UBS Swissreal increases rental income
The commercial real estate fund closed the 2025 financial year with higher rental income, but had to accept an increase in the rent default rate. The planned merger with UBS Interswiss is in the background.
UBS Swissreal's rental income rose by CHF 0.4 % to CHF 109.2 million in the 2025 financial year. Following the stronger increase of 2.2 % in the previous year, the growth momentum has thus flattened noticeably. At the same time, the rental loss rate increased from 3.6 % to 4.0 %, after falling in the two previous years. A look at the property register shows that several properties had higher defaults than in the previous year, for example in Pratteln (Güterstrasse 105/107: % 17.4, previous year: % 12.2) and Urdorf (Steinackerstrasse: % 9.3, previous year: % 6.9). The vacancy rate in Yverdon-les-Bains also remains high at 19.4 %, although an extension of the main rental agreement until the end of 2035 was agreed there. The weighted average remaining term of commercial rental agreements fell slightly from 4.7 to 4.5 years.
Operating result and overall success
Despite rising losses, net income improved slightly to CHF 65.5 million (previous year: CHF 65.0 million). The reduction in the management fee to 0.54 % of total fund assets - the fund management company previously charged a flat rate of 0.77 % - contributed to this. The fund operating expense ratio (TER) fell accordingly from % 0.77 to % 0.71 (based on total fund assets). This was offset by higher mortgage interest of CHF 7.0 million (+18.4 %, previous year: 5.9 million) with a slightly higher average interest rate of 1.3 % (previous year: 1.2 %) and an increase in taxes and duties of around CHF 2 million to CHF 6.2 million.
Total income rose sharply to CHF 63.0 million (previous year: CHF 49.8 million). This was due to unrealized capital gains of CHF 8.8 million, following unrealized losses of CHF 11.8 million in the previous year. The return on investment rose to 4.2 % (previous year: 3.3 %). At CHF 2.65 per unit, the distribution remained at the previous year's level, resulting in a payout ratio of 103.7 %.
Market value increases, discount rates fall
The market value of the portfolio increased by % 2.5 to CHF 2.22 billion - a stronger increase than in the previous year (+0.2 %). According to KPMG's valuation report, the average market value-weighted discount rate fell from % 3.64 to % 3.51, with a range of between 1.73 and 5.35 %. The current gross yield on the portfolio properties is reported at % 5.17. The debt ratio rose to % 25.8 (previous year: % 23.7) and is therefore still within the maximum limit of % 33 in accordance with the fund contract.
On the stock market, the fund, which is being merged with the Interswiss fund, was unable to keep pace with the market. Its performance amounted to 1.6 % and was thus 9 percentage points below the benchmark index SXI Real Estate Funds TR (+10.6 %). The premium shrank from % 16.2 to % 13.9.
Contract extensions and refurbishments
The fund management highlights two renewals as a sign of tenant loyalty: In Berne, the contract with the largest single tenant was extended until 2038, while in Yverdon-les-Bains (VD) an extension was agreed with the main tenant until the end of 2035. At Mainaustrasse 30 in Zurich, the complete renovation and conversion into a residential and commercial building was completed in July 2025 - all space has been let. At Weisse Gasse 15 in Basel, a residential and commercial building with 15 maisonette apartments and around 200 square meters of commercial space on the first floor is being built with an investment volume of around CHF 11 million; completion is scheduled for May 2026. In Frenkendorf (BL), work began in autumn on the new replacement building at Parkstrasse 3 with 22 apartments and around 1,300 sqm of commercial space, scheduled for completion in spring 2027.
In its outlook, the fund management company confirms the plans announced in November 2024 to merge UBS Swissreal and UBS Interswiss. The merger is to be implemented in 2026/2027 and will create the largest commercial real estate fund in Switzerland in terms of market value. It is subject to regulatory approvals.
Purchases
Basel, Freie Strasse 53 (commercial, long-term single-tenant lease with Ochsner Sport, investment volume approx. CHF 30 million, gross yield 3.6 %, WAULT approx. 13 years, as of December 1) (aw)
