CSA Real Estate Switzerland Residential 2020 opening...2019/06/30 · CREDIT SUISSE ASSET...
Transcript of CSA Real Estate Switzerland Residential 2020 opening...2019/06/30 · CREDIT SUISSE ASSET...
CSA Real Estate Switzerland Residential2020 opening
Switzerland: Only open to Swiss tax-exempt employee benefits insurance plans and Swiss tax-exempt social insurance and compensation funds
CREDIT SUISSE INVESTMENT FOUNDATION
CREDIT SUISSE ASSET MANAGEMENT (Switzerland) Ltd.Real Estate – Switzerland
May 2020
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Key figures4
2020 opening3
Real estate market2
Key facts, profile and strategy1
Overview
6 Reasons to invest
Properties held by the investment group
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Planned opening
In conjunction with CS AM Global Real Estate, CSA management has decided to open the investment group CSA Real Estate Switzerland Residential, Swiss security no. 2522609, for subscriptions.
The investment group will be closed as soon as the target
volume of CHF 120 million has been reached.
The capital will be used to reduce the debt ratio, complete current construction projects, make ongoing investments in
existing portfolio positions, and further expand the portfolio.
The group has CHF 118 million of ongoing projects and CHF 133 million of properties it is intending to buy.
Both existing and new investors will have the opportunity to
subscribe during the opening.
CSA Real Estate Switzerland ResidentialKey information on the opening
Source: Credit Suisse Asset Management (Switzerland) Ltd.
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The real estate investment group has total assets of approximately
CHF 976 mn and owns around 109 properties.
Only tax-exempt Swiss pension funds are permitted as investors.
The investment group is exempt from income and capital taxes
for its around 220 investors.
Claims are valued daily based on the net asset value (NAV) – no premium/discount
Focus on sustainability (Minergie ®, greenproperty, GRESB, energy optimization program, etc.)
Securitizations with or without tax-neutral restructuring under the Swiss Merger Act (FusG)
The claims are accumulating (i.e. there is no distribution of income)
CSA Real Estate Switzerland ResidentialProfile and investment strategy
Source: Credit Suisse Asset Management (Switzerland) Ltd.
Profile
The CSA RES Residential investment group invests exclusively
in Switzerland and mostly direct in properties with a high proportion of residential units.
Investments in other types of use such as office, retail and commercial are also permitted as secondary portfolio positions.
The investment group invests with the aim of holding the properties in the long term, generating a high level of income, and producing an attractive risk-optimized return.
In addition, the group can build up limited indirect real estate exposure through collective real estate investments (fund units,
claims on investment foundations), real estate investment companies, and real estate companies.
Investment policy
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CSA Real Estate Switzerland ResidentialSustainability approach and key figures
55
98 9265
83 8965
79 84
E S G
Fund score Peer group GRESB average
Sustainability initiatives Global Real Estate Sustainability Benchmark
ESG distribution GRESB
Electricity:
+15%
Energy:
-8%
CO2 emissions:
-16%
Heat:
-11%
Source: Credit Suisse Asset Management (Switzerland) Ltd. | Last data point: June 30, 2019
Energy efficiency and CO2 emissions 2011-2018
Building certificates Building optimization ESG performance
Internal standard
External standards
Energy efficiency
CO2
reduction ESG performance and
benchmark
Internal standard:greenproperty quality seal applies ESG criteria
External standards:e.g. Minergie, SNBS,
DGNB, LEED, Energy
Star, BREEAM, etc.
Collaboration with
Siemens Switzerland
to improve energy efficiency and reduce CO2 emissions
Short-term building
optimization measures
(low capex)
Long-term
refurbishments
depending on building life cycle (high capex)
Annual measurement of ESG performance in the environment (E), social (S), and governance (G) categories, as well as benchmarking versus the market and peer group with Global Real Estate Sustainability Benchmark (GRESB)
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5
Key figures4
2020 opening3
Real estate market2
Key facts, profile, and strategy1
Overview
6 Reasons to invest
Properties held by the investment group
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Market outlook for rental sectorImpact of COVID-19 on the rental market
• Decrease in immigration by 15,000 (-30%) • Recession, downturn in consumer confidence, and fewer small
households owing to budget constraints will lead to a softening of demand within Switzerland
• Residential construction activity was already falling before COVID-19 – further slowdown likely
• Average vacancy rate in the rental segment expected to rise from 2.64% to over 2.9% (forecast from Swiss Real Estate Economics)
• Rents expected to fall moderately
Impact on the rental accommodation market Sharp increase in vacant rental properties expected
• COVID-19 will have an impact on residential property markets in a variety of ways
• Exceptional number of uncertainties make quantifying the impact unusually difficult
• The impact of the lockdown is not reflected in WüestPartner's valuations yet
• With rent reductions and holidays amounting to 0.2% of net budgeted rental income, CSA RES Residential is substantially less affected on the revenue side than other real estate investment vehicles (data at April 25, 2020)
Impact on CSA Real Estate Switzerland Residential
Source: Swiss Federal Statistical Office, Credit Suisse, 2020
Source: Credit Suisse, Wüest Partner "Coronavirus – How the pandemic may impact the real estate market"
• Despite declining demand, there are various stabilizing factors on the rental market: Demand for residential property is not substitutable Supportive impact of the social security systems
(short-term working, unemployment benefits) and the federal government's direct financial assistance
Rents in existing rental agreements are protected and linked to the reference interest rate
Growing importance of quality of accommodation due to increasing use of home offices
Reduced supply of new builds
Outlook
Difference in no. of vacant rental properties yoy (r. scale)
Vacancy rate rental properties
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Key figures4
2020 opening3
Real estate market2
Key facts, profile, and strategy1
Overview
6 Reasons to invest
Properties held by the investment group
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CSA Real Estate Switzerland ResidentialSummary data on the opening
Source: Credit Suisse Asset Management (Switzerland) Ltd.
Security no.: 2522609
Investor eligibility: Tax-exempt pension funds domiciled in Switzerland
Open for subscriptions: From May 14, 2020, 8:00 a.m. (open-ended until the investment volume is reached)
Investment volume: CHF 120 mn
Minimum subscription (nominal)/ No minimum subscription
maximum subscription (nominal): Maximum subscription CHF 20 million per transaction date
Closing date: Subscriptions are possible on a daily basis (cut-off time 12:00 noon). The forward pricing
method applies. As soon as the proposed investment volume is exceeded on a transaction
date, the subscription orders registered for this date will be reduced proportionately and the investment group will be closed again for subscriptions. The subscription orders from
the prior transaction dates will not be affected by the reduction.
Issue price: NAV plus issue premium of 3.00%1)
Brokerage fee: 1.50% charged by the custodian bank to cover its costsValue date: Trade date plus two bank working days
1) The issue premium is included in the issue price and is paid into the investment group's assets (anti-dilution protection)
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CSA Real Estate Switzerland ResidentialPipeline
The expected yield is not a projection, prediction or guarantee that a particular return will be achieved. The expected yield is based on analysis by the manager when assessing investment opportunities and on various investment-specific assumptions, which could differ from actual future market conditions and thus have a significant effect on the investment outturn.
Proposed purchases
Current projects
Total current and proposed projects and
proposed purchasesCHF 293 mn CHF 89 mn 3.7%
Location Use Total volumeResidual
volume
Expected
gross yield
Completion
dateProbability
Neuhausen, Wildenstr. 8 Residential CHF 22 mn CHF 19 mn 4.4% Q2 2022
Basel, Klybeckstr. 58 / Haltingerstr. 5, 7
Residential, commercial
CHF 9 mn CHF 3 mn 4.2% Q3 2020
Olten, "Bahnhof Nord" areaResidential, office, commercial
CHF 87 mn CHF 67 mn 4.0% Q2 2023
Region Use Total volumeExpected
gross yield
Completion
date
Canton of Vaud Residential CHF 48 mn 3.0% 2022 25%
Canton of Schwyz Residential CHF 60 mn 3.8% 2023 / 2024 25%
Canton of ZurichResidential, commercial
CHF 25 mn 3.4% Existing invstmt 25%
Proposed projects
Location Use Total volume
Zurich, Hardturm area Residential CHF 42 mn 4.3% 2024 50%
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CSA Real Estate Switzerland ResidentialExamples of ongoing projects
Neuhausen am Rheinfall,
Chilesteig / Wildenstrasse 8
Project development of an existing property
Type of use: Residential/commercialNo. of apartments: 67Acquisition date: Q3 2013
Completion date: Q2 2022
Investment: CHF 23 mnGross yield: 4.43%*Market value: CHF 28.8 mn*
* = after completion
Olten,
Gösgerstrasse, rail way station area
Acquisition of project development
Type of use: Residential/office/commercialNo. of apartments: 155Acquisition date: Q4 2018
Completion date: Q2 2023Investment: CHF 87 mn
Gross yield: 3.94%*Market value: CHF 86.6 mn*
* = after completion
Source: Credit Suisse Asset Management (Switzerland) Ltd.
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CSA Real Estate Switzerland ResidentialExamples of recently completed projects
Wetzikon,
Vogelsang area
Renovation with horizontal and vertical extensions
Type of use: ResidentialNo. of apartments: 146Acquisition date: Q4 2014
Completion date: Q3 2019
Gross yield: 4.3% **Market value: CHF 77.2 mn*Current vacancy rate: 8.6%
* = as at June 30, 2019
** = since completion
Rorschach,
Pestalozzistrasse
New build
Type of use: ResidentialNo. of apartments: 54Acquisition date: Q4 2017
Completion date: Q4 2019
Gross yield: 4.40% **Market value: CHF 21.8 mn*Current vacancy rate: fully let
* = as at June 30, 2019
** = since completion
Roggwil,
Castania development
Renovation. Partial demolition and new build
Type of use: ResidentialNo. of apartments: 63Acquisition date: Q4 2014
Completion date: Q1 2020
Gross yield: 4.50% **Market value: CHF 20.7 mn*Current vacancy rate: 44.4%
* = as at June 30, 2019
** = since completion
Source: Credit Suisse Asset Management (Switzerland) Ltd.
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CSA Real Estate Switzerland ResidentialProposed purchases
Canton of Vaud
______________________________________________
Type of use: Residential
Property / project: Project
No. of apartments: 61
Completion date: 2022
Purchase price: CHF 48.0 mn
Expected GY: 3.0%
Status: Non-binding offer
Canton of Schwyz
______________________________________________
Type of use: Residential
Property / project: Project
No. of apartments: 94
Completion date: 2023 / 2024
Purchase price: CHF 60.0 mn
Expected GY: 3.8%
Status: Non-binding offer
Canton of Zurich
________________________________________________
Type of use: Residential
Property / project: Property
No. of apartments: 40
Completion date: 1973
Purchase price: CHF 24.0 mn
Expected GY: 3.4%
Status: Non-binding offer
*) Architect's impression
*) *)*)
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5
Key figures4
2020 opening3
Real estate market2
Key facts, profile, and strategy1
Overview
6 Reasons to invest
Properties held by the investment group
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CSA Real Estate Switzerland ResidentialKey financial figures
Historical performance and financial market scenarios are not reliable indicators of future performance.
Source: Credit Suisse Asset Management (Switzerland) Ltd.
Last data point: Data report as of 30.6.2019
Annual financial statements as of 30.06.2017 30.06.2018 30.06.2019
Total assets in CHF mn 801.93 924.27 976.12
Net assets in CHF mn 606.50 690.37 711.54
Asset value per unit in CHF 1’652.84 1’729.64 1’802.54
Rate of loss of rental income 8.17% 9.46% 11.44%
Debt financing ratio 20.01% 21.18% 21.46%
Debt ratio 24.37% 25.31% 27.11%
Operating profit margin (EBIT margin) 74.67% 73.36% 69.4%
Operating expense ratio (TERISA) GAV 0.59% 0.56% 0.55%
Operating expense ratio (TERISA) NAV 0.76% 0.75% 0.74%
Return on equity (ROE) 5.55% 4.12% 5.17%
Return on invested capital (ROIC) 4.37% 3.20% 3.98%
Investment return 4.84% 4.65% 4.21%
Average discount rate, real/nominal 3.59% / 4.11% 3.47% / 3.99% 3.36% / 3.88%
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CSA Real Estate Switzerland ResidentialKey figures (1/2)
Source: Credit Suisse Asset Management (Switzerland) Ltd. | Last data point: Data report as of 30.6.2019 / Cumulative investment return: 31.03.2020
For quarterly returns over the last five years, see slide 22 – Historical performance and financial market scenarios are not reliable indicators of future performance.Cash flow return = Asset value at the end of the financial year (overall profit adjusted for realized and unrealized capital gains/losses and changes in liquidation taxes) in relation to the
asset value at the start of the financial year
Cumulative investment return
0.7% 1.6% 1.6%
4.8%
15.0%
26.4%
0.5% 1.0% 1.0%
6.0%
17.8%
31.8%
0%
5%
10%
15%
20%
25%
30%
35%
1 Monat 3 Monate YTD 1 Jahr 3 Jahre 5 Jahre
CSA RES Residential Benchmark
4.70%
5.28%4.84% 4.65%
4.21%
0%
1%
2%
3%
4%
5%
6%
14/15 15/16 16/17 17/18 18/19
Investment return
3.69%
6.03%
3.19%
3.81%
2.88%
0%
1%
2%
3%
4%
5%
6%
7%
14/15 15/16 16/17 17/18 18/19
Cash flow return
5.87%
8.73%
8.17%
9.46%
11.44%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
14/15 15/16 16/17 17/18 18/19
Rent default rate
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3.45%2.25%
0.80%
1.40%
84.60%
1.45%
6.05%
Office
Retail
Cinemas/hotels/restaurants
Warehouses
Residential
Other
Parking
CSA Real Estate Switzerland ResidentialKey figures (2/2)
Source: Credit Suisse Asset Management (Switzerland) Ltd. Last data point: 30.6.20191 Weighted data based on annual rent
Five largest tenants
Intersport 31.12.2020 1.30%
Migros 28.2.20211 1.20%
Public institutions SH 31.7.2021 0.40%
Public institutions BE 30.6.2023 0.40%
AROMA GmbH 31.8.2023 0.20%
Remaining life of rental agreements
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
Structural allocation by actual net rental income
34.40%
12.10%
2.65%
21.10%
17.60%
1.25%8.35%
Zurich
Eastern Switzerland
Central Switzerland
Northwest Switzerland
Bern
Southern Switzerland
Lake Geneva
Western Switzerland
Regional distribution by market value
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CSA Real Estate Switzerland ResidentialChanges in vacancy rates
Source: Credit Suisse Asset Management (Switzerland) Ltd. Last data point: annual report at June 30, 2019
5.60%
3.60% 3.63%
4.77%
0.80%
2.90%
0.66%
1.04%
0.52%
0.98%
2.32%1.70%
4.64%
4.61%8.73%
8.17%
9.46%
11.40%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
15/16 16/17 17/18 18/19
Erstvermietung
Neuausrichtung
Total- oder Teilsanierung
Sockelleerstand
CSA RES Residential
Past years
High renovation and new build activity in the portfolio
The focus was on diversifying and expanding the portfolio throughout Switzerland.
Number of renovations declining (peak during the
financial year 2018/2019)
Continuing to diversify and expand the portfolio
Aiming to reduce the residual vacancy level through
active management
Current vacancy rate: 10.2% (April 2020)
Ongoing expansion and diversification of the portfolio
Continuously review the need to restructure the portfolio
Declining vacancy rate for initial lets
Reduce the residual vacancy rate on a sustained basis
Currently Outlook / objectives
First-time rentalRealignmentTotal or partial renovationResidual vacancy rateTotal
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5
Key figures4
2020 opening3
Real estate market2
Key facts, profile, and strategy1
Overview
6 Reasons to invest
Properties held by the investment
group
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Pfungen,
Vorbruggenstrasse
Type of use: ResidentialForm of ownership: Sole ownershipAcquisition: Q2 2010Construction year: 2011Gross yield: 4.05%Market value: CHF 25.9 mn*Share in portfolio: 2.6%
CSA Real Estate Switzerland ResidentialProperties in the assets (extract)
Source: Credit Suisse Asset Management (Switzerland) Ltd.
Chiasso,
Corso San Gottardo
Type of use: ResidentialForm of ownership: Sole ownershipAcquisition: Q4 2015Construction year: 2013Gross yield: 5.60%Market value: CHF 15.5 mn*Share in portfolio: 1.6%
Amriswil,
Weidwiesen Etappe Süd
Type of use: ResidentialForm of ownership: Sole ownershipAcquisition: Q2 2013Construction year: 2014Gross yield: 4.63%Market value: CHF 17.1 mn*Share in portfolio: 1.7%
Romanshorn,
Carl-Splitter-Strasse
Type of use: ResidentialForm of ownership: Sole ownershipAcquisition: Q1 2008Construction year: 1979Gross yield: 4.77%Market value: CHF 4.3 mn*Share in portfolio: 0.4%
* = Market value as of 30.6.2019
Historical performance and financial market scenarios are not reliable indicators of future performance.
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CSA Real Estate Switzerland ResidentialProperties in the assets (extract)
Source: Credit Suisse Asset Management (Switzerland) Ltd.
Bern,
Viktoriastrasse
Type of use: MixedForm of ownership: Sole ownershipAcquisition: Q4 2007Construction year: 1930Gross yield: 4.21%Market value: CHF 8.2 mn*Share in portfolio: 0.8%
Bienne,
Bözingenstrasse
Type of use: MixedForm of ownership: Sole ownershipAcquisition: Q4 2006Construction year: 1961Gross yield: 6.03%Market value: CHF 12.2 mn*Share in portfolio: 1.2%
Neuhausen am Rheinfall,
Wildenstrasse 6
Type of use: MixedForm of ownership: Sole ownershipAcquisition: Q3 2007Construction year: 1970Gross yield: 5.94%Market value: CHF 3.5 mn*Share in portfolio: 0.3%
Russikon,
Madetswilerstrasse 2
Type of use: MixedForm of ownership: Sole ownershipAcquisition: Q2 2010Construction year: 1997Gross yield: 5.07%Market value: CHF 4.7 mn*Share in portfolio: 0.4%
* = Market value as of 30.6.2019
Historical performance and financial market scenarios are not reliable indicators of future performance.
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CSA Real Estate Switzerland ResidentialAn attractive investment group
Historical performance and financial market scenarios are not reliable indicators of future performance.
Source: Credit Suisse Asset Management (Switzerland) Ltd.
Launched July 1, 2006Contributions in
kind are possible
Market value of all properties is
around CHF 915 mn
Profit appropriation through
reinvestment
Broadly diversified portfolio with
around 109 properties
Around 220 investors
Stable investment return of
4.65% in 2017/2018
financial year
Balanced regional
distribution within
Switzerland
Investment group a GRESB
score of three stars
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CSA Real Estate Switzerland ResidentialYour contacts
Key figures as per financial statements
Past performance and financial market scenarios are not reliable indicators of future performance.
Source: Credit Suisse Asset Management (Switzerland) Ltd.
Portfolio Manager
Murat SaydamProduct ManagementSihlcity – Kalandergasse 48070 Zurich
Tel. +41 44 334 43 26*
Real estate strategy and advice
Ulrich BraunGlobal Real EstateSihlcity – Kalandergasse 48070 Zurich
Tel. +41 44 332 58 08*
* Please note that telephone calls to our numbers may be recorded. By making a call, you acknowledge that you are in agreement with this.
Key figures from financial statements (June 30, 2019)
Currency CHFFinancial year-end June 30Initial issue date July 3, 2006
Management fee 0.40% p.a.TERISA GAV 0.55%TERISA NAV 0.74%
Total assets (in CHF mn) 976.1Net assets (in CHF mn) 711.4
Yield 4.21%No. of properties 109
(including building land and building projects at completion)
Rental income loss rate 11.4%
Debt ratio 27.11%
Swiss security no. 2522609
ISIN CH0025226090
The investment group CSA Real Estate Switzerland Residential will
open for subscriptions on May 14, 2020.
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CSA Real Estate Switzerland ResidentialKey figures – quarterly returns
Source: Credit Suisse / DatastreamLast data point: 31.03.2020
Historical performance and financial market scenarios are not reliable indicators of future performance.
Q1 Q2 Q3 Q4
quarterly returns net BM rel. net BM rel. net BM rel. net BM rel.
2015 1.10% 1.22% -0.11% 1.24% 1.12% 0.12% 1.36% 1.52% -0.17% 1.17% 1.82% -0.65%
2016 1.07% 1.15% -0.08% 1.60% 1.14% 0.45% 1.04% 1.69% -0.64% 1.03% 1.73% -0.70%
2017 1.02% 1.12% -0.10% 1.66% 1.21% 0.45% 1.18% 1.37% -0.20% 1.14% 1.61% -0.47%
2018 1.12% 1.00% 0.12% 1.13% 1.01% 0.12% 1.06% 1.16% -0.10% 1.08% 2.34% -1.26%
2019 1.00% 0.97% 0.03% 1.02% 1.05% -0.03% 1.07% 1.20% -0.13% 1.04% 2.71% -1.67%
2020 1.56% 1.01% 0.55% n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
1 month 3 months YTD
net BM rel. net BM rel. net BM rel.
2020 0.72% 0.49% 0.23% 1.56% 1.01% 0.55% 1.56% 1.01% 0.55%
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Mitigation
Thorough due diligence prior to purchase of any property Continuous monitoring of individual investments, rental markets,
and the macroeconomic environment by the Global Real Estate
Strategy team
Local internal and external experts on regulatory framework conditions and taxes
Broad portfolio diversification through carefully selected properties
Investments primarily through equity and a carefully selected level of debt capital absorb negative interest rate developments
Risk
Limited liquidity compared with larger listed investment products
The values of properties may fluctuate, for example due to the
following factors:
Unfavorable changes in supply or demand that negatively impact the acquisition/sale or rental of properties
Interest-rate development Taxes or changed regulatory conditions in the respective
markets Environmental risks Disasters Force majeure and terrorism
CSA Real Estate Switzerland ResidentialRisks and risk mitigation
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Disclaimer
The information provided herein constitutes marketing material. It is not investment advice or otherwise based on a consideration of the personal circumstances of the addressee, nor is it the result of objective or independent research. The information provided herein is not legally binding and it does not constitute an offer or invitation to enter into any type of financial transaction. This document was produced by Credit Suisse Group AG and/or its affiliates (hereafter "CS") with the greatest of care and to the best of its knowledge and belief. The information and views expressed herein are those of CS at the time of writing and are subject to change at any time without notice. They are derived from sources believed to be reliable. CS provides no guarantee with regard to the content and completeness of the information and does not accept any liability for losses that might arise from making use of the information. If nothing is indicated to the contrary, all figures are unaudited. The information provided herein is for the exclusive use of the recipient.Neither this information nor copies of it may be sent to, taken into, or distributed in the United States or distributed to any US person (within the meaning of Regulation S of the US Securities Act of 1933 in its applicable form). This document may not be reproduced, either in part or in full, without the written permission of CS. The key risks of real estate investments include limited liquidity in the real estate market, changing mortgage interest rates, subjective valuation of real estate, inherent risks in respect of the construction of buildings, and environmental risks (e.g. land contamination). Credit Suisse Investment Foundation, Zurich, is the issuer and manager of CSA products. The custodian bank is Credit Suisse (Switzerland) Ltd., Zurich. The articles of incorporation, regulations, and investment guidelines, as well as the most up-to-date annual report and fact sheets, may be obtained free of charge from the Credit Suisse Investment Foundation. Only pension funds domiciled in Switzerland that are not subject to tax are permitted as direct investors.
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