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The SORA-pegged loan will be used by OUE C-REIT to refinance existing borrowings and fulfil general working capital requirements.
OUE Commercial Real Estate Investment Trust (OUE C-REIT) has obtained its first sustainability-linked loan amounting to $540 million.
It obtained the loan from a consortium of five lenders, including OCBC Bank which also acts as the transaction’s sustainability advisor.
In an SGX filing, OUE C-REIT revealed that it is also its first loan that references the Singapore Overnight Rate Average (SORA).
It noted that the facility incorporates interest rate reductions that are linked to predetermined sustainability performance targets.
These targets include improving the water and energy efficiencies in relation to its commercial portfolio in Shanghai and Singapore, allowing the REIT to enjoy interest cost savings once the targets are achieved.
OUE C-REIT said it intends to use the proceeds of the loan for general working capital requirements and to refinance existing borrowings.
“With the new facility in place, OUE C-REIT has no further refinancing requirements until December 2022 where only $163 million of debt is due for refinancing,” it added.
The REIT’s average term of debt is also expected to lengthen from 2.9 years as of 30 June to 3.5 years on a pro forma basis, while its weighted average cost of debt remains stable at 3.2% per annum.
“The new loan is a step towards integrating sustainable practices into our operations beyond just managing the environmental impact of OUE Commercial REIT’s properties. We remain committed to our sustainability goals with the aim of translating our sustainability efforts into positive results to deliver long-term growth and value for Unitholders,” said Tan Shu Lin, Chief Executive Officer and Executive Director of the REIT’s manager.
All of the commercial properties of OUE C-REIT in Shanghai and Singapore have achieved green ratings.
Its commercial assets in Singapore and Mandarin Orchard Singapore have achieved Green Mark Gold certification by the Building and Construction Authority (BCA), while Lippo Plaza in Shanghai is certified LEEDTM Gold by the U.S. Green Building Council.
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Cheryl Chiew, Digital Content Specialist at PropertyGuru, edited this story. To contact her about this story, email: cheryl@propertyguru.com.sg.