Asian property developers are exploring the use of green loans. Recently, there has been a deal in Singapore where a green loan was used to fund an office tower.
Singapore-based Frasers Property Ltd. raised a S$1.2 billion ($881 million) green loan, the first of its kind by a Southeast Asian borrower under principles set by Asia Pacific Loan Market Association in March that aim to standardize disclosure. The facility refinances existing loans tied to Frasers Tower, an energy efficient office with its own park and podium roof gardens.
Green loan are playing catchup to bond markets, as borrowers are demanding more channels and options for such financing amongst a sustainability backdrop to address the pollution crises created by rapid urbanization and consumerism. The critics of green finance have pointed to a lack of universal standards and measures like for example, the APLMA’s guidelines aim to increase transparency on the use of proceeds and on the environmental impact of projects.
“There are strong returns for banks to get into sectors like green buildings and renewable energy as they are showing very strong financial performance,” said Jonathan Drew, Managing Director, Infrastructure and Real Estate Group, Global Banking Asia-Pacific at HSBC Holdings Plc.
Singapore’s Ho Bee Land Ltd. in August signed a 200 million pound ($264 million) green bridge loan for the acquisition of Ropemaker Place commercial building in London. Hong Kong real estate firm New World Development in March raised a HK$3.6 billion ($461 million) maiden green loan for a commercial re-development project.
“In Hong Kong, we increasingly see property firms that are developing green buildings based on the expectations of tenants, financiers and the community to develop projects that provide higher level of energy efficiency,” said Drew, one of the lenders for New World transaction and the green structuring adviser for Ho Bee Land deal.
Asian borrowers outside of real estate have also been adopting green loans. Hong Kong’s Leo Paper Group this month signed a HK$350 million loan for environmental projects in China. Singapore’s Wilmar International Ltd. this year has raised two separate credit facilities where the interest rate will be reduced based on sustainability targets achieved. Sydney-based Macquarie Group Ltd. in June raised 2 billion pound loan, with tranches to financing renewable energy-efficient projects and buildings.
Have you thought of applying for a green loan for a personal project of yours? If so, how have you gone about doing it? Have you been successful? If so, please share your story with us.