The Zurich-based real estate company Swiss Finance & Property Investment (SFPI) was founded in 2001 and is present in all regions of Switzerland, with a particular focus on Zurich and Basel.
Its market capitalization is 320 million (barely more than my bank account 🙂 ) and its real estate portfolio is valued at 520 million. SFPI has grown rapidly in recent years, since its real estate portfolio was still worth 276 million in 2012.
Commercial real estate represents two-thirds of the company's portfolio. The vacancy rate stood at 4.5% in mid-2017, compared to 5.7% a year earlier, a very reasonable value. The equity ratio of around 46% is sufficient without breaking the bank either.
Return on equity (ROE) increased from 5.5% in 2011 to 10.6% in 2017, a value comparable to that of Intershop and one of the highest in Swiss real estate.
The other numbers are also impressive: Net profit more than tripled from 2011 to 2017 and the dividend increased by 50% in the same time frame.
The dividend is high (current yield of 3.8%) for a very reasonable payout ratio of around 35%. For this year, the dividend should be increased to 3.70 fr., which represents a yield of 3.9%. The dividend also has the advantage of being non-taxable because it is paid from capital reserves.
Neither the price-earnings ratio (PER) nor the price-to-book ratio (PBR) are really appropriate for valuing real estate stocks. The best measure is given by the NAV (net asset value).
At the current price of 94.50, the premium over the NAV (which is around 92 fr. per share) is less than 3%, a VERY reasonable value. At this level, I am a buyer.
To summarize: SFPI is a solid company, with a fairly cheap stock, and a high, tax-free and growing dividend. An ideal investment for the conservative investor looking for passive income rather than capital gains.
In the medium/long term, I expect the company to grow less quickly than it has in recent years, offering its shareholders a decent but not extraordinary return: around 8 to 10% per year, of which around half comes from the dividend.
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There's one who's in Japan and the other who wanders around Swiss buildings 😉
Very nice company too in any case. I'm keeping it under my elbow because I may have to buy back some real estate soon to respect my diversification principles.
This is called globalization 🙂
Even Trump is coming to Davos. Everything is going to hell!
I sold my SF Urban Properties shares today. At 109 francs I now find them too expensive and the stagnation of the dividend does not please me very much.
The proceeds of the sale were directly reinvested in Valiant shares @101.60. The stock is cheap and the dividend is very attractive. The annual figures (and the dividend increase 🙂 ) will be announced this Thursday and I expect a positive reaction.
I can't wait to see Valiant's results! Well done sfp!