Geneva, September 3rd 2020
AB Alternative SICAV-SIF European Real Estate Fund, an open-ended Luxembourg based fund that invests in commercial real estate in Western Europe, just released its Q2 results. The Fund achieved a net annualized IRR of 9.41% in the second quarter of 2020, while distributing a 4.52% p.a. dividend during the same period (on initial contributed capital). The weighted average lease term (WALT) of the portfolio stands at 6.4 years due to selective lease renewals and careful asset management. This extended term will allow the fund to benefit from a secured and same rental income over the next 6.4 years. The Gross Asset Value (“GAV”) of the fund stands now at €220.6 million and the Net Asset Value (“NAV”) at €128.8m.
The Portfolio Manager’s hands-on management approach continues to yield positive results and most recently benefiting the portfolio during the Covid crisis, resulting in no negative impact on the overall portfolio valuation. Our focus continues on the highly sought-after logistics sector with a particular demand for last-mile logistic assets. Hence, the portfolio value has actually increased by €4.1m to reach €175.1m as of 30 June 2020, reflecting an annualized 4.86% growth, compared to the latest valuation in December 2019.
We anticipated that financing would be more difficult to access, and therefore increased our level of cash available for investments (currently at c. €19m) to be best placed to target acquisitions in the next 6 months.
We expect the logistics sector and especially last-mile warehouses to remain a bright spot in the property markets, and analysts even expect a higher demand for these assets post-Covid crisis. From an investment point of view, the logistics and industrial sector remain very strong; the growth of e-commerce remains steady at 14.2% in 2019, and therefore, the intention of the real estate team is to benefit from this growth through further investments in logistics assets linked to e-commerce.
The aim of the team is to make the fund grow even further, while maintaining a stable distribution level and increasing net operating income.
Daniel Deléchat, Head of Asset Management at Arab Bank (Switzerland) Ltd, the portfolio manager of the fund, comments on these excellent performance figures and positive news : “we are excited to continue our acquisitions in the logistics sector, where we have invested for more than 5 years, and we are confident to continue our strategy to select relatively smaller sized assets, where institutional demand remains lower, albeit in excellent locations. Our experience and our ability to source attractive opportunities reflects our continued commitment to deliver excellent returns to our investors and attract further investment in the years to come.”
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