LEADING CITIES INVEST acquires second property at Lake Geneva

• MINERGIE-certified office building is fully let
• LEADING CITIES INVEST with below-average risk profile in the Corona crisis

The LEADING CITIES INVEST purchased its second office property at Lake Geneva. The newly built office property La Porte d’Eysins, approximately 6,500 square meters in size, is a three-level low-rise building with a large photovoltaic roof system. The tenants are Ares Trading, an operational subsidiary to the Merck Group in Switzerland, Moët Hennessy Suisse and well-known watchmakers TAG Heuer. The building forms part of “Terre Bonne Park”. Eysins is at the Western shore of Lake Geneva. Geneva and Lausanne are 23 and 36 kilometers away respectively, with great connections via the nearby highway and train connections providing a great public transport option with short intervals between trains. The seller is a Dutch – Swiss-based developer named NEMACO It has been agreed to keep the sales price confidential. A year ago, the LEADING CITIES INVEST already purchased the headquarters of the Fruit trading company Chiquita on the Northern shore of Lake Geneva. In the current Corona crisis, LEADING CITIES INVEST has a comparatively below-average risk profile, primarily due to its tenant mix and its well-diversified property portfolio, also because the only hotel and the headquarters of a hotel provider were sold last year.

The acquired building is certified MINERGIE, a Swiss sustainability certificate. Part of this certificate is the photovoltaic system on the flat roof belonging to Swiss Solar AG for a term of 25 years. The solar panels generate low-cost green energy for the building, and the operator has to pay for any excess electricity that is fed back into the grid. Eysins is situated in the canton of Vaud, which is in the French-speaking part of Switzerland. This area, which has an above average population density for Switzerland, is dominated by the service industry, but is also steeped in watchmaking tradition. The office property is situated in a highly visible location at the entrance to the business park “Terre Bonne Park”, only two kilometers from the shore of Lake Geneva. It currently consists of 10 buildings that were added to successively. 

Corona and Real Estate

In the current Corona crisis, LEADING CITIES INVEST has a comparatively below-average risk profile, primarily due to its tenant mix and its well-diversified property portfolio. In addition, investors in the KanAm Grund Group open-ended real estate fund are protected against similar distortions as after the Lehman crisis, since LEADING CITIES INVEST is a „new generation” real estate fund in which the shock-resistant mechanisms of the new investor protection legislation apply to all investors (a twelve-month notice period and a twenty-four month minimum holding period).

The corona pandemic is keeping the whole world in suspense. Efforts to slow them down and curtail them have brought social and economic life to a standstill in large parts of Germany and most other countries. Hotels and retail are particularly affected, and to a certain extent also residential areas.

LEADING CITIES INVEST is invested far below average in these industries compared to the overall industry. For example, while the share of hotel real estate in open-ended retail property funds has increased by 4 percentage points to 9 percentage points in the past three years, LEADING CITIES INVEST in Brussels sold its only hotel and the German headquarters of a hotel provider in Munich and is now mainly invested in the office - real estate.

In current stress tests and risk assessments, the KanAm Grund Group is currently assuming that the corona pandemic will have a significant impact on the economic cycle. As a result, there is a high likelihood of negative growth and liquidity bottlenecks and even insolvency in particularly affected industries.

The LEADING CITIES INVEST portfolio, which currently has around 90 tenants, is a diversified tenant portfolio. The portfolio is also characterized by multi-tenant properties. The good creditworthiness of the main tenants contributes to further risk reduction. While 34 percent of all OIFs (as of December 31, 2019) were invested in the Risk sectors retail (26 percent) and hotel (8 percent) sectors, current risk analyzes for LEADING CITIES INVEST with its diversified portfolio of tenants with good credit ratings show after the purchase of PIXEL  that only 10,6 percent of the tenant portfolio at a higher risk. The risk of rent losses or tenant insolvencies cannot be excluded on the basis of the risk analysis. However, the creditworthiness of the main tenants and the majority of the tenants directly affected by the coronavirus pandemic can still be rated as good.