SINGAPORE—Ascott Residence Trust (ART) has issued its first sustainability-linked bond of S$200 million under its newly established Sustainability-Linked Finance Framework. ART is the first hospitality trust globally to issue a sustainability-linked bond. ART is also the first listed real estate trust in Singapore to issue a sustainability-linked bond.
ART’s sustainability-linked bond is issued pursuant to its S$2 billion Multicurrency Debt Issuance Program and proceeds from the bond issuance will be used to refinance ART’s existing borrowings. With a fixed coupon rate of 3.63 percent per annum, paid semi-annually in arrears, the five-year sustainability-linked bond will mature in April 2027.
ART has achieved a “greenium” through the issuance of the sustainability-linked bond and committed to a sustainability performance target (SPT) of greening 50 percent of its total portfolio by end of 2025. The properties must achieve a regional, national, or internationally recognized green building standard or certification by a recognized third-party by the SPT observation date.
The deal was met with strong demand from institutional investors and was about 2.2 times oversubscribed. The bond issue was eventually upsized from S$150 million to S$200 million, and the final orderbook closed at S$335 million with orders from across 47 accounts. In terms of investor distribution, 79 percent of the bond was allocated to institutional accounts and 21 percent to private banking accounts.
Beh Siew Kim, CEO of Ascott Residence Trust Management Limited and Ascott Business Trust Management Pte. Ltd. (the Managers of ART) said: “Sustainability is core to everything we do at ART. Aligning our financing needs with our sustainability efforts to build a greener portfolio demonstrates ART’s focus on responsible growth. Our global sustainability strategy centers on improving energy efficiency through technology or engineering solutions, as well as increasing the use of renewable energy. Our efforts are also guided by a Sustainability Committee comprising members from ART’s senior management team as well as operations and technical department experts. As of December 31, 2021, 33 percent of ART’s portfolio is green-certified, and we target to green the rest of our portfolio by 2030. We continue to work with our operators and lessees to green our properties globally, and contribute to the environmental and social well-being of the communities we operate in.”
