Article published on March 6th 2025, on Immoday.ch.
Since the return of investors to the Swiss securitized real estate market in early 2024, capital increases have surged. More than 50 were recorded in 2024, with already around 20 in early 2025. However, a new trend has emerged among smaller funds: instead of conducting a single large fundraising, they prefer multiple smaller operations, not exceeding a few tens of millions of francs. Here’s why.
By Olivier Toublan
The return of investors to the Swiss securitized real estate market in 2024 led to a wave of capital increases. More than 50 transactions took place that year, and 2025 has already seen around 20. However, a particular strategy has gained traction among several independent small funds: instead of raising large amounts at once, they opt for successive increases of a few tens of millions of francs. In 2024, half a dozen vehicles conducted at least two capital increases.
Why this strategy? Diego Reyes, Senior Fund Manager at Dominicé Swiss Property, who has carried out four capital increases in the past 12 months, explains his approach.
Diego Reyes, you just announced a new capital increase. If I’m counting correctly, this is the fourth in 12 months?
Indeed. We completed an initial increase of 37 million francs in April 2024, followed by a second in June (38 million francs), a third in November (57 million francs), and the next, scheduled for March 2025, will also amount to 57 million francs. Additionally, we carried out an asset swap of 13 million francs in July 2024.
Why not conduct a single 200-million-franc fundraising round?
At the beginning of 2024, the market was still affected by rising interest rates, making investors more cautious. When rates started to decline, we chose a measured approach: raising capital only to finance already secured acquisitions.
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Okay, but why a second increase just three months after the first? Poor planning?
Not at all—quite the opposite. An opportunity emerged sooner than expected: the acquisition of a real estate portfolio owned by a Geneva-based Family Office. This flexibility allows us to seize opportunities as they arise without needlessly immobilizing capital.
Why adopt this fragmented fundraising strategy?
We want to immediately invest the capital entrusted to us by our investors, without leaving it idle. Those who invest in a real estate fund expect their money to be promptly deployed into tangible assets, not sitting as cash in a bank account. In the current context of persistently declining interest rates, this approach optimizes capital utilization and fund performance.
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Doesn’t this reflect a lack of investor confidence?
On the contrary. All our capital increases have been heavily oversubscribed. Today’s investors are highly pragmatic—they demand full transparency on fund usage and the impact of acquisitions on profitability. We have therefore adopted a measured strategy, with increases corresponding to approximately 10% of the fund’s value, ensuring optimal capital integration and rigorous management.
If the March increase goes as planned, where will the Swiss Property Fund stand?
We anticipate that the gross portfolio value will reach around 830 million francs by autumn 2025. Our growth is based on strict acquisition criteria and a rigorous selection of assets to ensure sustainable value creation.
Is demand for this new capital increase strong?
Yes, very strong, particularly from new private investors looking to acquire fund shares.
If demand is so strong, why limit yourself to 57 million francs? Why not raise 80 million?
We take a pragmatic approach. Raising 80 million would require securing a larger volume of acquisitions, which is challenging in a market where high-quality opportunities are becoming scarce. We remain selective to preserve the fund’s profitability and stability. This cautious approach is even more justified if, as we anticipate, interest rates turn negative again.
What will happen if interest rates turn negative?
Major players—pension funds, banks, and insurance companies—will massively reposition themselves in residential real estate, driving prices up and yields down. This will make it even more difficult to find attractive assets. Fortunately, these institutional investors typically target acquisitions of at least 30 million francs, leaving interesting opportunities below that threshold.
What is the average price of your acquisitions today?
It is increasing. Over the past 12 months, the average size of acquired assets has risen to 18.5 million francs. Since 2022, the fund’s average asset value has grown from 12 to 14 million, reflecting our strategy to acquire larger properties and improve fund liquidity.
Who are your investors in these capital increases—existing shareholders or new entrants?
In our first two capital increases in 2024, about one-third of subscribers were new investors. We put significant effort into engaging wealth managers, Family Offices, and private investors to attract them to our fund. This approach has paid off—our existing investors have since increased their positions. By December 2024, more than 70% of subscriptions came from our current shareholders.
More private or institutional investors?
Our fund consists of approximately 70% private investors and 30% institutional investors. This is a strategic choice—we aim to be a preferred product for private investors.
Your February premium of 21% is well below the average for listed funds, which exceeds 35%. Is this an advantage or a drawback?
It is clearly an advantage. Historical funds, with high-quality real estate portfolios generating strong yields from acquisitions made decades ago, currently have premiums often exceeding 40%. For investors looking to enter the market, these high valuations can be a barrier. We offer an attractive alternative with a more reasonable premium and a disciplined investment strategy. Our track record demonstrates our ability to identify relevant opportunities and create value through active and efficient portfolio management.
Are the costs of multiple fundraising rounds higher than those of a single one?
No, the difference is marginal. In the end, the fees are almost identical.
Will you continue this strategy in the coming months?
Yes, we intend to maintain this approach. Our goal is to reach a portfolio of 1 billion francs by 2029.
Is this the new critical size for a real estate fund?
With the merger of Credit Suisse and UBS funds, this critical size will likely exceed 2 billion francs. This is why it is essential for us to pursue qualitative and controlled growth, ensuring we remain a key player in the market.
