Ascott Residence Trust (ART) has issued its first sustainability-linked bond, a five-year S$200 million note at 3.63 percent, the hospitality REIT said in a filing to SGX Wednesday.
The announcement confirmed an earlier Shenton Wire article.
ART claimed Wednesday that the note was the first sustainability-linked bond by a hospitality trust globally, and the first by a Singapore-listed REIT.
Under the issuance, ART received a “greenium,” or a cheaper cost of funding for issuing debt with a positive environmental impact, the filing said. The trust said it has committed to a sustainability performance target (SPT) of greening 50 percent of its portfolio by gross floor area by end-2025. A third-party will determine if the properties have achieved a regional, national or internationally recognized green building standard or certification, the filing said.
Beh Siew Kim, CEO of ART’s manager, said around 33 percent of ART’s portfolio was green-certified by end-December, with the trust targeting to green the rest of the portfolio by 2030.
“Our global sustainability strategy centers on improving energy efficiency through technology or engineering solutions, as well as increasing the use of renewable energy,” she said in the statement. “We continue to work with our operators and lessees to green our properties globally, and contribute to the environmental and social wellbeing of the communities we operate in.”
The offering met with strong demand from institutional investors, coming in 2.2 times subscribed, with the offering size raised to S$200 million from the originally planned S$150 million, ART said. Around 79 percent of the bond was allocated to institutional investors, and the remainder to private banking accounts, ART said.
ART said it has entered a cross-currency interest rate swap transaction to swap the Singapore-dollar-denominated coupon payments into Japanese yen at a fixed 1.043 percent rate per annum.
DBS Bank was the sole sustainable finance advisor, lead manager and bookrunner for the deal, the filing said.
Fitch Ratings has rated ART at BBB-minus, with a stable outlook, and the bond has the same rating.
Ascott Residence Trust had an asset value of S$7.7 billion as of end-December, with its portfolio including 93 properties with more than 17,000 units across 15 countries in Asia Pacific, Europe and the U.S.