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Two large real estate investors have secured loans linked to their sustainability credentials, as the real estate green finance sector continues to expand.
Singaporean property company Frasers has garnered a £110M sustainability-linked loan secured against its UK business park portfolio from Maybank Singapore.
The loan is tied to Frasers UK’s Global Real Estate Sustainability Benchmark score, CoStar reported. The loan is a five-year bilateral facility. If Frasers maintains its GRESB score of 85/100, it will pay a reduced margin on the debt from the second year.
Frasers is one of the largest owners of business parks in the UK, with a 6.5M SF portfolio that includes Winnersh Triangle near Reading and Hillington Park, Scotland’s largest business park.
"With this transaction, we are continuing on our journey towards our goal of financing the majority of our new asset portfolio with green and sustainable financing by 2024,” Frasers Group Chief Financial Officer Loo Choo Leong said in a release. “Being an early-mover in the UK real estate sector for sustainability-linked loans tied to a GRESB rating helps us raise sustainability ideals across our value chain.”
With this sustainability-linked loan in place, Frasers, including subsidiaries and associated entities, has secured 25 green or sustainability-linked loans, and two sustainability bonds, raising more than $6B in total.
Elsewhere, fund manager Europa Capital has secured a €210M (£175M) sustainability-linked revolving credit facility from RBS International for its sixth value-add fund, Europa Fund VI.
The rolling facility agreement lays out margin incentives conditional on sustainability-linked targets, including improved waste diversion, the use of green energy and minimum EPC ratings of C for the fund’s major refurbishment and redevelopment projects.
The loan is significant because it shows a value-add or opportunistic investor embracing sustainability targets and green finance. With shorter time horizons before they sell assets, managers in this sector of the market have typically been seen as less likely to embrace sustainability initiatives than long-term holders.
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