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%
Mieter	Einnahmen
SEG Swiss Education Group Brig	14,61%
Eidgenössische Technische Hochschule Lausanne	13,81%
Seiler Hotels Zermatt AG	12,43%
Swiss Holiday Park AG	8,59%
Dorint Hotels & Resorts AG	7,55%
Kanton Zürich	6,39%
25hours Hotel Company Zürich AG	5,96%

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

Questions or feedback?

Feel free to write me at contact@zuberbuehler-associates.ch or add a comment.

Charts: source SIX Swiss Exchange.

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