Real Estate Switzerland Commercial
The actively managed investment group Real Estate Switzerland Commercial invests primarily in Commercial Real Estate in Switzerland.
Real Estate Switzerland Commercial
Mixed properties with a predominant business share and co-ownership interests are also permitted. The portfolio rental income resulting from the business segment must be at least 75%. In addition to purchases, contributions in kind, sales and renovations, new construction projects are also selectively realised. The aim of the value chain is to achieve the highest possible return in line with the risk.
The entire real estate portfolio of the Real Estate Switzerland Business investment group is valued annually by external independent valuation experts. The market values are determined using the DCF method (discounted cash flow) and in accordance with the requirements of SWISS GAAP FER 26. The accredited real estate valuers are selected by the Real Estate Switzerland Commercial Commission using a structured evaluation process. KPMG AG was used as the appraiser in the current financial year. The investment costs for new construction projects that have been started are capitalized. However, in the case of repair and renovation projects that have been initiated, only the value-enhancing investment costs are capitalized, the remaining costs are depreciated through profit or loss. If purchases are made during the year, a new market value is determined at the end of the fiscal year. The average market value-weighted discount rate for the existing portfolio in Real Estate Switzerland Business is 3.74%, with the range for individual properties extending from 2.74% to 4.70%.
The portfolio has a heterogeneous structure in terms of year of construction: About 40% of the portfolio (in m2 of energy reference area) was built before 1980, about 30% in the 1980s and 30% thereafter. Many buildings were renovated or partially renovated in the past. Accordingly, the renovation strategy and timing are individual for each property. Sustainable solutions for existing buildings must take into account the building substance and the local conditions. Today, about 35% of the energy reference area of the portfolio is heated with sustainable energy sources. District heating accounts for a large part of this. About 60% of the area is heated with gas and 4% with oil. Fortunately, there are now only two properties in the entire portfolio with oil heating systems.
The gradual phasing out of fossil fuels, especially oil and gas, which have a poor efficiency rating, will take place over the investment cycle of the property. Where possible, the replacement of heating systems is combined with other energy improvement measures.
Sustainable investment activity
The new building projects of the last three years were built to the Minergie standard. As a case study of our new construction activities, we present "Aldi" in Romont in our project snapshot. Avadis has already introduced a guideline for sustainable construction in new buildings in 2014, which was implemented in the projects. In refurbishment projects, we have been able to take existing oil-fired heating systems out of service over the past three years and replace them with a more climate-friendly energy source. In most cases, we have also been able to improve the building envelope by means of insulation measures and to use the existing property more efficiently through constructional means. In our project snapshot we present the "Gartenstrasse" in Berne as a case study. In 2018, Avadis has summarised its efforts to date on the topic of sustainability in renovation in a guideline that will be uniformly applied to all projects. When renovating existing buildings, existing framework conditions must be taken into account (e.g. monument protection, available open space, rental space market). Not all measures that are desirable from an energy and emissions perspective can be implemented in every project from a regulatory, technical and economic point of view: Property strategy, sufficiency in the consumption of building materials, building regulations and the tenant market also play an important role in the decision. Possible energy-related measures are examined in detail in each investment application and, if justifiable, implemented. In our view, synchronising the replacement of heating systems with the major investment cycles of the buildings is central to making our properties more energy-efficient and low-emission in the future, while conserving resources. We will be tackling this task and its timely implementation at project level as soon as possible in the coming years.