estate investor, Helvetia Investment Foundation is on our list of the 100 largest Swiss real estate investors.

Real estate investment groups – “Real Estate Switzerland” and “Real Estate Romandie”

There are two investment portfolios in the real estate investment groups: “Real Estate Switzerland” and “Real Estate Romandie” (or Real Estate French-Speaking Switzerland). The “Real Estate Switzerland” portfolio functions like a closed-end fund. Additional units can only subscribe to it in the event of capital increases. In contrast, “Real Estate Romandie” is designed like an open-ended fund. Both funds invest primarily in Swiss residential real estate, with “Real Estate Switzerland” investing at least two-thirds and “Real Estate Romandie” investing at least three-quarters. The remainder is invested in offices and other commercial properties.

The investment focus of “Real Estate Switzerland” is mainly, but not exclusively, German-speaking Switzerland. In contrast, “Real Estate Romandie” is only involved in the French-speaking part of Western Switzerland. Following the latest acquisitions, the pension assets under management in the “Switzerland portfolio” amount to CHF 800 million, while the “Romandie portfolio” has around CHF 236 million under management (as at 30.9.2019).

Current acquisitions in the “Real Estate Switzerland” portfolio

A major new acquisition was made for “Real Estate Switzerland” on December 1, 2019. It comprises a total of seven properties in seven cantons, which were taken from the real estate portfolio of Helvetia Versicherungen. The properties are residential. The transaction volume totals CHF 182 million, for which financing commitments of CHF 110 million have already been made in the form of a capital increase. The real estate portfolio will thus be sustainably increased and rounded off.

It now comprises a total of 51 properties located in 15 Swiss cantons. Around a quarter of the real estate assets are located in French-speaking Switzerland, and three quarters in German-speaking Switzerland – mainly in the cantons of Aargau (almost 23 percent of the total portfolio), Zurich, Bern and Schwyz. Just under 78 percent of assets (i.e. more than the minimum required) are invested in residential real estate. The rest is accounted for by office and commercial properties. Here are five examples of typical “Real Estate Switzerland” investments:

  • Multi-part residential complex in Beinwil am See (Canton Aargau), built in 2018;
  • Multi-storey residential complex in Biberist (canton of Solothurn), built in 1983;
  • Mixed-use multi-storey residential and commercial building on Boulevard James Fazy in Geneva (canton of Geneva), built in 1981;
  • Office tower in Frauenfeld (canton Thurgau), built in 2000;
  • Apartment building in Brugg (canton Aargau), built in 1993/95.

12 properties were built after the turn of the millennium and 22 were built in the 1980s/1990s. Three properties date from the period before the Second World War. Overall, the portfolio has a strongly mixed age structure with properties from virtually every construction period of the last 100 years. When acquiring new properties, preference is given to properties of more recent construction dates.

Aiming for stable income with a risk-reducing effect

With “Real Estate Switzerland”, Helvetia Investment Foundation Swiss Pension Funds wants to offer a low-risk and broadly diversified real estate investment with stable income and small fluctuations in value. It should also make a good contribution to risk diversification in customers’ investment portfolios. The most recent real estate purchases fit seamlessly into this objective. The portfolio performance was 3.5 percent in 2017 and 3.6 percent in 2018. In the first three quarters of 2019, 2.0 percent was achieved. Portfolio management is carried out by Helvetia Versicherungen, while Privera AG in Berne manages the real estate.

Picture source: Victor

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