(April 22, 2022, 11:49 +07)
Ascott Residence Trust (ART) has issued its first S$200 million (approximately US$147 million) sustainability bond under a new sustainability-linked financing framework.
The bond is being issued under its S$2 billion multi-currency debt issuance program and the proceeds from the bond issuance will be used to refinance ART’s existing borrowings. With a fixed coupon rate of 3.63% per annum, paid semi-annually in arrears, the five-year sustainability bond will mature in April 2027.
ART has achieved “greenium” through the issuance of the sustainability bond and has committed to achieving a sustainability performance target (SPT) of greening 50% of its total portfolio by the end of 2025.
Properties must achieve a recognized third-party regional, national or internationally recognized green building standard or certification as of the SPT observation date.
lyf one north of singapore
The operation met with strong demand from institutional investors and was oversubscribed approximately 2.2 times. The bond issue was eventually increased from S$150 million to S$200 million, and the final order book closed at S$335 million with orders coming from 47 accounts. In terms of distribution to investors, 79% of the bond was allocated to institutional accounts and 21% to private bank accounts.
ART simultaneously entered into a cross-currency interest rate swap transaction to swap the Singapore dollar-denominated coupon payments of the bond into Japanese yen at a fixed interest rate of 1.043% per annum.
Ms. Beh Siew Kim, President and CEO of Ascott Residence Trust Management and Ascott Business Trust Management (the managers of ART), said, “Sustainability is at the heart of everything we do at ART. Aligning our funding needs with our sustainability efforts to build a greener portfolio demonstrates ART’s focus on responsible growth. Our global sustainability strategy focuses on improving energy efficiency through technological or engineering solutions, as well as increasing the use of renewable energy. Our efforts are also guided by a Sustainability Committee comprised of members of ART’s management team as well as operations and technical service experts. As of December 31, 2021, 33% of ART’s portfolio is certified green and we aim to green the rest of our portfolio by 2030. We continue to work with our operators and tenants to green our properties globally and contribute to environmental and social protection. well-being of the communities in which we operate.
ART’s sustainability-linked finance framework facilitates the future issuance of sustainability-linked bonds and loans linked to its environmental, social and governance (ESG) objectives, including certain United Nations Sustainable Development Goals .
ART engaged Moody’s ESG Solutions to provide a second party opinion (SPO) on ART’s sustainability related finance framework.
According to Moody’s ESG Solutions, “ART’s key performance indicators are clearly defined, measurable and demonstrate a robust level of ambition relative to its hospitality industry peers. Its sustainability-linked financing framework has clearly revealed its strategies to achieve its SPTs and is credible. »
Fitch Ratings assigned a long-term issuer default rating of “BBB-”, with a stable outlook to ART. The rating reflects the growing diversification of ART’s real estate portfolio into longer-term assets, such as student residences and rental accommodation, in the medium term. ART’s sustainability bond is also rated “BBB-” by Fitch.
DBS Bank Ltd. is the only sustainable finance advisor, lead arranger and bookrunner for the transaction.
In January 2021, ART was the first hotel trust in Singapore to obtain a green loan. Proceeds from the loan were used to finance lyf one-north Singapore (pictured), ART’s first development project. The newly opened co-living property is equipped with green, energy efficient and smart building features and is Green Mark GoldPLUS certified by the Building and Construction Authority of Singapore.
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