Paragon SA is a real estate firm which provides investment services to private and public equity vehicles focused on real estate and real estate-related endeavors principally in Switzerland. Paragon works with investment partners to identify, asset manage, and operate properties. We are a one-stop shop with expertise in finance, leasing, insurance, redevelopment, construction and building operations.
Paragon also specializes in tenant representation, third party asset management, and brokerage in commercial real estate. Paragon executives are multi-lingual and multi-national and benefit from an international approach to corporate culture combined with a local presence and expertise in local markets. In particular, through the experience of its chief executive, Paragon SA is able to transfer some of the successful approaches pioneered in the US real estate market to a European context.
Paragon's key strengths lie in distressed opportunities, underperforming and undervalued assets and value creation opportunities. Investments include single assets, portfolios, joint-ventures and real estate development, as well as real estate-related loans and debt instruments. We canvas retail, logistics, office, industrial, as well as senior and student housing opportunities.
Note from the CEO
Over the past few years, we have seen some turbulent times and we have been able to test some of our previous assumptions. Indeed, the Swiss and Austrian markets have proven relatively stable while other EU markets have been more affected. Banks have been encouraged via monetary easing policies to keep rates down, however due to legislation like Basel III, lending has been more restrictive, and leverage more difficult to come by. Paragon’s operating assumption is that real estate debt will continue to be expensive and difficult to obtain in 2013.
The flight to quality has helped the Swiss real estate market in general and, as in many other markets, the core residential market has over heated with prime yields as low as 3.5% in several cases in Geneva and Zurich. There has been a slowdown in transactions in secondary micro-markets, since sellers have not been pressed to sell (as banks have been supportive and the properties have been able to continue to generate cash flow). Therefore, attractive deals have been scarce. In primary markets, the desire for secure income has seen commercial properties with long leases to high quality tenants become more expensive as well with prime yields below 5.5%. Whilst yields are remaining low in core markets, the other sectors are weakening and we are beginning to see yields being pushed up and more opportunities coming to market.
While a strong Swiss Franc provides opportunities for Swiss investors to invest in Europe, it eats away at small & medium sized Swiss businesses ability to export, and therefore, puts pressure on rents locally. Every cycle has its ups and downs, and in Switzerland, rents have never been higher, interest rates lower, or the Franc so expensive. There is the consolidation in the banking sector, and companies like Merck Serono are leaving Geneva, while other groups like Procter & Gamble, Sanofi Aventis, and even some NGO's are contracting. All of these factors are putting pressure on rents in Geneva and in Switzerland in general.
These factors continue to pose challenges for the typical real estate traders, however, the value-add players can still find attractive opportunities in such markets. At Paragon SA, we search for “value” where the combination of seller circumstances and our expertise in asset management make a deal attractive and with less risk. As more money chases core assets that are stabilized, and banks becomes more averse to lending, we expect to find really good opportunities for those with available capital and an appetite to take advantage of opportunities in niche markets.