The fund management company Swiss Finance & Property Funds has announced a capital increase with pre-emptive rights. The specific terms of the issue are expected to be announced at the end of November.
The fund intends to use the additional capital to further develop its existing property portfolio. In particular, it plans to acquire existing properties and invest in new developments and the refurbishment of existing properties.
Part of the proceeds is also to be used to repay interest-bearing debt. In this way, the fund management is combining its expansion plans with an adjustment to the financing structure.
This combination is relevant for institutional investors. Property funds face the challenge of tapping into new investment opportunities whilst simultaneously controlling their financing costs and risks.
The planned capital raising also sends a signal to the property sector. It shows that capital continues to be mobilised for residential and investment properties. However, the key factor remains which specific properties and projects will be financed with these funds.
The market environment calls for a careful assessment of purchase prices, yield potential and the need for energy-efficiency upgrades. Particularly in the case of existing properties, investment costs and long-term return expectations must be balanced against one another.
Whether the capital increase can be fully implemented will become clear once the terms have been announced and the subscription period has closed.
