Frasers Property secures 5-year A$340 million and US$75 million sustainability-linked loan

THE Australian arm of Frasers Property Ltd (FPL) has secured a five-year sustainability-linked syndicated loan worth A$S340 million (S$311 million) and US$75 million that promises lower interest rates if it meets emissions targets, the real estate developer said on Wednesday (Feb 22).

While this is Frasers Property Australia’s fourth sustainability-linked loan, this is the first time that the financing is tied to its target of reducing its annual absolute greenhouse gas emissions from its FY2019 footprint with the aim of achieving net-zero emissions by 2028.

Under the terms of the sustainability-linked loan, Frasers Property Australia will pay a lower interest rate from the second year of the loan if it meets its annual emission reduction targets until it hits net zero in 2028. The targets cover both direct and indirect emissions – also known as Scope 1, 2 and 3 emissions – as well as operational and embodied carbon, and are aligned with recommendations by the Science-based Target Initiative to meet the goals of the Paris Agreement.

The interest rate step-down in its previous sustainability-linked loan was tied to the developer’s performance on the Global Real Estate Sustainability Benchmark.

With this latest loan transaction, all of Frasers Property Australia’s corporate facilities are now green or sustainability-linked, FPL said.

Loo Choo Leong, FPL’s chief financial officer, said: “This is our first sustainability-linked loan tied to a prescribed reduction in annual absolute greenhouse gas emissions, marking our steady progress in green certifying the group’s owned and asset-managed properties. We are delighted that this sustainability-linked loan enabled the group to achieve full sustainability-linked financing for its Australia business.”

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As at Sep 2022, the total assets in its Australian business makes up about 8 per cent of FPL’s total assets at S$40.2 billion. To date, FPL has secured more than S$9 billion of green or sustainability-linked loans and bonds since its first green loan in September 2018. This is approximately half of the group’s net borrowings. As a group, it is targeting net-zero carbon across Scopes 1, 2 and 3 emissions by 2050.