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Practical Example «Seven Senses»: A win-win situation for all involved
Seven Senses began with an offer from a landowner with a fully developed new building project and planning permission for a 1,750-square-metre plot of land on a preferred hillside location above the centre of Zug. Unsure if his ideas were in line with the market, he consulted Property One’s specialists. The plans were reviewed, and the individual components of the project recalculated. Based on this work, an investment case was developed, for which Property One brought selected investors to the table.
Generally viewed positively by the parties involved, club deals are typically temporary co-investments by investors with aligned interests. The participants pool their capital and jointly acquire real estate with the aim of achieving an above-average return with shared risk and a professionally drawn up contract. In the case of Seven Senses, the main investor was joined by a manageable number of smaller parties and, as an expression of its own commitment, Property One. The fact that the company, as the initiator of the project, was as committed as everyone else, gave those involved a good feeling. A bonus-penalty system also provided the incentive to successfully implement the project.
Property One was responsible for establishing the ties between the club deal members, a complex set of contracts in which all rights and obligations are defined and the rules for exit are laid down, and all conceivable contingencies are taken into account. Its by now extensive in-house knowledge of club deals helped with the task. Other services included structuring the financing and pooling the required equity (see box “Attractive financing alternative”).
Everything from a single source: The existing construction project was redesigned after an in-depth redesign and market test. This included changing the floor plans, planning material variants for the interior finishes, and marketing the apartments while they were still in the planning and construction phases. This took just 18 months to complete. The project was implemented without a general contractor in a direct award procedure conducted by the architects and construction specialists of Property One. The construction management and execution planning also remained in-house.
Individual living in a beautiful panoramic location: The realised residential building leaves plenty of room for the seven senses of the residents of the seven high-quality apartments with a total living space of 1,250 square metres. The individual units, including a particularly attractive penthouse apartment, have areas ranging from 150 to 270 square metres of living space. High window facades allow light to enter into the living spaces, most of which offer an unobstructed view of Lake Zug. Much attention has been paid to the colour scheme and the design of the exterior, while 19 underground parking spaces round off the offer. With a future-oriented energy concept, the project also meets the Minergie standard.
Club Deals
Seven Senses shows that club deals are a suitable alternative to sole direct investment, especially for smaller and medium-sized projects with condominiums. The investors share the risk and still have relatively large opportunities to exert their influence. They are also attractive to landowners who want to partner with like-minded investors. Overall, a balanced compromise was found between the wishes and goals of the club members and the interest of the buyers, who can now live and enjoy their property with all seven senses.
Read the full article about this project in our ONEFocus
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