22 Sep 2021
World Green Building Week 2021: #BuildingResilience starts with sustainable financing
Frasers Property’s Parc Greenwich is best-selling Executive Condominium launch this year with 65% of units sold during first weekend.
What actually goes into a green building? For this year’s World Green Building Week that falls from 20 to 24 September, we are going to unpack what #BuildingResilience is about. Of course, green buildings should consider all processes related to circular design, sustainable build and efficient operations. At Frasers Property where we are owner/developer/operator of real estate, our sustainability experience tells us one of the first steps to green buildings start with the letter ‘F’.
Financing green buildings
As part of our commitment to being a sustainable company with a target of achieving net-zero carbon by 2050, we have established a goal to finance the majority of our sustainable asset portfolio with green and sustainable financing by 2024. Since our first green loan in September 2018, we have grown the overall share of green and sustainability loans and bonds to over SGD 6 billion.
Green and sustainable financing defers from traditional modes of financing by factoring in climate risks and ensuring funds consider environmental concerns. For sustainability-linked loans, the conditions go further requiring the commitment to improve or maintain certain predetermined sustainability perimeters and standards.
We are one of the real estate leaders that are a first-mover in green financing. For our newest residential development Parc Greenwich, which is the best-selling executive condominium this year, we are the first in Singapore to secure an SGD 350 million green loan under the LMA/APLMA1 Green Loan Principles.
This year, we also issued the first green bonds priced in Singapore dollars which received high investor interest and demand. Frasers Logistics & Commercial Trust (FLCT) in July priced its maiden SGD 150 million sustainability notes issued under a newly established Sustainable Finance Framework allowing for proceeds to be deployed towards financing or refinancing of eligible sustainable projects. The transaction is also part of FLCT’s SGD 1 billion Multicurrency Debt Issuance Programme.
Parc Greenwich, 4-bedroom penthouse
Further ashore, our Australian business has also set up its Sustainable Finance Framework, which is a first of its kind in Asia Pacific. It pioneers innovation within the sustainable lending space by defining an entire portfolio as sustainable assets using Global Real Estate Sustainability Benchmark (GRESB) ratings and the first of its kind for sustainability-linked bonds and loans. Under the Framework, proceeds can be used to finance sustainable projects and for general corporate purposes.
Frasers Property’s Australian platform is a remarkable market leader in the green finance space; with over 51 per cent of our corporate funding now secured in the form of sustainability linked loans. In April this year, we secured an AUD 300 million five-year syndicated sustainability linked loan with an accordion option of AUD 25 million. The AUD 300 million loan secured included a significant contribution from Clean Energy Finance Corporation (CEFC) (AUD 75 million), which encompasses Real Utilities carbon neutral energy solution to be used on two Frasers Property Industrial Australian assets.
This loan incentivises sustainable practices by building a price reduction mechanism offering a lower interest rate from the second year onwards should our Australian business maintain its GRESB ratings.
There is more work to be done in the sustainable financing space. Credit is definitely due to our investors and banks who spur us further to achieve greener buildings with sustainable financing. We believe this ultimately relates to being a more purpose-driven business.
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