Investing in the Residential US Real Estate Market

Varia US Properties is a Swiss real estate company based in Zug, Switzerland.
The combination of an experienced Swiss team, a US dedicated staff, and a broad network of highly qualified local partners allows Varia US Properties to navigate through the opportunities of the US real estate market.

The Company aims to maximize long-term value by acquiring, owning, repositioning, managing and selling US multifamily properties. It focuses on value creation with a long-term perspective.

Varia US Properties considers the following key strengths and market characteristics as basis for future growth:

  • Long-standing investment expertise in Swiss and international real estate applied to the U.S. rental housing market
  • Well performing multifamily property portfolio in growing urban submarkets
  • Experienced Swiss asset manager optimizing performance with tailored investment strategies
  • Board of Directors with broad experience in real estate, banking and investments

Asset Management

Varia US Properties cooperates with Stoneweg SA, a Geneva based, international real estate asset manager with over CHF 600 million under management. Stoneweg SA supports Varia US Properties in the portfolio management and implementation of its investment strategy.

Stoneweg SA was formed by a group of Swiss senior real estate executives with a broad experience both in national and international real estate. Thanks to their diversified skills and professional backgrounds, they have deep insight both in the Swiss and the US market. Stoneweg SA formed a US subsidiary, Stoneweg US LLC, that assists in the selection of assets, the local asset management and the development of the local network.

Structure

The Company indirectly invests in real estate properties in the United States through a set of so called blockers and PropCo companies. For each property or portfolio that the Company acquires, one or several blocker companies as holding subsidiaries are incorporated, normally in the legal form of a limited liability company typically incorporated in Delaware, United States. Usually, Varia US Properties holds 100% of the interests in the single or series of holding subsidiaries. Each holding subsidiary, possibly in cooperation with other investors, incorporates one or several limited liability companies with the sole purpose of holding the title in one or several properties, a so called PropCo LLC. It is the Company’s intention that the subsidiary holding holds more than 50% of the equity interest and more than 50% of the votes in each PropCo LLC.

Varia US Properties capitalizes the blockers with a mix of equity and debt in the form of shareholder loans.

The below graphic depicts the typical target structure:

variausproperties_161116

Valuation

Valuation of the properties is the basis of the NAV calculation. Therefore, each property is valued twice a year, for the year closing (as of 31 December) and for mid-year closing (as of 30 June).

The Company appointed Colliers International Valuation & Advisory Services as its appraiser. Thanks to its numerous offices throughout the country, Colliers makes relevant appraisal of each property based on local market comparative data and the latest appraisal standards.

Currency

Varia US Properties prepares its consolidated financial statements in USD according to IFRS and its statutory financial statements in CHF according to the Code of Obligations (CO). However it invests in US Dollars (USD), its incomes and main expenses are in USD and it functional currency is USD. To date, the Company decided not to hedge the currency risk. Investors may choose to hedge the currency risk or to benefit from a long-term exposure to USD.

Accounting

The Company reports both according to IFRS with the USD as its functional currency as well as according to the Code of Obligations (CO) for its statutory report and for the Swiss tax authority

The IFRS accounts are consolidated accounts based on real estate company standards.

The US Real Estate Market

The United States residential real estate market is characterized by a considerable number of renter households that has been increasing over the last few years. Tightened credit requirements for single family home ownership following the financial crisis have led to a shift from home ownership to renting in the United States. Rents for residential multifamily units in suburban regions have been growing on average since 2010 and the vacancy rates have remained comparatively low. There is a trend for demand for rental housing to continue to exceed new supply in secondary and tertiary markets.