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Three Years Early: Aviva Hits Target Of £1B In Loans To Make Properties Greener


Aviva has beaten its target of providing £1B of sustainability-linked real estate transition loans three years early, and it is set to expand the programme.

The UK insurance company said this week it had provided a £227M sustainability-linked refinancing to property group Romulus on behalf of Aviva UK Life’s annuity business. Romulus is a London-based investment and development company that owns and manages a mixed-use portfolio of more than 1M SF.

The 10-year, fixed-rate loan is secured against a number of assets owned by Romulus in the office, hotel, leisure and retail sectors and located across central London. 

Aviva said in December 2020 that it wanted to provide £1B of sustainability-linked real estate transition loans before 2025. The deal takes it past that target. 

Sustainability-linked loans, a subcategory of the catch-all term transition finance, are loans in which the borrower gets a benefit if they reduce the carbon emissions of the building the debt is secured against. Rather than just lending against a building that is already environmentally sound, the lender is providing an incentive for making a building greener. 

In the case of the Romulus loan, and indeed in most cases when it comes to real estate debt, the incentive is a reduction in the interest rate margin paid by the borrower.

Aviva Head of Real Estate Debt Gregor Bamert said on LinkedIn the insurer was looking to extend the programme beyond the initial £1B. 

“When we created the sustainable transition loans framework, this figure seemed both challenging and substantial, however the reaction and engagement from borrowers has been astounding and we look forward to setting ourselves some even more challenging targets in the next phase of the programme,” he said in a statement.

Other loans in the programme include a £200M facility extended to healthcare real estate company PHP; a £154M facility for listed investor CLS Holdings; a £73M facility for investor and developer Commercial Estates Group; a £50M facility for self-storage company Big Yellow; and a £48M facility for Urban Logistics REIT.