FAR East Hospitality Trust (FEHT) has secured its first sustainability-linked loan facility worth S$125 million for a term of five years from OCBC Bank, which is the sole lender for this transaction.
The loan will be used to refinance FEHT's existing bank borrowings, with the loan's interest margin tied to selected sustainability targets that were set together with OCBC Bank. They include the reduction in the energy consumption of its portfolio and improvements in the Building and Construction Authority of Singapore's Green Mark Certification for its properties.
If these pre-set targets are met, the interest margin on the facility will be subsequently reduced on a tiered basis.
FEHT has 13 properties in Singapore, consisting of nine hotels and four serviced residences.
OCBC Bank said providing this sustainability-linked loan is a natural progression, with the bank having worked with various real estate investment trusts (Reits) and corporates on their sustainable financing journey.
The facility agreement also places restrictions on a change in the manager of the Reit and a change in ownership of the Reit manager, FEHT said.