Direct property investment can be challenging for property owners and is set to become even more demanding in future. Managing a property portfolio requires extensive knowledge of the real estate sector and regional markets. Many different factors need to be considered, such 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.
The contribution of real estate to an investment vehicle is defined as a contribution in kind. In return, the owner receive 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.
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.
A contribution in kind typically comprises five main stages:
- The property owner announces their willingness to sell a property
- The fund manager/investment foundation assesses the property to determine its suitability for acquisition, and the custodian bank checks the investor’s eligibility
- A more thorough assessment of the property is carried out is carried out, which includes valuing it and proposing a purchase price
- The purchase price is paid in the form of share certificates and/or cash, depending on the agreement
- The former property owner is now an investor with share certificates
Die Durchführung einer Sacheinlage umfasst in der Regel 5 zentrale Meilensteine:
- Bereitschaft der Eigentümerschaft, Liegenschaften zu veräussern
- Prüfung durch Fondsleitung/Anlagestiftung ob Liegenschaft für Übernahme geeignet ist und Prüfung durch Depotbank ob Anleger zugelassen ist
- Durchführung einer vertieften Objektprüfung, Bewertung des Kaufpreises durch einen Schätzungsexperten, Abgabe Kaufpreisindikation
- Zahlung des Kaufpreises erfolgt nach Absprache zu Anteilsscheinen und allenfalls Bargeld
- Bisheriger Liegenschaftseigentümer ist neu Anleger mit Anteilsscheinen
Swiss Prime Site Solutions has demonstrated its contribution-in-kind process several times over recent months. We have successfully completed three such transactions with a value of about CHF 250 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 complete the 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.
A contribution in kind to an investment vehicle of Swiss Prime Site Solutions offers four main benefits:
- 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
- Optimised use of resources: Assignment of operational property management, efficiency gains, release 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
monika.gadolahug@sps.swiss
+41 58 317 16 31
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