OCBC, Cromwell E-Reit execute sustainability-linked cross-currency swap

OCBC and Cromwell European Real Estate Investment Trust (Cromwell E-Reit) have executed a 5-year sustainability-linked cross-currency swap which will be used to hedge any currency risks on the Reit's S$100 million fixed-rate perps issued in November.

The structured derivative transaction is Singapore's first sustainability-linked cross-currency swap, OCBC and Cromwell E-Reit said in a joint press statement on Friday (Dec 17).

The hedge allows Cromwell E-Reit to convert Singapore dollars to euros at a cheaper rate during the duration of the swap, provided the Reit meets 2 green targets.

The first is attaining a certain rating under the Global Real Estate Sustainability Benchmar, an international evaluation system which measures the sustainability performance of property companies and real estate funds.

The other target is for Cromwell E-Reit to obtain a certain number of green building certifications for its portfolio properties each year.

OCBC said the targets will be adjusted upwards each year by a predetermined percentage to allow its clients to push for higher environmental, sustainability and governance standards.

Simon Garing, the chief executive of Cromwell E-Reit's manager, noted that the coupon in euro post-cross-currency swap provides attractive funding. This further diversifies Cromwell E-Reit's capital sources, which allow the Reit to fund new acquisitions on an accretive basis.

OCBC head of global treasury Kenneth Lai said clients can enjoy cost savings with the sustainability-linked cross-currency swap, stacked on top of the euro's lower interest rate, while meeting their sustainability goals.