Schroder ImmoPLUS: effects of Covid-19
Due to the extraordinary situation, in connection with the coronavirus, which has led to significant share price losses over the past few days, the fund management company would like to provide an update about the Schroder ImmoPLUS fund.
The Schroder ImmoPLUS remains in a strong market position. The approximately CHF 2.1 billion property portfolio is spread across the major business locations in German and French-speaking Switzerland. The locations and the quality of the properties are high standing and the rental contracts secured with long-term durations, with an average contract length of eight years. Office properties in central locations make up the most important usage category of the portfolio with around 40 percent, followed by retail properties with around 25 percent. The remaining third of the portfolio is spread across various segments and is broadly diversified.
The Schroder ImmoPLUS is managed with a great deal of foresight. The fund management company pursues a sustainable dividend policy with a payout ratio of around 80 percent. As a result, we act more conservatively than the peer group of Swiss listed real estate funds, which is an important advantage in today's demanding environment.
In order to test the possible effects of the current pandemic on the Schroder ImmoPLUS fund, several stress test scenarios have been undertaken. Depending on tenant's credit rating and sector, a wide range of assumptions was used in the different scenarios. The fund currently has gross rental income of over CHF 100 million per year. Before the pandemic occurred, a net income of CHF 56 million was forecast for the current 2019/20 financial year. Our stress tests show that the fund's positive annual result remains solid in each of the scenarios tested. We consider a reduction in net income of more than 10 to 15% to be unlikely.
This assessment includes the assumption that individual tenants may run into financial difficulties. This applies mostly to tenants from the retail trade where, apart from the basic services (food, chemists, etc.), the shops remain temporarily closed. Above all, we see the possibility for rental losses amongst the smaller retailers. Schroder ImmoPLUS, in contrast, generates a large part of its retail rental income from large national and international retailers such as Aldi, Coop, Hornbach, Manor, Migros and Spar. In part, these tenants provide the aforementioned basic services and are therefore not affected by the current shop closures as a result of the coronavirus, or can maintain operations with online trading for corporate customers (“Click & Collect”). Importantly, these retail assets are located at first-class locations for their respective use. The large retail tenants mentioned make up around 17 percent of rental income.
Schroders manages the ImmoPLUS fund very actively and we are in regular contact with all of the fund's stakeholders. To date, we have no evidence that any important tenant would no longer be able to meet their obligations. Furthermore, no rental reductions or deferrals have been requested in the current environment, despite our active approach. The portfolio’s renowned major tenants remain committed to maintaining the excellent locations they occupy and are showing an exemplary payment behaviour despite the current market situation.
Please be assured that we will continue to keep you updated with the latest developments of the fund.
Important Information
The Schroder ImmoPLUS («Fund») is a contractual investment fund under Swiss law of the type «real estate fund». Schroder Investment Management (Switzerland) AG, Zurich, is the fund management company («Fund Management Company») and Zürcher Kantonalbank, Zurich, is the depositary bank of the Fund. The fund contract, the prospectus and the simplified prospectus as well as the annual and semi-annual reports («Fund Documents») may be obtained free of charge from the Fund Management Company. This document is issued by Schroder Investment Management (Switzerland) AG, Central 2, CH-8001 Zurich, a fund management company authorized and supervised by the Swiss Financial Market Supervisory Authority FINMA, Laupenstrasse 27, CH-3003 Bern.
Further Information:
https://www.schroders.com/en/ch/asset-management/about-schroders2/press-releases/
Roger Hennig, Head Real Estate Switzerland,
Tel. +41 (0) 44 250 12 91
Réservé exclusivement aux investisseurs et aux conseillers professionnels.
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