Credit Suisse Hospitality Real Estate Fund Performance similiar to recently delisted Global REF

On 30.11.2020 Credit Suisse made the decision to delist, without warning obviously, the Credit Suisse REF Global. Reasons given were disagio and liquidity (lack thereof). I venture it is because of leverage and pending property value readjustments. There is a law in Switzerland (KAG) that states that leverage should be used in a limited fashion and duration. The REF Global was getting close to the 1/3 limit the law sets out (the link to article 65). As the property values sink, the leverage ratio rises, leading to a pro-cyclical effect, reinforcing a correction trend, as the funds scramble to deleverage, in order to be below the maximum 1/3.

Well, here is a bigger and similiar performing Credit Suisse Real Estate Fund, that specialises in hospitality. Hospitality which has seen 40% and more drop in customer footfall, and a >20% fall in revenue from rental income.

It will be interesting to see the logic unfold: Either both these funds are justifiably at a discount to old valuations – or neither.

Disagio Rising Quickly

From a ~ 13% agio (30.12.2019), we have gone to a -12% disagio as of writing (07.12.2020). The -2% was on 30.06.2020.

Largest Paying Renters

Mietzinseinnahmen pro Mieter grösser als 5%
SEG Swiss Education Group Brig14,61%
Eidgenössische Technische Hochschule Lausanne13,81%
Seiler Hotels Zermatt AG12,43%
Swiss Holiday Park AG8,59%
Dorint Hotels & Resorts AG7,55%
Kanton Zürich6,39%
25hours Hotel Company Zürich AG5,96%

Properties of the Credit Suisse REF Hospitality (which are commercially used)

Questions or feedback?

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Charts: source SIX Swiss Exchange.

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