Higher returns with an asset swap?
Can I generate higher returns with an asset swap? Contribute your residential properties as an asset swap to our Helvetica Swiss Living Fund before the SIX Swiss Exchange listing. This offers attractive benefits for both pension funds and private real estate owners, says Dominik Fischer, Chief Investment Officer at Helvetica.
Interview: Andreas Benz, Editor-in-Chief of Helvetica Magazine
Dominik Fischer, are asset swaps a real insider tip?
Dominik Fischer: Yes definitely. In Switzerland, there is great upside potential for many pension funds, companies and private individuals in shifting from direct to indirect real estate investments. In the case of asset swaps, Helvetica offers flexible, fast and reliable solutions thanks to its many years of experience. We take care of all the work for our clients and are always a fair business partner.
Asset swaps as an alternative to selling, that sounds rather complicated.
Not with the right partner. There are good and interesting reasons why you should always consider an asset swap. But first the basic idea: With an asset swap, a real estate owner contributes a property to a real estate fund or an investment foundation. In return, the real estate owner does not receive money, but shares in a real estate fund or investment foundation. Thus, he remains a real estate owner, but in a so-called indirect real estate investment.
What are the main benefits of such an indirect real estate investment?
Less risk and in some cases even higher returns right from the start. Further benefits are a broader diversification as well as no expenses for the maintenance of the real estate.
Because directly held real estate can represent a cluster risk?
Yes, exactly. Units, on the other hand, are more tradable. For example, a pension fund receives fund units or units in an investment foundation in the amount of the net asset value of its real estate and generates income from day one.
Why are asset swaps particularly suitable for pension funds?
When investing in an investment foundation, pension funds in particular benefit from attractive tax advantages. In addition, the real estate quota for the pension fund remains unchanged. By eliminating the need for time-consuming internal administration, resource- and cost-intensive renovations, or compliance with new ESG guidelines, real estate ownership through an indirect investment becomes much more cost-efficient, predictable, and thus usually more profitable.
What do you mean by tax advantages?
In a recently published ruling on February 28, 2022, the Federal Supreme Court ruled that the transfer of real estate to an investment foundation can be tax neutral.
Are there other advantages?
Certainly, there are. After an asset swap, a pension fund or private real estate owner no longer has any tenant, market, redevelopment or renovation risks. On the contrary, the vehicle provides secure and stable distributions and also cost certainty.
Is an asset swap better than a sale?
Yes! If it is difficult to sell a property on the market, an asset swap is the ideal solution.
Does this mean that succession planning or the inheritance of a property should be easier?
Exactly, many property owners don't even have this on their radar at the moment. In any case, it's much easier to divide up fund units than it is to divide up a property.
Which properties are suitable for an asset swap?
In principle, all properties are suitable for an asset swap. Thanks to its large product range, Helvetica can offer asset swaps for almost all uses. These can be apartment buildings, shopping and retail centers and supermarkets, but also office buildings, logistics centers, warehouses and special properties. As always, important parameters are: the property quality, location and use.
What is the difference between real estate funds and investment foundations?
Investment foundations are intended exclusively for Swiss pension funds, whereas real estate funds are open to all investors.
How does such an asset swap work at Helvetica?
During a face-to-face, non-binding meeting, interested parties learn free of charge how they can contribute their properties to one of our investment vehicles. The aim is to get to know the customer's needs and then to work out concrete proposals for solutions. First, the properties are analyzed, assigned to an investment vehicle, valued, and then an offer is prepared in which the seller can see how many shares he or she would receive in return for the asset swap. Special topics such as possible tax rulings, asset transfer agreements, etc. are also examined, depending on the case.
A final tip?
An asset swap should definitely be considered as an interesting alternative. Especially in our residential real estate fund Helvetica Swiss Living Fund. The fund is to be listed on the Swiss SIX Exchange until the end of 2024. That's usually a sure tip.
Why is that?
Listed residential funds trade at high premiums. We offer private individuals and pension funds the opportunity to contribute their residential real estate to the fund as an asset swap and thus benefit from potential attractive appreciation and high distributions until listing and beyond. This is particularly attractive because asset swaps are made at net asset value and not at the trading price. A real insider tip.
About the person
Dominik Fischer
As Chief Investment Officer, Dominik Fischer is responsible for sourcing, reviewing, managing and executing real estate transactions for all investment vehicles managed by Helvetica.
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