UOB extends S$140m in green loans to real estate SMEs under new framework

UNITED Overseas Bank (UOB) on Thursday said it has provided its first green loans under its new real estate sustainable finance framework.

Lucrum Capital and Teambuild Engineering & Construction are the first to use the framework. The two companies secured a total of S$140 million in three loans to finance the construction and operation of their green buildings in Singapore.

UOB said this is the first lending framework dedicated to supporting sustainability-related projects for the property sector established by a Singapore bank.

It was developed specifically for companies that own or manage real estate assets such as data centres, hotels, homes, restaurants, offices, as well as industrial and retail spaces.

The framework sets out the eligibility criteria - including sustainability strategy, objectives, ratings and performances targets - for the companies to meet when applying for the green or sustainability-linked loans.

This makes it easier for small- and medium-sized enterprises (SMEs), which often have limited resources, to apply for green financing, UOB said on Thursday.

The bank will record and monitor each borrower's management of loan proceeds, and track the sustainability metrics as agreed with the company.

UOB will also roll out similar lending frameworks for other sectors to receive green loans, said Lam Li Min, UOB's head of real estate and hospitality, sector solutions group.

Private equity firm Lucrum Capital will use two of the loans to construct a six-storey hotel at 110/112 Killiney Road. The hotel's design will include climate-responsive features to help reduce its contribution to the urban heat island effect, energy-efficient air conditioning and lighting, water-efficient fittings, as well as energy and water monitoring and management systems. These green features are expected to lead to 30 per cent in cost savings.

Meanwhile, Teambuild Engineering & Construction will use its term loan for its new integrated construction and prefabrication hub (ICPH). Located at 9 Defu South Street 1, the building has green walls and rooftop solar panels with a total solar capacity of 58.9 megawatt-peak. The company has also implemented an energy management system to track energy consumption.

Eric Tham, head of group commercial banking at UOB, said the lender aims to help more clients, particularly SMEs in the real estate sector, develop sustainable buildings. This will be aligned with BCA's target for 80 per cent of buildings to be certified green by 2030.

KPMG in Singapore advised UOB in the development of the real estate sector's framework, which is in line with the Green Loan Principles and the Sustainability Linked Loan Principles issued by the Loan Market Association in 2018 and 2019 respectively.

UOB shares were trading at S$26.87 as at the midday break on Thursday, up 27 cents or 1 per cent.