Ascott Residence Trust (ART) has issued its first sustainability-linked bond of $200 million under its Sustainability-Linked Finance Framework. The trust is the first Singapore-listed real estate trust to issue a sustainability-linked bond, in addition to being the first hospitality trust in Singapore to secure a green loan in Jan 2021.
ART is the largest hospitality trust in APAC with an asset value of $7.7 billion as at Dec 31, 2021, with an international portfolio comprising 93 properties with over 17,000 units in 43 cities across 15 countries in APAC, Europe and the US.
The bond is issued pursuant to its $2 billion Multicurrency Debt Issuance Programme, with proceeds from the bond issuance used to refinance ART’s existing borrowings.
The five-year sustainability-linked bond will mature in Apr 2027, with its fixed coupon rate of 3.63% per annum paid semi-annually in arrears.
At this juncture, ART has also committed to a sustainability performance target (SPT) of greening 50% of its total portfolio by the end of 2025. ART’s properties must therefore achieve a regional, national or internationally recognised green building standard or certification by a recognised third-party by the SPT observation date.
As a result, ART has also achieved a green premium, or ‘greenium’, through the issuance of the sustainability-linked bond
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The deal was met with strong demand from institutional investors and was oversubscribed at about 2.2x. The bond issue was eventually upsized from $150 million to $200 million, and the final orderbook closed at $335 million with orders from across 47 accounts.
With regards to investor distribution, 79% of the bond was allocated to institutional accounts and 21% to private banking accounts.
“Sustainability is core to everything we do at ART. Aligning our financing needs with our sustainability efforts to build a greener portfolio demonstrates ART’s focus on responsible growth,” says Beh Siew Kim, CEO of the manager.
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“Our global sustainability strategy centres on improving energy efficiency through technology or engineering solutions, as well as increasing the use of renewable energy. Our efforts are also guided by a Sustainability Committee comprising members from ART’s senior management team as well as operations and technical department experts,” she adds.
According to Beh, as of 31 December 2021, 33% of ART’s portfolio is green-certified, where the trust aims to green the rest of our portfolio by 2030. To achieve this, ART will continue to work with its operators and lessees to green its properties globally, and contribute to the environmental and social well-being of the communities it operates in.
ART has engaged Moody’s ESG Solutions to provide a Second-Party Opinion (SPO) on its Sustainability-Linked Finance Framework. Moody’s ESG Solutions has also affirmed that ART’s key performance indicators are clearly defined, measurable and demonstrate a robust level of ambition compared to peers in the hospitality sector. Moreover, Moody’s verifies that its Sustainability-Linked Finance Framework has clearly disclosed its strategies to achieve its SPTs and is credible.
According to Fitch Ratings, ART has a stable outlook and is assigned a ‘BBB-’ long-term issuer default rating, which reflects the growing diversification of ART’s property portfolio towards longer-stay assets, such as student accommodation and rental housing, in the medium term. This improves its business-risk profile and boosts income stability as global travel demand gradually resumes.
As at 3.05pm, units in ART are trading at 1 cent up and 0.92% higher at $1.10.
Photo: ART
