AFIAA, the investment foundation owned by 40 Swiss pension funds, is adjusting its real estate return expectations as it plans to invest more capital in core properties in major global cities.
The organisation, which owns CHF1.4bn (€1.29bn) of real estate in Europe, North America and Australia, is devising a new “dynamic return model” in response to what it terms “increasing pressure on acquisition returns”.
AFIAA revealed the move in its annual financial report along with plans to “acquire further core commercial properties in central locations in major cities”.
The foundation said it would also continue to sell “non-strategic properties”.
Over the past 12 months, AFIAA has acquired office buildings in the US – in Washington DC and Austin, Texas – and Finland, in Helsinki. It also sold properties in the US – in Ohio and Philadelphia – and in Germany, Austria and Spain.
Investors in AFIAA rose from 35 to 40 over the 12 months, as three pension funds from Switzerland’s German-speaking region and three pension funds from the French-speaking region joined; another pension fund withdrew “on strategic grounds due to the reorganisation and streamlining of its asset investments”.
The board plans to adjust the inital charge for committing capital as part of “the reconciliation of interests between original and new investors”. New investors will face higher management fees of up to 25bps on invested equity.
AFIAA suffered losses on the currency market following the Swiss National Bank’s decision at the beginning of the year to stop pegging the Swiss franc against the euro. But it said invested equity of CHF1.11bn generated a a record net cash flow of CHF62.9bn, which it attributed partly to the highest-ever occupancy rate across its portfolio.
