Swiss Life is selling a real estate portfolio with a market value of approximately 700 million Swiss francs to its real estate fund, «Swiss Life REF (CH) ESG Swiss Properties.»

This means that the asset management division of the insurer is transferring ownership of the properties to the fund's customers. As previously announced, financing will involve a capital increase of around 610 million Swiss francs.

According to a press release on Tuesday, the subscription ratio is three to one, meaning that fund customers will receive one subscription right for every three shares. Subscription rights trading will take place from July 2 to July 10 on the Swiss stock exchange, and the subscription period will run from July 2 to July 12. The issue price of the shares is expected to be announced on June 19.

Sale of 47 Properties to the Fund

In a presentation, Swiss Life detailed the real estate portfolio to be included in the fund. A total of 47 properties, spread throughout Switzerland, will be transferred to the fund. Significant market values are, for example, located in the cities of Zurich, Schaffhausen, Liestal, and Lausanne.

After the acquisition, the value share of the market regions «Northwestern Switzerland,» «Eastern Switzerland,» and «Central Switzerland» in the portfolio will be about 5 percentage points higher, while the market region «Zurich» will have correspondingly less weight.

Step Expected to Positively Impact Net Income

The additions are expected to increase the fund's earning power and improve cost efficiency. The gross initial yield of the new portfolio is stated to be around 4,6 percent, compared to approximately 3,9 percent for the existing portfolio. The management fee is expected to decrease to 0.51 percent per year from the previous 0,54 percent. Overall, this should positively impact the net income of the fund.

In the presentation, the asset manager pointed to the favorable economic environment in Switzerland, historically low interest rates, and positive prospects for increasing rental income due to high demand.

Large Real Estate Portfolio

According to the information provided, Swiss Life Asset Managers manage a total of around 255,7 billion Swiss francs in assets (as of the end of 2023), of which more than 111,8 billion Swiss francs are in third-party investment business.

Approximately 85,4 billion Swiss francs are invested in real estate. Additionally, Swiss Life, together with Livit, manages properties worth 21,2 billion Swiss francs.

Until the emergency acquisition of Credit Suisse by UBS, Swiss Life was the largest real estate investor in Switzerland.