- Published on October 17th, 2018
We are pleased to announce tha Varia US Properties AG (VARN) is, for the first time since it’s creation in 2015, covered by analyst research. Kepler Cheuvreux issued it’s initial coverage research this week with a target price of 38 CHF.
For any questions and to obtain the research paper, please contact Lea Saenz de Cabezon at Kepler Cheuvreux.
Varia US Properties is a Swiss based company investing in the US residential real estate market, with over $750 M of properties accross the country.
Its main focus lies on secondary and tertiary areas that are characterized by strong population and employment growth and limited housing offering. These regions are typically within a 45 to 60 minute drive of city or employment centres. The housing offering targets the low to medium income population in these regions.
The company’s asset manager is Stoneweg, an international real estate asset manager with over CHF 2 billion of real estate assets and projects under management .
Varia US Properties is listed on the Swiss Stock Exchange (SIX) in Zurich, with the ticker VARN.
- Published on August 28th, 2018
Today, Stoneweg reaches the threshold of ten thousand apartments under management across 20 States with an overall valuation near $800 million.
This represents more than 20,000 tenants and family members living in the communities we manage and more than 250 employees working onsite. The workforce housing sector in the U.S. (median household income and below) has proven lucrative for our company and investors – driven by favourable demographics, high demand, and limited new supply especially in growing secondary and tertiary markets.
- Published on May 31st, 2018
The rise of e-commerce and of flexible working habits is part of a larger phenomenon, triggered by the digitalization of the economy. Stoneweg forecasts that as entire industries go immaterial, real estate will be deeply and lastingly impacted.
As the company launches its Swiss commercial real estate strategy, it shuns away from standard offices or classic shopping malls. Rather, it is investing exclusively in buildings that will profit from the digitalization of the economy – realtech assets, such as health and sport assets, food-court and entertainment hubs, coworking spaces, logistic hubs, and data centers.
Last month Stoneweg acquired the iLife leasure center for CHF 53.5 Million. Located between Geneva and Lausanne, the iLife center boasts 9’500 sqm of food courts, pop-up entertainment space, kids club, showrooms, and flexible office space. Built in 2015, it proved wildly popular in the region.
Earlier this year, Stoneweg bought a 3’000 sqm fitness center in Gland, the largest in the lake Geneva area, and let it to Let’s Go Fitness, a leader in Western Switzerland. Stoneweg bets that gyms will be increasingly sought after as a hedge against adverse effects of digitalization on real estate.
- Published on April 10th, 2018
Investor profits have been crystalized by Stoneweg following the successful development and completion of the landmark Luxa office buildings in the 22@ district, Barcelona.
Luxa is an exclusive and avant-garde office complex at the heart of the 22@ district. There are two independent units within the space, with the silver building covering 13,035 sqm and the golden building with a further 6,835 sqm of executive office space. These are state of the art offices: energy efficient, double-heighted lobbies and a quality of materials used that adds to the grandeur.
This development was initiated in January 2016. A sale agreement was reached a year and a half later, in July 2017, well ahead of the completion of the building in February 2018.
Stoneweg’s investment approach in Spain is a capital gain orientated strategy targeting a net IRR at project level of 15% – 20% and executing transactions within both residential (2/3) and opportunistic projects (1/3). By the end of quarter-one 2018, €640 million had been invested within Spanish development over 37 transactions, with 5 successfully completed exits.
The 22@ district in Barcelona is a key investment center for Stoneweg given the implementation of a new economic model attracting innovative companies, co-existing in the same physical areas with research, training and tech transfer centers. Key tenants for the Luxa complex include Amazon and WeWork; cutting edge companies that demand the highest of standards.
This district attracts both a strong tenant mix, as well as, a highly skilled and talented employment base; demand drivers and demographics provide the backdrop for generating an interest in investment, however, at Stoneweg, project selection and execution is always driven by a bottom-up process based on the individual opportunity.
We are delighted to present to you 22@ Luxa, another successfully executed investment and a milestone for Stoneweg’s investors in Spain.
- Published on March 19th, 2018
The company’s investment activity in Spain has entered its third year and the rationale looks more compelling than ever.
Stoneweg’s residential development strategy within Spain is already leading 35 projects representing € 570 million total investment, and has successfully exited 5, at the end of December 2017. This year, Stoneweg will keep on expanding its portfolio of projects, starting with five selected pipeline opportunities, with due diligence exclusivity, totaling €72.2 million in acquisition price.
Our analysis show that present market conditions within Spain continue to present a unique buying opportunity in a growing economy and recovering real estate market. Attractive valuations are coupled with upside potential for residential in Madrid, Barcelona and second tier cities, and the momentum is picking up speed.
A more detailed analysis can be found here.
- Published on December 18th, 2017
Varia US Properties , whose asset manager is Stoneweg, announces today that it reached an agreement with Peak Capital Partners to buy out the interests of Peak Capital Partners and its affiliates in the Company’s portfolio, which are accounted for as non-controlling interests in its financial statements.
According to the agreement, the non-controlling interest holders will receive assets of the portfolio up to their net equity participation, which will be calculated based on the appraisals of December 31, 2017 prepared by Colliers. Based on the valuations of the 30 June 2017, this participation is estimated to amount to approximately USD 22.4 million. The preliminary allocation of properties will be done through a defined selection process that will be initiated promptly based on interim calculations. The preliminary allocation of properties is expected to be completed by the end of December 2017. Once the year end valuations are available, the calculations and property allocation process will be finalized. The economic transfer will take place on January 1, 2018, i.e. based on the agreed allocation of properties, the respective parties will be treated as 100% owners for economic purposes of the respective properties.
This transaction will grant the Varia US Properties with 100% ownership on its remaining portfolio and it will liquidate the non-controlling interest position both in Varia US Properties’ statements of financial position and statements of profit or loss and other comprehensive income. The closing of this transaction will have a corresponding impact on the Varia’s total assets, total liabilities and total income.
Jaume Sabater, Vice Chairman of the Varia US Properties and CEO of Stoneweg SA, the asset manager of the Varia US Properties, comments: “This transaction arrives at the best time, when Stoneweg has hired the necessary resources to take over the full asset management of this part of the portfolio. We expect greater efficiency in the management of Varia’s total portfolio as well as a consolidation of the returns”.
See Varia US Properties media release here
Varia US Properties intends to increase its share capital to exploit further growth opportunities – no significant property damage due to Hurricane IrmaPublished on September 13th, 2017
Varia US Properties, whose asset manager is Stoneweg, announced today the intention to increase its share capital with two consecutive transactions in order to further enhance its portfolio and to benefit from the strong investors’ demand for appeling real estate investments.
In a first step, the Company intends to offer newly issued registered shares based on Article 2.3 of the Articles of Association of the Company, which authorizes the Board of Directors to increase the share capital at any time until November 13, 2018, by issuance of a maximum of 665,871 registered shares at market price. Currently, the Company expects this transaction to be completed by the beginning of October, and anticipates generating proceeds of approx. CHF 20 million in cash from a new anchor investor.
Subsequently, the Board of Directors of Varia US Properties intends to ask shareholders to vote on an ordinary capital increase with the participation from existing and new institutional and private investors by means of rights offering. Further details – like the number of shares newly issued, subscription price, subscription period, and subscription ratio for existing shareholders – will be communicated with the invitation to the required extraordinary Shareholder Meeting in Q4 2017.
Varia US Properties AG has historically a large exposure in Florida and the local property management companies have been very active last week and over the week-end to make sure tenants were safe and assets protected as much as possible against high winds and possible floods during the storm.
Due to its enormous size, Irma affected the whole State of Florida. However, the Company is able to report, at the best of its current knowledge, that it sustained no injury to tenants or staff, nor significant damage to the properties.
The Company is well insured against any property damage and liability claim, but none should be needed for this storm.
See Varia US Properties media release here
Varia US Properties increases total income and gross potential income significantly – half-year net profit boosted to USD 15.0 millionPublished on September 4th, 2017
Varia US Properties, whose asset manager is Stoneweg, announces strong half year 2017 results.
The resulting portfolio, as of 30 June 2017, consisted of 47 properties totalizing 7,289 units, representing USD 508.1 million of real estate value. The occupancy rate stood at 95.3%. In the first six months 2017, the portfolio generated a rental income of USD 26.2 million, compared to USD 17.4 million during the period from 28 September 2015 through 30 June 2016, and a total income of 43.3 million (previous year USD 33.0 million). The gross potential income as of 30 June 2017 increased to up to USD 71.1 million.
The net gain from fair value adjustment on investment property amounted to USD 14.9 million and reflects the execution of the value-add strategy of Varia US Properties.
Total operating expenses were USD 18.2 million (previous year USD 19.8 million), which results in an operating profit of USD 25.1 million (previous year USD 13.2 million). After deduction of the finance cost and the income tax provision, the profit for the period is USD 15.0 million (previous year USD 6.5 million), of which USD 12.2 million (previous year USD 2.9 million) are attributable to Varia.
With regard to the realized operating results, the effective gross income is USD 28.4 million and the total operating expenses is USD 14.9 million which give a net operating income of USD 13.5 million.
See Varia US Properties half year 2017 results media release here
- Published on July 28th, 2017
The Spanish economy accelerated at the fastest pace in almost two years, extending a recovery that shows no signs of abating.
Output grew 0.9 percent in the three months through June after expanding 0.8 percent in the previous quarter, the National Statistics Office said Friday in a preliminary report. That’s the best reading since 2015 and matches the median estimate in a Bloomberg survey of economists. From a year ago, the economy accelerated 3.1 percent.
While market consensus initially pointed to a slowdown this year, the Spanish economy continued to outperform its euro-area peers. Renewed momentum has prompted string of GDP revisions from the International Monetary Fund, which now sees growth of 3.1 percent for 2017 compared to a previous estimate of 2.6 percent, and the Spanish government of Mariano Rajoy, which forecasts growth of 3 percent instead.
That prediction is still too conservative according to economists at Banco Bilbao Vizcaya Argentaria SA and Bankia SA, who believe this will be the best year for the Spanish economy in a decade with output expanding 3.3 percent. The prospects of a continued recovery coupled with further budget consolidation has prompted S&P Global Ratings and Fitch Ratings to upgrade their outlook on Spain’s credit rating to positive from stable, hinting at a possible hike in the second half of the year.
While Friday’s report didn’t break down components of GDP, economists say growth probably benefited from accelerating household consumption fueled by strong job creation, resilient exports and a pick up in services linked to tourism. Visitor numbers are on track to post yet another record year despite concern that Brexit will reduce the number of U.K. tourists.
“Household consumption has rebounded and that’s going to manifest in the quarterly data,” Miguel Cardoso, chief Spain economist at BBVA in Madrid said before the data were released. “Exports are still strong despite coming off from a high point and the tourism sector is very dynamic, that’s having a positive impact on services.”
The latest health-check on the Spanish economy comes on the back of Thursday’s second-quarter unemployment report, which saw the nation’s jobless rate fall to the lowest level in eight years. Retail sales data in June pointing to renewed impetus from consumers after spending lost some ground at the start of the year.
Source: Bloomberg Markets
- Published on May 23rd, 2017
Varia US Properties generated strong operating results for the first quarter 2017. The net cash flow Q1 yield stood at 11.2%, up from 8.4% in Q4 2016. The distribution yield at property level increased to 9.5% (Q1’17) from 8.7% (Q4’16). Effective gross income (EGI) reached USD 12.7 million, a USD 2.3 million increase from Q4 2016. This was the combination of the fast rental growth, the stability in vacancy and new acquisitions. Total operating expenses as percentage of EGI dropped from 50% in Q4 2016 to 44.6% in Q1 2017, which in turn increased the net operating income from USD 5.2 million in Q4 2016 to USD 7.0 million in Q1 2017. As a result, the total net cash flow stood at USD 3.4 million, an increase of 79% from Q4 2016. Gross potential rate improved by nearly 20% to USD 12.5 million.