Swire Properties makes first sustainability-linked loan

After converting existing US$64 million credit facility into sustainability-linked loan, company is first in Hong Kong to launch a financing mechanism against year-on-year ESG performance targets

Swire Properties has secured its first sustainability-linked loan. The company reached an agreement with Crédit Agricole Corporate and Investment Bank (Crédit Agricole CIB) to convert an existing five-year revolving credit facility of HK$500 million (US$63.9 million), dated August 2017, into a sustainability-linked loan, with the interest rate being indexed against the company’s ESG performance.

Swire Properties is the first company in Hong Kong to launch such a financing mechanism against its year-on-year ESG performance.

Within this loan structure, Crédit Agricole CIB will grant a reduction in interest rate each year based on the following criteria:

•Swire Properties retains its listing on the Dow Jones Sustainability World Index (DJSI World),

and

•Swire Properties achieves a target reduction in energy use intensity (EUI, measured in units of kWh/m2) each year for its Hong Kong portfolio.

The DJSI is the first global sustainability benchmark which tracks the stock performance of the world's leading companies in terms of economic, environmental and social criteria, and only the top-ranked companies are selected for inclusion in the DJSI World.

Since 2017, Swire Properties has been the only property developer and multinational corporation from Hong Kong and mainland China to be included in the DJSI World, consolidating its position among global sustainability leaders in the real estate industry.

“In 2016, we launched our global Sustainable Development strategy, SD2030, which was designed to help us effectively integrate ESG considerations into every part of our business. This sustainability-linked loan reflects our desire to find new ways to finance and operate a more sustainable business,” says Guy Bradley, Chief Executive of Swire Properties.

The loan will be used for investments supporting the company’s targets set under the SD2030 strategy, such as adoption of advanced energy saving technologies, and to fund ongoing green building developments, including Two Taikoo Place – the triple Grade-A office building which is a key component of the company’s Taikoo Place redevelopment project.

Spanning 1 million square feet, Two Taikoo Place is currently under construction and is expected to be completed in 2022. The building has already obtained Pre-certified Platinum for LEED Core and Shell Version 2009, Provisional Platinum for BEAM Plus New Buildings Version 1.2, and Pre-certified Platinum for WELL Core and Shell Version 1.0.

This is Swire Properties’ second sustainable financing initiative, following the issuance of a US$500 million green bond in 2018. The new loan has been developed with reference to the framework of the internationally-recognized Sustainability Linked Loan Principles developed by the Loan Market Association, the Asia Pacific Loan Market Association and the Loan Syndications and Trading Association.