CS EUROREAL Bulletin German Version of EUR Unit Class for Investors with Unlimited Tax Liability in Germany, January 13, 2016

Transcription

1 Credit Suisse Real Estate Investment Management Important Information: CREDIT SUISSE ASSET MANAGEMENT Immobilien Kapitalanlagegesellschaft mbh has given irrevocable notice of the termination of management of the CS EUROREAL special fund effective April 30, 2017, and announced the permanent suspension of the issue and redemption of CS EUROREAL units. This means that the company will no longer execute incoming issue and redemption orders. CS EUROREAL Bulletin German Version of EUR Unit Class for Investors with Unlimited Tax Liability in Germany, January 13, 2016 Return & Valuation The EUR unit class of CS EUROREAL posted an investment performance of 0.4 percent in the last two months of The revaluation of nine properties in Germany, France and Great Britain by the independent expert resulted in a valuation effect of 2.2 percent in this period. The Return for the 2015 calendar year was at 6.0 percent 1 for the EUR unit class. This performance is unsatisfactory, but it is mainly attributable to the special situation of the fund s liquidation. Firstly, returns were reduced by ongoing adjustments to market values as a result of the periodic revaluation of properties. Overall, the market value of the real estate portfolio was adjusted downwards by 3.0 percent on balance by the independent experts in Secondly, extensive real estate sales completed in 2015 impacted negatively on the investment return. With a total of 26 sales, the aggregate sale prices were more or less on the level of the most recent assessments of market values by the independent experts. However, the fund performance also felt the effect of salesrelated costs and of the provisions to be set aside under the purchase contracts on the basis of the usual rules to cover potential expenses resulting from guarantees and warranties. Gross/Net Performance of EUR unit class of CS EUROREAL in the past 5 years (using the BVIMethod 1 ) 4.0% 0.0% 4.0% 8.0% 12.0% 1.0% 3.8% 3.7% 3.7% 12/31/ /31/ /31/ /31/ % 1.1% 12/31/ /31/ % 4.7% 12/31/ /31/2014 Performance (Net) Performance (Gross) 6.0% 6.0% 12/31/ /31/2015 Gross performance refers to performance taking into account costs incurred at fund level. Net performance is defined as costs incurred at fund level plus the maximum issuing commission of 5 percent. Safekeeping account management fees are not included; if they were included they would detract from performance. 1 Yield calculation using the method recommended by the German Federal Association of Investment and Asset Management (BVI). Gross performance: Performance taking account of costs at fund level. The nonrecurring sales charge of up to 5 percent and individual costs like e.g. safekeeping charges, provisions and other charges are not included in the chart. If considered they would have a negative effect on the performance. Historical performance indications and financial market scenarios are no reliable indicator for current and future performance. 1/5

2 Property Sales Since the editorial deadline of the last CS EUROREAL Bulletin on November 17, 2015, no further property sales have been completed. 26 properties were sold in the 2015 calendar year for a total of almost EUR 1.1 billion. This corresponds to almost a third of the real estate portfolio at the beginning of The sale of the office property at 80 Bath Street in Glasgow already contractually secured in October 2015 will probably be completed in February 2016 with the payment of the purchase price and the transfer of the burdens and rights. A further 44 properties with a value of around EUR 2.2 billion remain to be sold. The fund management team is currently discussing single and block sales with an aggregate value of around EUR 700 million; the negotiations are at various different stages. The sale of most of the remaining portfolio is already being prepared so that as much of the real estate portfolio as possible can be sold before our management mandate expires on April 30, As to date, we will report on single sales either when they are completed or at least contractually secured. Rentals & Asset Management At the end of December 2015, CS EUROREAL reported an almost unchanged occupancy rate versus the end of October 2015 at 84.9 percent. The loss of two tenants with a total of 1,800 sqm was offset by an additional lease for around 1,200 sqm in the property in Madrid. The tenant leases for the four German DIY stores in BerlinMariendorf, BerlinWeissensee, Osnabrueck and Fuerth with a total area of 78,400 sqm were also extended over the long term. The occupancy rate declined slightly in 2015 by 1.5 percentage points to 84.9 percent. The decline in the occupancy rate is due in particular to the fact that the properties sold had aboveaverage occupancy rates on balance. Loans 2 In November 2015, the loan for the RathausGalerie property, FriedrichEbertPlatz 12, Leverkusen, was repaid in the amount of EUR 90 million. As a result, the loan ratio fell further from 5.1 percent to 1.1 percent of the real estate assets between the end of October 2015 and the end of December This means that CS EUROREAL is now almost free of debt. There remains only one loan in the amount of EUR 25 million for the property Orteliuslaan 750 in Utrecht. The loan is due for repayment in September Distribution/Capital Repayment With the eights distribution within the framework of the liquidation and payout of CS EUROREAL, a total of close to EUR 190 million will be paid out to investors on January 26, The distribution amounts to EUR 1.80 per unit in the EUR unit class. The fund had liquidity of EUR million, or 17.1 percent of the fund s net assets, as at December 31, The liquidity remaining in the fund following the distribution will be needed to cover future expenses and obligations of the fund to ensure the further proper operation of the fund in the interests of the investors. These comprise in particular construction and letting measures for maintaining and increasing the value of the fund properties as well as obligations arising from property sales, e.g. capital gains taxes on disposals abroad, warranties or guarantees given as part of the sales. It also needs to be borne in mind that, as further properties are sold, the fund is generating less and less rental income. Following the initiation of the fund s liquidation, distributions comprise of ordinary and extraordinary income as well as a capital repayment from the fund s assets. The latter part is free of tax for investors with unlimited tax liability in Germany. The distribution of EUR 1.80 per unit in the EUR unit class, which is nearly completely free of tax for investors with unlimited tax liability in Germany, composes as follows: 2 There may be differences from previous versions and/or since the beginning of the fund liquidation due to exchange rate effects for foreign currency loans. 2/5

3 EUR unit class Natural persons whose units are held as private assets Natural persons whose units are held as business assets Corporations 8b Abs. 1 and 2 KStG Corporations 8b Abs. 7 and 8 KStG Investmentlawcompliant distribution Distribution amount of which is nontaxable distribution Reinvestment of profits Total amount of the income accrueing to investors for tax purposes of which taxfree capital gains ² Taxfree and nontaxable portion of the distribution and reinvestment amount Taxfree and nontaxable portion of the distribution and reinvestment amount in % Taxable portion of the distribution and reinvestment Taxable portion of the distribution and reinvestment in % Assessment basis for capital gains tax Capital gains tax (25%) Solidarity surcharge (5.5%) Distribution amount includes the distribution under investment law of EUR per unit plus paid foreign taxes of EUR per unit less refunded foreign taxes of EUR per unit. 2 Capital gains from shares in domestic and foreign real estate investment corporations that were acquired before January 1, 2009 are taxfree. 5 percent of the capital gains are deemed to be nondeductible business expenses for corporations and are thus subject to taxation. For sole proprietorships, 60 percent of the capital gains are taxable and 40 percent is taxfree (socalled partial income method). 3 The assessment basis for capital gains tax includes EUR per unit from domestic rents and domestic capital gains, on which capital gains tax is levied for foreign investors and for units held in foreign custody accounts. As of fiscal yearend, more than 25 percent of the CS EUROREAL fund consisted of claims as defined by the STD. The interest portion contained in the distribution is EUR per unit for the EUR unit class. 3/5

4 In comparison to the tax approach presented above, in terms of the use of funds, EUR 0.12 per unit of the total distribution of EUR 1.80 per unit in the EUR unit class is attributable to current income and EUR 1.68 per unit to the capital repayment. Please note that this approach only considers the breakdown according to the use of funds, which may differ from the tax breakdown. With the distribution on January 26, 2016, the unit price will reduce by EUR 1.80 per unit for the EUR unit class. This price reduction does not represent a loss for investors because the equivalent amount will be paid out to investors or credited to their reference account, where applicable reduced by the amount of the withheld capital gains tax. Since the process of orderly liquidation was initiated on May 21, 2012, just under EUR 2.9 bn has been repaid so far to investors in CS EUROREAL including the forthcoming distribution/ capital repayment on January 26, The total distribution of EUR per unit paid of the EUR unit class so far amounts to close to half of the unit price at the time the fund s liquidation was initiated. In addition, real estate loans totaling EUR 1.4 bn have been repaid from the sales proceeds achieved thus far and from current income. The distributions/capital repayments of the EUR unit class since the liquidation of the fund was initiated break down as follows: Date Distribution per unit 07/03/2012 EUR /11/2012 EUR /18/2013 EUR /10/2013 EUR /29/2014 EUR /27/2015 EUR /28/2015 EUR /26/2016 EUR 1.80 Total EUR Subject to the possibility of interim dividends if the corresponding sales volumes are achieved, and depending on the liquidity available, the next rotational semiannual dividend is currently scheduled to be paid toward the end of July We will announce the exact date in due course in one of the next CS EUROREAL Bulletins. The next CS EUROREAL Bulletin will presumably be published in March /5

5 CREDIT SUISSE (DEUTSCHLAND) AKTIENGESELLSCHAFT Junghofstrasse 16 D60311 Frankfurt am Main Telephone: +49 (0) Telefax: +49 (0) creditsuisse.com Copy deadline: January 7, 2016 Source: Credit Suisse, unless specified otherwise Important tax information The tax information includes the legal status until September 30, It is aimed at taxpayers subject to unlimited income tax liability or unlimited corporation tax liability in Germany. We cannot guarantee that the accuracy of this information will not be affected by changes in tax laws, court rulings or decrees of the tax authorities. The tax information makes no claim of completeness and does not represent tax advice. We recommend foreign taxpayers to consult a tax consultant and clarify the tax consequences resulting from the purchase of units in their home country. Important Information This document was produced by Credit Suisse AG and/or its affiliates (hereafter CS ) with the greatest of care and to the best of its knowledge and belief. However, CS provides no guarantee with regard to its content and completeness and does not accept any liability for losses which might arise from making use of this information. The opinions expressed in this document are those of CS at the time of writing and are subject to change at any time without notice. If nothing is indicated to the contrary, all figures are unaudited. This document is provided for information purposes only and is for the exclusive use of the recipient. It does not constitute an offer or a recommendation to buy or sell financial instruments or banking services and does not release the recipient from exercising his/her own judgment. The recipient is in particular recommended to check that the information provided is in line with his/her own circumstances with regard to any legal, regulatory, tax or other consequences, if necessary with the help of a professional advisor. This document may not be reproduced either in part or in full without the written permission of CS. This document applies exclusively to clients in Germany. It is expressly not intended for persons who, due to their nationality or place of residence, are not permitted access to such information under local law. Neither this document nor any copy thereof may be sent, taken into or distributed in the United States or to any U. S. person (within the meaning of Regulation S under the US Securities Act of 1933, as amended). The document is not intended to be addressed to new investors contemplating investment in the fund e.g. via the stock exchange. The trading of CS EUROREAL units on the stock exchange is neither organized nor supported by CS. Therefore, CS does not provide any documents for these investors. Every investment involves risk, especially with regard to fluctuations in value and return. Investments in foreign currencies involve the additional risk that the foreign currency might lose value against the investor s reference currency. Historical performance indications and financial market scenarios are no reliable indicator for current or future performance. Furthermore, no guarantee can be given that the performance of the benchmark will be reached or outperformed. In connection with this investment product, Credit Suisse AG and/or its affiliates may pay to third parties, or receive from third parties as part of their compensation or otherwise, onetime or recurring inducements (e.g. sales charges, placement or holding fees). You may request further information from your bank/relationship manager. Potential conflicts of interest cannot be excluded. The composition of customized benchmarks, as well as additional explanations of linked benchmarks, can be obtained from the Fund management company or the Fund s representative in Germany. This document qualifies as marketing material that has been published for advertising purposes. It must not be read as independent research. Copyright 2016 Credit Suisse Group AG and/or its affiliates. All rights reserved. GE/E/ /5