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CDL secures S$250m sustainability-linked loan from DBS

REAL estate group City Developments Limited (CDL) has obtained a S$250 million three-year revolving credit facility from DBS Bank to promote the United Nations (UN) Sustainable Development Goals (SDGs).

This SDG Innovation Loan is a green financing concept focused on innovations, CDL and DBS said in a joint statement on Wednesday.

The loan will be used for general working capital and corporate funding.

It will enable the property developer to trial fresh solutions to improve the way it builds its properties, as well as raise the quality and performance of its buildings, said Sherman Kwek, CDL’s group chief executive officer.

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The company will be eligible for a discount on the interest rate of the loan when it achieves sustainability-related performance targets, mutually agreed with DBS, on innovations that contribute positively to the UN goals.

To qualify, CDL is required to be the first company in Singapore to adopt and apply such innovations to its projects. An authoritative expert or expert panel will be appointed to independently assess and endorse the innovative nature of CDL’s proposal against market norms.

The company must also remain listed on at least one leading global sustainability index.

The loan will support industry, innovation and infrastructure; sustainable cities and communities; and climate action – which are SDGs nine, 11 and 13 respectively.

This complements global sustainability trends and answers the Singapore government’s call for climate action, smart cities, green innovation and sustainable development and financing.

Tai Lee Siang, executive director of BuildSG at the Building and Construction Authority, said: “The green financing initiative is a commendable effort given the increasing need to build more environmentally friendly buildings and infrastructure to mitigate the impact of climate change.”

“We hope to see more of such collaborations between financial institutions and built environment firms, to help spur the development of advanced and innovative solutions for green buildings,” Mr Tai added.

As part of its sustainability blueprint, CDL has committed to achieve an average of two innovations or new technology adoptions per year by 2030.

In 2017, CDL issued the first green bond by a listed Singapore real estate company. The green bond raised S$100 million, which was used to repay a company loan that financed initiatives to improve energy and water efficiency at Republic Plaza, CDL’s flagship Grade A office building.

This April, the property group secured its first green loans totalling S$500 million, marking the first time green loans in Singapore would be used for new property developments.

DBS was the sole bookrunner for CDL’s green bond in 2017. The lender also provided the green loan in April and was the adviser for the loan. 

In the past two years, DBS has provided some S$6.9 billion in sustainable financing to customers who want to go the extra mile to adopt more resource-efficient operations and towards green industries, such as green real estate development and renewable energy. This amount includes green loans, ESG-linked (environmental, social and governance-linked) loans and renewable projects financing.

Shares of CDL were trading flat at S$9.32 as at the midday break on Wednesday, while DBS was up 10 cents or 0.41 per cent to S$24.45.