The manager of Sabana Industrial REIT has launched and priced $100 million in sustainability-linked guaranteed bonds.
The bonds are due in 2029 and will bear an interest rate of 4.15% per annum, payable semi-annually in arrear. They will be issued at 100% of their principal amount and in denominations of $250,000.
Under the bonds’ terms and conditions, the REIT trustee, the issuer of the bonds, has set a sustainability target where the REIT should achieve at least a 24% reduction in absolute Scope 2 greenhouse gas (GHG) emissions from 2023 by the financial year ending on the target’s observation date.
In a separate release, Sabana REIT says it is targeting a 30% absolute reduction of Scope 2 GHG emissions by 2028.
Some of these initiatives include the REIT’s partnership with Keppel Energy-as-a-Service (EaaS), a wholly-owned subsidiary of Keppel Infrastructure, to implement and jointly execute decarbonisation solutions. Such solutions include the installation of solar panels across nine portfolio properties.
“We are pleased with the strong vote of confidence from investors in our first sustainability-linked bond issue, a clear signal of the market’s positive reception towards the REIT’s sustainability plans. This serves to expand our capital financing options, and will enable the REIT to meet our target to convert all financing facilities into sustainability-linked or green loans by 2025. Our raising of capital through debt financing is also aligned with the REIT’s prudent capital management approach,” says Donald Han, CEO of the manager.
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“We remain committed to achieving sustainability and are continuing with our efforts to implement solar panel installations across selected portfolio assets. By 4Q 2024, the majority of our multi-tenanted properties will be powered by renewable energy. The REIT is well on track to achieve our goal of becoming one of Singapore’s first carbon-neutral industrial REITs by 2040,” he adds. “We wish to thank CGIF and our joint lead managers (CIMB and HSBC) for their support of this deal to diversify our funding sources.”
“CGIF is very thrilled to support Sabana Industrial REIT’s strong environmental, social and governance (ESG)-initiatives, including the issuance of the sustainability-linked bond under Asean and [the] International Capital Market Association (ICMA) Standards. This issuance is a new milestone for CGIF, representing the first-ever sustainability-linked bond in our portfolio and our commitment to our mandate to support thematic bonds in the region,” says Wang Hongwei, CEO of CGIF.
“With the partnership from the joint lead managers (CIMB and HSBC), through risk-sharing, CGIF underscores the developmental impact of this deal by allowing Sabana Industrial REIT to extend its weighted average maturity and diversify funding sources,” he adds.
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The issuer will redeem the bonds at their principal amount on June 25, 2029.
Units in Sabana REIT closed 0.5 cents lower or 1.43% down at 34.5 cents on June 18.
