Swiss Estates AG is concentrated on purchasing residential real estate in Switzerland. The federal law regarding acquisition of real estate by persons outside of Switzerland (BewG) limits the acquisition of residential property by foreigners who are not resident in Switzerland. This condition places the Swiss residential real estate market in position, based on the limitation of possible purchasers of residential real estate, in which it is not in an overheated phase, as is the case in some other countries. Activities are currently underway to loosen the BewG or to repeal it completely. Should this occur, then it will certainly be possible that market conditions will change for the long term.
Although there is generally high demand for residential space in Switzerland at the moment, it cannot be excluded that a surplus of residential spaces will develop in the future. This situation would make the rental ability of apartments by Swiss Estates AG difficult and reduce the income of the company. This kind of surplus in residential real estate could also negatively influence the option to sell properties. Swiss Estates AG could therefore be forced not to sell or to sell for lower prices. This could negatively affect the liquidity of the company.
The value development of the properties is very different depending on the location and is subject to cyclical movements at the individual locations. The real estate of Swiss Estates AG is valuated according to industry guidelines. It cannot be excluded that later valuation could lead to a lower price or that sale could take place below the valuation. Any tax consequences in case of later sale of properties shall not be included in current invoicing, since this is regulated differently according to canton and larger sales of properties are currently not planned. Tax consequences may seriously reduce revenues during sale of a property.
Shares and participation certificates of Swiss Estates AG are NOT suitable for investors with short-term or medium-term investment terms.
Swiss Estates AG works together with external consultants to locate suitable properties for purchase and to maintain held properties. These persons are not available exclusively to SE Swiss Estates AG. It cannot be excluded that these external consultants may find themselves in a conflict of interest while exercising their mandate, which could influence the business situation of Swiss Estates AG. Swiss Estates AG has acquired experienced consultants. Nevertheless, there is no guarantee that the investments of Swiss Estate AG will be successful in the future.
Possible changes to laws and other regulations, especially in the area of tax, rental, and environmental laws and, as previously indicated, federal laws concerning the acquisition of real estate by people outside of the country (BewG) may have negative influences on the costs and revenues involved with business transactions made by Swiss Estates AG.
Trading shares and participation certificates
In spite of quotations for shares and participation certificates, there is no guarantee that the shareholder or participant shall find a purchaser at any time who is prepared to purchase his titles or pay the purchase price desired by him. The sale of larger quantities of shares may result in significant price reductions, provided the titles are not sustainably liquidity.
Although the company works together with qualified employees and consultants and selects real estate to be purchased with great care, no one is able to foresee future developments with certainty. Every investor should understand that every commercial activity contains risk of failure. Economic fluctuations may affect rental ability and/or resale of real estate negatively and therefore reduce the company revenues forecast or exclude them completely. It must be indicated that the respective investment situation is dependent on the conditions of the Swiss real estate and financial markets. In case of falling real estate revenues and/or increasing interest rates, reduced profits must be expected. These may have an immediate effect on the prices of Swiss Estates AG titles. Swiss Estates AG may therefore not assure and guarantee that it is able to use capital provided by shareholders and participants or possible profits for the purchase of properties quickly at any time. If these property purchases are not possible within a certain period, the company will possess increased liquidity, which may result in reduced or negative income of the company.
Shares and participation certificates in the company are investments denominated in Swiss Francs (CHF). Currency risks exist for investors calculating with other currencies. It cannot be excluded that the value of the Swiss Franc sinks relative to other currencies.
Market risks (unsystematic risk)
A market risk refers to a risk that cannot be eliminated by diversification. Essentially, this affects all real estate businesses and is not or only hardly related to their company or industry-specific fundamental data. A market risk may represent changes to domestic economic growth, monetary policy, financial regulators, accounting principles, and international market developments.
Specific risk (systematic risk)
In addition to market risk, all real estate businesses are subject to specific industry risks. These risks, for example, involve possible additional taxes on real estate.
In addition to this, the following risks should be considered: Changes in the management or strategic orientation and other company-specific economic risks.