Geneva, April 28th 2020
AB Alternative SICAV-SIF European Real Estate Fund, an open-ended Luxembourg based fund that invests in commercial real estate in Western Europe, has completed its annual audit for the FY 2019 and achieved a net annualized IRR of 10.50% in the last quarter of 2019 and distributed 4.50% p.a. dividend for the same period (on contributed capital). The weighted average lease term of the portfolio increased to 6 years as a result of targeted lease renewals and careful asset management; generating a total rental income of €13.1 million in 2019. The Gross Asset Value (“GAV”) of the fund is €218.5 million (NAV at €126.4m) with the aim of growing the fund further while maintaining a stable distribution level.
The current portfolio consists of four office buildings and eight warehouses located in Germany, the Netherlands, Luxembourg and Italy. The portfolio is well balanced both by geography and asset class and the portfolio manager continues to target the e-commerce sector with new acquisitions of last-mile warehouses in the same countries.
The logistics sector and especially last-mile warehouses are expected to remain a bright spot in the property markets. From an investment point of view the logistics and industrial sector remain strong, with improved fundamentals, particularly increased demand for space (+ c. 1.3m sqm demand each year). The small in-town units capable of being used as last mile logistics are likely to see increased demand, resulting in yield compression.
Daniel Deléchat, Head of Asset Management at Arab Bank (Switzerland) Ltd, portfolio manager of the fund, is keen on commenting on the excellent Q4 2019 figures: “we built a strong portfolio so far and are able to deliver a stable distribution to our investors with a high net performance thanks to our efforts in asset management and targeting the right assets in the right locations. Our strategy to pick relatively small assets where demand remains lower combined with excellent locations both in offices and logistics is paying off, and we definitely intend to continue the good work in the year to come.”