March 24, 2021

Manulife US Reit snags US$250m sustainability-linked loan from DBS, OCBC

By ellen

SINGAPORE (THE BUSINESS TIMES) – Manulife US Real Estate Investment Trust (Manulife US Reit) has obtained a five-year US$250 million (S$336.4 million) unsecured sustainability-linked loan from DBS Bank and OCBC Bank.

The facility is the Reit’s first sustainability-linked loan. It will use the loan for general corporate and working capital purposes, including refinancing existing loan facilities in connection with the Reit’s green buildings.

These include, but are not limited to, two office buildings located in Washington and California at 1750 Pennsylvania Avenue and 3161 Michelson Drive respectively, the Reit manager said in a bourse filing on Wednesday (March 24).

The facility incorporates interest rate reductions linked to predetermined sustainability performance targets. This allows the Reit to save on borrowing costs as it achieves targets, including the efficient use of energy and water and the management of greenhouse gas emissions concerning the Reit’s nine office properties in the United States.

Ms Jill Smith, chief executive of Manulife US Reit’s manager, said the Reit’s properties are included in its sponsor’s target to reduce 80 per cent of greenhouse gas emissions by 2050.

“In 2021, to further our commitment to reducing our environmental footprint, we are working with our sponsor to develop a model to identify greenhouse gas reduction opportunities specific to Manulife US Reit’s buildings,” she added.

DBS and OCBC are the sustainability advisers for the transaction.

DBS group head of institutional banking Tan Su Shan said that as the global shift towards lower carbon economies gains momentum, the bank is seeing growing interest among its institutional clients for more sustainable financing options, with the real estate sector being particularly active.

OCBC head of global corporate banking Elaine Lam said Manulife US Reit’s maiden sustainability-linked loan comes on the back of the Reit’s first green loan extended by OCBC last year. The bank developed the Reit’s green loan framework.

Units of Manulife US Reit were trading flat at 71.5 US cents as at 9.18am on Wednesday.