Singapore-based logistics property investor GLP has closed its first sustainability-linked loan (SLL) of US$658 million, the largest transaction of its kind in the Asia-Pacific ex-Japan real estate sector. A total of 10 banks participated in the deal.
The three-year revolving credit facility was structured as an SLL tied to the company’s latest Sustainalytics environmental, social and governance (ESG) risk rating. Under the facility, GLP is committed to improving its ESG risk rating score which reflects its performance in various ESG metrics.
The loan features a two-tier incentive mechanism where GLP will be entitled to an interest rate reduction when targeted improvements in its ESG performance score are achieved.
Edwin Tey, GLP’s global treasurer, comments: “The size of our first sustainability-linked loan demonstrates how GLP has been able to capitalize on our achievements in sustainability and integrate ESG performance with financial metrics. We look forward to using the proceeds of this loan to sustainably enhance our assets and the communities in which we work.”
In particular, the company will use the loan proceeds to contribute to environmental objectives related to climate change mitigation and the promotion of green buildings.
ING acted as the lead sustainability structurer and coordinator for the latest deal and served as the sole adviser on GLP’s new green finance framework which will cover the company’s future green use-of-proceeds bond and loan issuances.
The framework is aligned with the Green Bond Principles 2018, the Green Loan Principles 2020 and the Asean Green Bond Standards 2018, and has received a second-party opinion from Sustainalytics.
Robert Scholten, ING’s head of real estate finance for Asia-Pacific, says: “Despite the general economic fallout from the Covid-19 pandemic, APAC’s real estate sector remains a bright spot, where logistics has proven to be among the most resilient asset classes in 2020.
“We expect the real estate industry to continue on its growth trajectory this year, primarily led by the logistics sector. Retail and hospitality assets have taken a beating, and we see downward pressure on yields of office spaces. At the same time, Covid-19 has accelerated the already prominent shifts to e-commerce and digitalization, particularly in the region, which will further boost demand for logistics facilities and data centres.”
GLP and its strategic partners have raised more than US$1 billion in sustainability-linked loans and green bonds globally. Notably, GLP J-REIT has obtained an SU1 (F) rating, the highest possible credit rating, issued by Japan Credit Rating Agency under the JCR Sustainability Finance Framework Evaluation and was the first logistics J-REIT to launch a green bond targeted at retail investors. In December 2020, GLP J-REIT issued 15-year sustainability bonds, the longest tenure for sustainability bonds in the J-REIT market.