OUE Commercial REIT gets S$540M sustainability-linked loan from consortium including OCBC

OUE Commercial Trust's Mandarin Orchard on Orchard RoadOUE Commercial Trust's Mandarin Orchard on Orchard Road. Image taken pre-Covid

OUE Commercial REIT has obtained a S$540 million sustainability-linked loan from a consortium of five banks including OCBC Bank, which is also acting as sustainability advisor for the deal, the REIT said in a filing to SGX Thursday.

The loan facility incorporates interest rate reduction reductions tied to sustainability performance targets, including improving the energy and water efficiency at its commercial portfolio in Singapore and Shanghai, giving the REIT savings in interest costs once the targets are reached, the filing said.

The loan proceeds will be used to refinance existing borrowings and for general working capital needs, OUE Commercial REIT said.

Tan Shu Lin, CEO and executive director of the REIT’s manager, said the loan supported the REIT’s efforts to improve its sustainability performance.

“The new loan is a step towards integrating sustainable practices into our operations beyond just managing the environmental impact of OUE Commercial REIT’s properties. We remain committed to our sustainability goals with the aim of translating our sustainability efforts into positive results to deliver long-term growth and value for unitholders,” she said in the statement.

OUE Commercial REIT said it has set long-term energy and water reduction targets of 25 percent below 2017’s levels by 2030, with the potential to partner with tenants through green lease agreements. All of the REIT’s commercial properties n Singapore and Shanghai have green ratings, the REIT added.

With the new facility, the REIT has no further refinancing needs until December 2022, when S$163 million is due for refinancing, the filing said.

The loan is OUE Commercial REIT’s first sustainability-linked loan and its first loan referencing the Singapore Overnight Rate Average (SORA), the filing said.

OUE Commercial REIT had total assets of S$5.8 billion as of end-June, with seven properties in the commercial and hospitality segments in Singapore and Shanghai.