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Green finance gains among developers as CapitaLand, Tong Eng obtain loans
GREEN loans have been gaining popularity among Singapore property developers as more look towards green financing to support sustainability-related properties.
CapitaLand on Wednesday said it obtained its first three green loans in India totalling 17 billion rupees (S$323 million) from DBS Bank India and HSBC India.
Proceeds from the green loans will be used to finance the development of the property giant’s green-certified business park developments in Chennai, Gurgaon and Pune.
DBS provided two out of the three green loans - a 4.5-year 6.25 billion rupee green loan which will be used to finance the development of the first phase of International Tech Park Chennai, Radial Road, as well as a three-year 4.25 billion green loan which will be used to fund the first phase of International Tech Park Gurgaon.
Both green loans were structured in alignment with the Asia Pacific Loan Market Association’s Green Loan Principles and are the first in India to be issued by a Singapore-based lender, DBS said in a separate statement on Wednesday.
HSBC, meanwhile, provided a four-year 6.5 billion rupee loan, which will be used to finance the development of International Tech Park Pune, Kharadi.
DBS group head of institutional banking Tan Su Shan said the bank sees "immense potential" for growth in Asia’s sustainable financing market as companies look to further their sustainability agenda through responsible financing practices.
“In becoming the first Singapore bank to finance green loans in India, we are also establishing Singapore as a regional sustainable financing hub with the expertise and experience to forge meaningful partnerships for a more sustainable Asia,” she said.
CapitaLand India chief executive of business parks Vinamra Srivastava said: “The securing of the first green loans in India demonstrates CapitaLand’s commitment to growing our business in a responsible manner as we create long-term value for our stakeholders.”
HSBC India head of global banking and markets Hitendra Dave said: “As we enter a pivotal decade of change, we look forward to supporting CapitaLand as their banking partner in building a healthier, more resilient, and more sustainable future.”
In India, CapitaLand has a portfolio of over 20 business and IT parks, industrial, lodging and logistics properties across seven cities - Bangalore, Chennai, Goa, Gurgaon, Hyderabad, Mumbai and Pune.
Separately, OCBC has provided a S$71 million revolving green loan referencing the Singapore Overnight Rate Average (Sora) to Singapore property developer Tong Eng Group.
This is Singapore's first green loan referencing the Sora, OCBC and Tong Eng said in a joint press statement on Wednesday. Proceeds will be used to refinance Tong Eng Building, which received the Building and Construction Authority (BCA) Green Mark Platinum re-certification last month, they said.
The loan's interest rate will be calculated based on the three-month compounded Sora published by the Monetary Authority of Singapore, as well as an applicable margin.
Tong Eng will be informed on the first day of the loan, and thereafter, on each rollover of the loan, of the amount of interest due on its outstanding loan at the end of an interest period.
OCBC and Tong Eng said this "compounding in-advance" methodology provides better visibility and therefore facilitates cashflow planning with regard to interest payment.
The green Sora-based loan was raised under the property developer's newly-established green loan framework developed together with OCBC as green loan adviser.
To obtain the BCA Green Mark Platinum Award, Tong Eng incorporated several green features for Tong Eng Building which resulted in energy savings. Separately, the property developer undertook an extensive lift-upgrading exercise where all the lifts were fitted out with new technology motors, drives and controllers for optimum operation.
Tong Eng managing director Teo Tong Lim said: "Besides furthering our sustainability strategy, this loan is also an important step for us in transitioning our loan book to backward-looking rates - an inevitable shift that many businesses will have to undertake."
He added that beginning this process early has given Tong Eng a better understanding of the pricing of such loans and the operational changes that have to be made, to prepare for the period after the cessation of the Swap Offer Rate.
OCBC head of global commercial banking Linus Goh said choosing to launch this loan with the refinancing for Tong Eng Building is an important signal of intent and a timely reminder that mature buildings can and should strive towards meeting today's sustainability standards. The building has been a fixture in the central business district since the 1980s.
Tong Eng's green loan is OCBC's third Sora-based corporate loan. The first was extended to CapitaLand in June this year, and then to Sembcorp Industries in October. The lender introduced the first Sora-based retail home loan in July.
To date, OCBC has extended more than S$1.3 billion in corporate and retail loans referencing Sora, including close to S$1 billion in Sora-based home loans.
As at 2.32pm on Wednesday, CapitaLand shares were trading 1.4 per cent or S$0.04 higher at S$2.97, DBS was up 0.2 per cent or S$0.04 at S$24.69, while OCBC gained 0.9 per cent or S$0.09 to S$9.88.