Real Estate Deal Snapshot

Swiss Prime Site / Fundamenta: A property owner buys an asset manager

Swiss Prime Site acquired the real estate asset management business of Fundamenta Group in 2024. We read why a listed property company is building third-party asset management, and how it paid for it.

Announced 14 March 20243 min readReal Estate

Swiss Prime SiteFundamenta
The one-page editionDownload the SnapshotPDF · A4 · Mar 2024
  • CHF 4.2bnAssets under management acquired
  • CHF 13bnPlatform after the deal
  • 75 / 25Cash / shares, in %
  • c. 20 Rp.Guided FFO I accretion per share
David BaburiHead of Research, Valstron
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Key takeaways

  1. Swiss Prime Site bought Fundamenta's Swiss and German real estate asset managers, adding about CHF 4.2 billion of assets under management.
  2. About a quarter was paid in new shares and three quarters in cash, with the aim of keeping the loan-to-value ratio below 40%. The price was not disclosed.
  3. The company guided to about CHF 0.20 more FFO I per share once synergies are realised.

The transaction

BuyerSwiss Prime Site
TargetFundamenta Group, CH and DE

Result Swiss Prime Site Solutions

Key terms
Announced14 March 2024
Completed15 April 2024
BuyerSwiss Prime Site, through Swiss Prime Site Solutions
TargetFundamenta (Schweiz) AG and Fundamenta Deutschland AG
SellersGarcia and Marxer families, Luzerner Kantonalbank, management
Assets under management acquiredc. CHF 4.2 billion
Platform after the dealc. CHF 13 billion at Swiss Prime Site Solutions
Considerationc. 25% new shares, c. 75% cash; price not disclosed
Target profilec. 2,000 investors; income above CHF 24 million (2023); c. 60 staff
Guided accretionc. CHF 0.20 FFO I per share after synergies

Timeline

  1. 14 Mar 2024Agreement signed and announced
  2. 15 Apr 2024Transaction completed

The rationale

Swiss Prime Site owns one of Switzerland's largest listed property portfolios and has been building a second business: managing real estate for third-party investors through Swiss Prime Site Solutions. The company describes the combined business as Switzerland's largest independent real estate asset manager by a distance.

Asset management fees are capital-light. They do not require the balance sheet to own the buildings, which makes them attractive after the rise in interest rates of 2022 and 2023 put pressure on property valuations and financing costs.

Fundamenta brought around 2,000 investors, including pension funds, banks, insurers, private clients and family offices, together with a team in Zug and Munich.

The assessment

Consideration

Paying a quarter in shares preserved cash and kept leverage in check, at the cost of some dilution. The stated aim of keeping loan-to-value below 40% shows that the balance sheet was a real constraint.

Earnings

Guidance of about CHF 0.20 FFO I per share is the main test. Because the price was not disclosed, outsiders cannot calculate the multiple paid. The guided accretion is the best public measure of whether the price made sense.

Risks

An asset manager's value rests on people and investor relationships. Keeping Fundamenta's team and investors through the integration, and fund flows in a rate-sensitive market, are the main risks.

What to watch

Growth in third-party assets under management, fee margins at Swiss Prime Site Solutions and the FFO accretion actually delivered against guidance.

Assets under management (CHF bn)
13.0SPS Solutions after8.8SPS Solutions before*4.2Fundamenta

Source: Swiss Prime Site, 14 March 2024. *Derived: 13.0 minus 4.2.

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