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.
