Link secures maiden sustainability-linked loan from DBS
Loan incorporates reduced pricing structure with interest cost savings
Link Asset Management (Link), the manager of Link Real Estate Investment Trust (Link REIT), has signed a A$212 million (US$122 million) five-year sustainability-linked term loan with Singaporean bank DBS, representing its first sustainability-linked loan following its issuance of a US$500 million green bond in 2016 and HK$4 billion (US$515.46 million) convertible green bond in 2019.
To incentivize sustainable practices, DBS has structured the loan to incorporate a reduced pricing structure with interest cost savings. Link will be eligible for the interest savings if it maintains its listing on leading global sustainability indices and achieves sustainability milestones based on performance in the annual independently assessed Global Real Estate Sustainability Benchmark (GRESB). GRESB is widely recognized as the leading sustainability benchmark for real estate and infrastructure investments across the world.
The loan, announced on March 22, is also the first by a real estate investment trust in Asia to be linked to GRESB performance. The proceeds of the loan will be used for general corporate funding purposes, including sustainability initiatives. Subsequent to the acquisition of 100 Market Street in Sydney, announced in December last year, Link is taking on the sustainability-linked loan in Australian dollars to match the currency of this investment.
Link chief executive officer George Hongchoy says, “As we pursue our medium-term goals outlined in Vision 2025 to create value for our stakeholders and the communities we serve, we are pleased to ensure the integration of sustainability best practices into our daily operations by introducing our very first sustainability-linked loan with our key relationship bank, DBS.”
Chew Chong Lim, managing director and global head of real estate, institutional banking, at DBS, notes that the loan underscores the growing shift towards responsible financing in the region. “We believe financing solutions with features that incentivize sustainable development enable corporates to generate long-term value, while contributing to the United Nations' sustainable development goals (SDGs).”
Both Link and DBS are signatories to the United Nations Global Compact and are committed to driving progress towards the SDGs in ways that are meaningful for their respective businesses. For DBS, this includes acting on climate change by partnering with corporates to adopt responsible financing practices. In 2019, DBS provided sustainable financing amounting to about S$5 billion (US$3.43 billion).
Link and DBS are listed on the Dow Jones Sustainability Asia Pacific Index and FTSE4Good Index. Additionally, Link is listed on the Hang Seng Corporate Sustainability Index, while DBS is listed on the Singapore Exchange ESG Indices under the Leaders Index and Transparency Index.
23 Mar 2020