Stories

«We’re feeling the synergy between the two segments even more.»

2023 proved to be one of the most challenging years in the real estate sector in a long time – rising interest rates, far fewer transactions, and valuation corrections were just some of the headline issues. In spite of this, Swiss Prime Site ended the year with a strong operational result. René Zahnd, Swiss Prime Site CEO, looks back on the financial year.

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Climate-neutral property portfolio

Humans have exceeded the limits of what the planet can cope with in a number of areas. Climate change – and the accompanying call for decarbonisation – is one of the greatest global challenges of our time. The responsibility of states, corporations and every single person, employee and consumer is complex and wide-ranging. The situation demands a new, cross-generational awareness and engenders a sense of global unity.

I n real estate, around 68% of emissions can be attributed to the use phase. To decarbonise a property portfolio, it is essential to understand the components of a carbon footprint and where to source reliable information. The monitoring of energy and carbon emissions implemented at Swiss Prime Site formed the basis for the development of the Company’s CO2 reduction pathway in 2019. The data gathered from this will ensure that we can become a climate-neutral business by 2040 and will serve to monitor our progress along the way.

The goal is clear, but the strategies required are often complex and multi-faceted. The Company’s efforts are focused on the reduction of emissions that can be directly influenced during the use phase of properties. This involves implementing instruments and processes that ensure the supply and production of renewable energy. In addition to reducing CO2 emissions within our own value chain, we must not disregard indirect emissions. Around 30% of these emissions occur during the production of raw materials, along the supply chain and in the materials cycle. It is therefore important to ensure transparency along the supply chain and within our building stock. This is also an area where we can link goals with a reduction strategy.

Müllerstrasse Zurich before the renovations.
Circular thinking

Swiss Prime Site is confident that, in the long-term, the concept of the circular economy can help to transform buildings into sources of materials with financial value. At the same time, this can make a major contribution to reducing waste. After all, 84% of waste in Switzerland comes from the construction industry. As a result, we need to determine technical cycles (e.g. disassembly) and biological cycles as early as the planning stage. This work is based on the relevant information about materials and their recycling potential. On specific projects such as Müllerstrasse in Zurich, Swiss Prime Site is working together with Madaster Switzerland to optimise recycling capabilities in buildings, create an inventory and make the concept transparent and tangible.

However, the circular economy goes beyond technical and environmental cycles. The changing climate requires a profound transformation and innovation of our current linear economic system. For real estate companies, this means questioning the existing business model and developing it further with new innovative methods, cycle-oriented processes and new forms of collaboration. The key to success lies in a new mindset, reflected in our values and corporate culture. Achieving this depends on continuously raising awareness, sharing knowledge and strengthening our expertise in sustainability.

Cross-section of the Müllerstrasse project, Zurich.
Shaping the future

It is now time to think beyond our established boundaries and linear systems, and to forge ahead boldly with practical examples. Swiss Prime Site is taking this corporate responsibility seriously, promotes innovation and, above all, is seizing the opportunities associated with the necessary transformation.

Setting an example of sustainability

As the largest real estate company listed on the stock exchange in Switzerland, we lead by example and are aware of our responsibilities towards our employees, customers, the environment and society as a whole. Our vision is to generate value and create sustainable living spaces. For us, this means a comprehensive, multidimensional business concept in which non-financial aspects are taken into account as well as financial goals.

Read story

Climate-neutral property portfolio

Humans have exceeded the limits of what the planet can cope with in a number of areas. Climate change – and the accompanying call for decarbonisation – is one of the greatest global challenges of our time. The responsibility of states, corporations and every single person, employee and consumer is complex and wide-ranging. The situation demands a new, cross-generational awareness and engenders a sense of global unity.

I n real estate, around 68% of emissions can be attributed to the use phase. To decarbonise a property portfolio, it is essential to understand the components of a carbon footprint and where to source reliable information. The monitoring of energy and carbon emissions implemented at Swiss Prime Site formed the basis for the development of the Company’s CO2 reduction pathway in 2019. The data gathered from this will ensure that we can become a climate-neutral business by 2040 and will serve to monitor our progress along the way.

The goal is clear, but the strategies required are often complex and multi-faceted. The Company’s efforts are focused on the reduction of emissions that can be directly influenced during the use phase of properties. This involves implementing instruments and processes that ensure the supply and production of renewable energy. In addition to reducing CO2 emissions within our own value chain, we must not disregard indirect emissions. Around 30% of these emissions occur during the production of raw materials, along the supply chain and in the materials cycle. It is therefore important to ensure transparency along the supply chain and within our building stock. This is also an area where we can link goals with a reduction strategy.

Müllerstrasse Zurich before the renovations.
Circular thinking

Swiss Prime Site is confident that, in the long-term, the concept of the circular economy can help to transform buildings into sources of materials with financial value. At the same time, this can make a major contribution to reducing waste. After all, 84% of waste in Switzerland comes from the construction industry. As a result, we need to determine technical cycles (e.g. disassembly) and biological cycles as early as the planning stage. This work is based on the relevant information about materials and their recycling potential. On specific projects such as Müllerstrasse in Zurich, Swiss Prime Site is working together with Madaster Switzerland to optimise recycling capabilities in buildings, create an inventory and make the concept transparent and tangible.

However, the circular economy goes beyond technical and environmental cycles. The changing climate requires a profound transformation and innovation of our current linear economic system. For real estate companies, this means questioning the existing business model and developing it further with new innovative methods, cycle-oriented processes and new forms of collaboration. The key to success lies in a new mindset, reflected in our values and corporate culture. Achieving this depends on continuously raising awareness, sharing knowledge and strengthening our expertise in sustainability.

Cross-section of the Müllerstrasse project, Zurich.
Shaping the future

It is now time to think beyond our established boundaries and linear systems, and to forge ahead boldly with practical examples. Swiss Prime Site is taking this corporate responsibility seriously, promotes innovation and, above all, is seizing the opportunities associated with the necessary transformation.

Contributions in kind – the ideal solution for property owners

Direct property investment can be challenging for property owners. The kind of ­detailed knowledge of regional markets and specific real estate expertise that Swiss Prime Site Solutions offers is essential. Many different factors need to be ­considered in an existing portfolio, such areas as sustainability, vacancy reduction, ­renovation backlogs and utilisation of potential, as well as regulatory and political ­challenges. Economies of scale are also an important consideration here.

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Direct property investment can be challenging for property owners. The kind of ­detailed knowledge of regional markets and specific real estate expertise that Swiss Prime Site Solutions offers is essential. Many different factors need to be ­considered in an existing portfolio, such areas as sustainability, vacancy reduction, ­renovation backlogs and utilisation of potential, as well as regulatory and political ­challenges. Economies of scale are also an important consideration here.

The contribution of real estate to an ­investment vehicle is defined as a contribution in kind. In return, the owner receives shares in the investment vehicle (investment foundation and/or investment fund). The tax-optimised contribution in kind allows the property owner to transfer their directly held property portfolio to an indirect real estate investment. A contribution in kind also gives small and medium-­sized pension funds and institutional investors access to larger real estate investment volumes that are professionally and efficiently managed.

«Our decision to enter into a transaction with the Swiss Prime Investment Foundation was influenced not only by the investment group’s strong portfolio, but also by its professional approach.»
Antonio Sacco, Managing Director of the Ringier Group’s pension fund

Diversification is of central importance in optimising the risk-return profile of a property portfolio. Since direct real estate investment by pension funds has historically grown regionally, contribution-in-kind transactions allow greater geographical and use-specific diversification. Furthermore, the considerations around sustainability are crucially important.

Implementing a contribution in kind is a multi-step process which usually comprises five key milestones. Firstly, the owners need to be willing to sell the properties. The fund management company or investment foundation then checks whether the property is suitable for acquisition, while the custodian bank verifies the eligibility of the investors. The third step involves a thorough inspection of the property, in which the purchase price is determined by a valuation expert, and a purchase price indication is given. The fourth step involves the payment of the purchase price, which is made in the form of share certificates and, if applicable, cash. In the fifth and final step, the previous property owner becomes the new investor with shares.

Swiss Prime Site Solutions has demonstrated its expertise with contributions in kind several times over recent years. We have successfully completed five such trans­actions with a value of about CHF 400 million. For example, we were able to take over 33 properties for the Swiss Prime Investment Foundation as part of a contribution in kind from the Ringier Group’s pension fund. «Our deci­sion to enter into a transaction with the Swiss Prime Investment Foundation was influenced not only by the investment group’s strong portfolio, but also by its professional approach», says Antonio Sacco, managing director of the Ringier Group’s pension fund.

We support our clients throughout the entire contribution-in-kind process with our extensive experience and through access to our nationwide network of experts. Our innovative process for execution of contributions in kind serves as an exemplar.

Benefits of in-kind ­contributions

Better performance

­Efficient use of capital, potential ­revaluation gains, tax advantages for investors, asset optimisation

Less risk

Greater diversification effect, stable cash flow, maximum transparency

Optimisation of resources

Assignment of operational property management, efficiency gains, ­freeing up of resources, succession planning, expertise of Swiss Prime Site Solutions

Greater flexibility

Timing of the contribution in kind ­independent of issuance windows, greater fungibility (possible trade­ability of shares), more decision-­making freedom

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