Swiss Prime Site: New loans in the billions
Swiss Prime Site has concluded two credit facilities totalling CHF 2.6 billion, thus replacing bank mortgages on a large scale.
In accordance with the Capital Management Principles presented by Swiss Prime Site at the Capital Markets Day at the end of October 2021, the real estate company has concluded two unsecured credit facilities totalling CHF 2.6 billion with eleven Swiss banks. On the one hand, this means that the majority of the 1.8 billion bank mortgages that were still heavily secured by real estate collateral as at 30 June 2021 will be redeemed. On the other hand, a committed revolving credit facility (RCF) of CHF 0.8 billion has been secured, according to the real estate company.
According to Swiss Prime Site, both contracts have a term of five and six years respectively and have three and one extension option. The switch will increase the proportion of properties not encumbered by mortgages from currently just under 30% to over 80% of the total portfolio.
The early redemption of the bank mortgages will have a negative impact of around 24 million on the income statement in 2021, Swiss Prime Site announces. At the same time, however, the current interest costs of the redeemed mortgages will fall by around 50% or 10 to 12 million per year, and the weighted term will be significantly extended.
The refinancing represents a first important step in the implementation of the new capital management principles, according to Swiss Prime Site. The specific targets are an LTV ratio (basis: total debt/total assets) of less than 40% (previously 45%), an interest coverage ratio of more than seven (7x) and an unencumbered asset ratio of more than 80%. The real estate company aims to achieve this in the coming year. The banks involved would support the strategy by agreeing to reduce the interest margin if the targets are achieved.
The new financing is also linked to Swiss Prime Site's sustainability goals: In addition to the LTV ratio, the credit margin to be paid is also dependent on the development of the external ISS ESG rating. "This significant optimisation of our capital structure increases our comparability with European and global competitors. This should also lead to an improvement in the credit rating in the medium term," comments René Zahnd, CEO of Swiss Prime Site. (ah)
