Link REIT secures Asia's largest sustainability-linked RE loan
Hong Kong’s Link REIT has secured a HK$12 billion ($1.53 billion) sustainability-linked loan (SLL) from a consortium of banks; the largest such loan in the Asian real estate sector.
Link Asset Management Limited, the manager of Link Real Estate Investment Trust, announced today that it had arranged the facility with 16 Hong Kong and international banks. HSBC acted as sustainability advisor.
The facility comprises four tranches, including a four-year HK$3 billion revolving credit and HK$3 billion term loan, as well as a five-year HK$3 billion revolving credit and HK$3 billion term loan. Proceeds will be used for general working capital.
The SLL terms incorporate interest rate reductions linked to predetermined sustainability performance targets, which will reduce interest payments. Link chief financial officer Ng Kok Siong told Sustain the sustainability targets included:
- Environment: engaging tenants in developing Green Leases
- Social: engaging contractors and other service providers to provide local employment opportunities as a means to promote upward social mobility
- Governance: developing and submitting the Science Based Targets initiative (SBTi) Net Zero Standard to become one of the few companies in Hong Kong included in the ranking
Ng said Link's interest payments may increase if it fails to meet targets. "The interest rate can be adjusted both upward or downward within the tenor of the financing, depending on our performance in a matrix of multiple targets," he said. "More incentives on the rate or a larger rate reduction will be given if we can achieve each additional target or perform better in each of the targets."
George Hongchoy, CEO of the REIT manager, said: “The SLL is governed by Link’s new Sustainable Finance Framework (SFF), which requires all our sustainability-linked finance transactions to include at a minimum, one target under each of the ESG aspects.
“As our Vision 2025 sets out ambitious medium-term goals, which comprehensively address ESG impacts on sustainability across all our operations, sustainability-linked financing is the natural step to ensure that ongoing investment in sustainability initiatives helps us to extend our track record of strong ESG performance.”
Jonathan Drew, managing director for ESG solutions, global banking at HSBC said: “Sustainability-linked loans are an effective way to incentivise positive change and to further align a company’s financing strategy with its sustainability goals.”
Link REIT has a market capitalisation of HK$131 billion and owns and manages retail, office and logistics assets in Hong Kong, Guangzhou, Shenzhen, Beijing, Shanghai, Sydney and London.