At the Capital Markets Day 2022 in Basel, Swiss Prime Site will give the various stakeholders a balanced overview of the market, as well as highlighting the opportunities within the attractive real estate portfolio and the development pipeline. There will be a special focus on the «life sciences» type of use, which is in high demand worldwide and especially in Switzerland. The spotlight will also be on financing strategy in the current changing interest rate environment. In this respect, Swiss Prime Site has a solid basis. It has an excellent credit rating and has set itself the medium-term goal of linking all financing to the sustainability targets in harmony with the operational strategy. In order to achieve this goal, the company has introduced a «Green Finance Framework».
«Life sciences» type of use with strong momentum
The life sciences sector has numerous clusters in Switzerland and invests disproportionaly in basic research, knowledge and technology. It employs a large number of people in the regions of Basel, Zurich and Lake Geneva. Demand for fully equipped research and laboratory spaces is correspondingly high. In 2011, the Tech Park opened on the Stücki site in Basel. In addition to offices and other infrastructure, it offers attractive and collaborative laboratory and research spaces for innovative startups in the fields of life sciences, nanotechnology, ICT and cleantech. The construction of the Tech Park also planted the seeds for the «Stücki Park» life sciences hub. The demand for corresponding spaces has grown further in recent years. The life sciences sector has been growing at a disproportional rate for several years now and is not susceptible to recessionary phases. René Zahnd, CEO Swiss Prime Site, says: «In response to the demand for turnkey laboratory and research spaces, Swiss Prime Site made the decision to expand the Stücki Park site in two construction phases and double the area from 27 000 m2 to 60 000 m2 with four new buildings. Startups, fast-growing companies and already established market participants all want to focus on research and invest their capital in areas that will benefit them the most. A second, mature life sciences cluster already exists in Schlieren near Zurich, where further laboratory and research spaces are being built on our JED site. Both projects in Basel and Schlieren are almost fully let already.»
Financing ensured even under a changing interest rate environment
In the current dynamic interest rate environment, corporate financing is being seen increasingly as a strategic management tool. As the largest listed real estate company in Switzerland, Swiss Prime Site has a sound and balanced financing structure. Borrowed capital amounted to around CHF 5.4 billion on 30 June 2022 and is well hedged with a diversified range of instruments. In the third quarter of 2022, the two sustainability-linked syndicated loans of CHF 2.6 billion were extended prematurely by one year until 2027/28 at stable margins. The debt maturity profile suggests that no significant refinancing will be needed before 2025. This means that Swiss Prime Site will not be affected by any unfavourable conditions on the financial markets for the next three years at least. Marcel Kucher, CFO of Swiss Prime Site, says: «As well as giving us more timeline flexibility, we also believe that any extra costs associated with future refinancing will be well cushioned through indexation of commercial rental agreements, additional income from completed real estate developments in the project pipeline, and prudent capital recycling. Furthermore, Moody’s has confirmed our long-term issuer rating (A3) with a stable outlook.»
Real Estate Asset Management on a growth course
Swiss Prime Site Solutions and the Real Estate Asset Management business continue to enjoy strong growth. Across all products, the asset manager was able to raise more than half a billion in capital in the current financial year and increase its assets under management to more than CHF 7.3 billion. Swiss Prime Site Solutions saw equal growth across all three business areas and grew its client base by 10 percent. Following the completed takeover and integration of Akara, the company is aiming to continue on its steep growth trajectory over the coming years.
Commitment to financial and operational sustainability
Swiss Prime Site will also present the new «Green Finance Framework» at the Capital Markets Day. In contrast to the first version from 2020, the new one is a dynamic framework model that also covers sustainability-linked loans and other financial instruments in addition to green bonds. Swiss Prime Site’s medium-term goal is to embed sustainability in all corporate financing. This will support the operational measures within the portfolio of existing properties and developments. At the same time, existing properties are being certified according to the international certification system BREEAM In-Use. The goal is to have around 75 percent of the spaces within the property portfolio certified by the end of 2022. For development projects, the focus is on certification under the Swiss sustainable building standard (SNBS). Great importance is also being attached to the procurement and on-site production of renewable energy and innovative technologies, as well as the circular economy. René Zahnd, CEO Swiss Prime Site, adds: «By linking our operational and financial processes to sustainability, we will achieve our goal of becoming climate neutral by 2040 more quickly. Our ambitions were also recognised recently with outstanding GRESB scores for 2022.»
2022 guidance confirmed
Swiss Prime Site is set to meet its targets for the 2022 financial year. These include assets under management of more than CHF 20 billion, a vacancy rate of less than 4.4 percent, an increase in funds from operations (FFO I) of ≥ 5 percent and an LTV of below 40 percent.