Green Financing
Colony’s business is primarily financed by equity and interest-bearing liabilities, including bank loans. A small portion of the financing comprises other liabilities. Other liabilities include, amongst other things, approved but unpaid dividends, property tax and deposits from tenants.
The Company's portfolio and sustainability profile position it to access green financing markets, supported by the following factors.
The Company's property portfolio consists of six prime office locations in the Helsinki metropolitan area. The properties are energy-efficient and have been developed to standards intended to align with the EU Taxonomy and the objectives of the Paris Climate Agreement. The portfolio is 100% certified under BREEAM and/or LEED, and the Company was the first Nordic real estate company to achieve an "Excellent" score from third party opinion provider Sustainable Fitch. Sustainability characteristics are integral to the asset base rather than the result of subsequent retrofitting.
These characteristics may support more favourable financing terms over time. Sustainable Fitch applies positive weighting to taxonomy-aligned portfolios in its rating methodology, which the Company believes its certified portfolio would satisfy. In addition, issuers with certified portfolios have historically been able to achieve a pricing benefit ("greenium") on green bond issuance, which the Company estimates at approximately 5–20 basis points. Applied to a green bond of EUR 150 million, such a benefit would correspond to an estimated reduction in annual interest cost of approximately EUR 75,000 – 300,000. There can be no assurance that any such rating uplift or pricing benefit will be realised.
As part of its financing strategy, the Company has prepared a Green Bond Framework under which potential future bond issuances are intended to be made. The Company's current financing consists entirely of secured bank loans. Colony intends to grow its portfolio and diversify its funding sources through bond issuance. This approach is consistent with strategies previously adopted by comparable Nordic real estate issuers.
Realisation of these objectives is dependent on, among other factors, growth of the portfolio towards a scale that supports a liquid bond programme, prevailing capital market conditions, and the Company's ability to execute its acquisition and capital-raising strategy. These statements are forward-looking and subject to the risks.