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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Driving the circular economy

Real estate accounts for a large part of global CO₂ emissions, both during construction and demolition and while the building is in operation. The circular economy, which addresses this issue within the context of grey energy, is an integral part of Swiss Prime Site’s business model.

Swiss Prime Site

According to current estimations, around 40 percent of global CO2 emissions are caused by real estate, with approximately 70 percent being produced while a building is in operation and 30 percent during construction. We can no longer view the economy as a linear process – instead, we must see it as circular, because resources are not infinite. This means consciously using all materials up until the end of a product’s service life and documenting them accordingly, so that they can be fed back into the closed loop in a way that preserves value and resources.
However, today’s economy largely still follows the linear process logic of raw material, production, product, consumption, waste. Here’s a simple example: while dial telephones of the past lasted a good 40 years, the only thing that generally matters in today’s modern smartphones is performance, which is improved every two to three years to such a degree that the device is ready to be replaced again almost as soon as it has been purchased. For this reason, we need to rethink our approach and go back to manufacturing products which last longer and which suppliers can strip down to individual materials at the end of their service life, so that the resources can be fully fed back into the closed loop.

Tackling challenges
The «circular economy» as a maxim of responsible action also needs to be more firmly anchored in the minds of the real estate sector. As a major real estate company, Swiss Prime has been committed to «circular construction» for some time, and was also the first signatory of the corresponding charter.
Its goal is to reduce the use of non-renewable primary raw materials to 50 percent of total volume, to record and significantly reduce the output of grey greenhouse gas emissions, and to measure and significantly improve the circular potential of renovations and new builds by 2030.
More specifically, this means making a careful assessment of the extent to which total demolition can be avoided and whether a renovation would be possible in place of a new build. If a new building is nevertheless required, it should be built with as long-term a perspective as possible. In general, it is important to reduce the use of materials and to record CO2 emissions and resource requirements in order to ensure that, that if a demolition has to happen at a later date, the materials can be fully reused. In addition, when choosing the materials, the risks of pollutants should be kept to a minimum, while waste should be reduced during production and subsequent demolition.

Leading by example
At Swiss Prime Site, the re-development project  on Müllerstrasse in Zurich is a milestone, as most of the building shell was retained and 90 percent of the concrete reused, saving 2 600 tonnes in CO2 emissions. 
Swiss Prime Site’s latest development projects consider even more aspects of sustainability. The «JED» new build project in Schlieren follows the «2226» approach: heating, mechanical ventilation and cooling is not needed at all in the office floor space, while operating energy expenses are minimised thanks to the particularly climate-resilient building envelope.
A deliberate choice has been made to preserve one building at the «YOND Campus» in Zurich Albisrieden, and the components and materials from the demolition that are suitable for reuse will be assessed. One particular planning specification in this project is to design the new buildings to be as neutral as possible for use as office or commercial spaces and, for the first time, consistently construct them using at least 50 percent renewable primary raw materials. 
In addition to the ambitious targets for planning and implementation, Swiss Prime Site will also make an impact with this project when it comes to social sustainability, and focus on «inclusion» when marketing the rental floor space. More information about the project and this approach will be available soon on the corresponding website.  
 

Sustainable cornerstone of the extensive «JED Campus» development

This article was published as part of the NZZ publishing supplement «Nachhaltig handeln» 2024. Find out more about the «YOND Campus» project:

www.yond.swiss

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.

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Driving the circular economy

Real estate accounts for a large part of global CO₂ emissions, both during construction and demolition and while the building is in operation. The circular economy, which addresses this issue within the context of grey energy, is an integral part of Swiss Prime Site’s business model.

Swiss Prime Site

According to current estimations, around 40 percent of global CO2 emissions are caused by real estate, with approximately 70 percent being produced while a building is in operation and 30 percent during construction. We can no longer view the economy as a linear process – instead, we must see it as circular, because resources are not infinite. This means consciously using all materials up until the end of a product’s service life and documenting them accordingly, so that they can be fed back into the closed loop in a way that preserves value and resources.
However, today’s economy largely still follows the linear process logic of raw material, production, product, consumption, waste. Here’s a simple example: while dial telephones of the past lasted a good 40 years, the only thing that generally matters in today’s modern smartphones is performance, which is improved every two to three years to such a degree that the device is ready to be replaced again almost as soon as it has been purchased. For this reason, we need to rethink our approach and go back to manufacturing products which last longer and which suppliers can strip down to individual materials at the end of their service life, so that the resources can be fully fed back into the closed loop.

Tackling challenges
The «circular economy» as a maxim of responsible action also needs to be more firmly anchored in the minds of the real estate sector. As a major real estate company, Swiss Prime has been committed to «circular construction» for some time, and was also the first signatory of the corresponding charter.
Its goal is to reduce the use of non-renewable primary raw materials to 50 percent of total volume, to record and significantly reduce the output of grey greenhouse gas emissions, and to measure and significantly improve the circular potential of renovations and new builds by 2030.
More specifically, this means making a careful assessment of the extent to which total demolition can be avoided and whether a renovation would be possible in place of a new build. If a new building is nevertheless required, it should be built with as long-term a perspective as possible. In general, it is important to reduce the use of materials and to record CO2 emissions and resource requirements in order to ensure that, that if a demolition has to happen at a later date, the materials can be fully reused. In addition, when choosing the materials, the risks of pollutants should be kept to a minimum, while waste should be reduced during production and subsequent demolition.

Leading by example
At Swiss Prime Site, the re-development project  on Müllerstrasse in Zurich is a milestone, as most of the building shell was retained and 90 percent of the concrete reused, saving 2 600 tonnes in CO2 emissions. 
Swiss Prime Site’s latest development projects consider even more aspects of sustainability. The «JED» new build project in Schlieren follows the «2226» approach: heating, mechanical ventilation and cooling is not needed at all in the office floor space, while operating energy expenses are minimised thanks to the particularly climate-resilient building envelope.
A deliberate choice has been made to preserve one building at the «YOND Campus» in Zurich Albisrieden, and the components and materials from the demolition that are suitable for reuse will be assessed. One particular planning specification in this project is to design the new buildings to be as neutral as possible for use as office or commercial spaces and, for the first time, consistently construct them using at least 50 percent renewable primary raw materials. 
In addition to the ambitious targets for planning and implementation, Swiss Prime Site will also make an impact with this project when it comes to social sustainability, and focus on «inclusion» when marketing the rental floor space. More information about the project and this approach will be available soon on the corresponding website.  
 

Sustainable cornerstone of the extensive «JED Campus» development

This article was published as part of the NZZ publishing supplement «Nachhaltig handeln» 2024. Find out more about the «YOND Campus» project:

www.yond.swiss

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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