Manulife US REIT partners DBS and OCBC Bank on maiden sustainability-linked loan
Manulife US REIT (“MUST”) has obtained a USD 250 million unsecured sustainability-linked loan from DBS and OCBC Bank, with both banks acting as sustainability advisors for the transaction.
This is MUST’s first sustainability-linked loan, which incorporates interest rate reductions linked to pre-determined sustainability performance targets, allowing MUST to enjoy savings in borrowing costs as it achieves these targets. These targets include efficient use of energy and water, and management of greenhouse gas (GHG) emissions, in relation to MUST’s nine office properties in the U.S.
With a firm belief in responsible investing, over the years, MUST has made great strides in its four strategic sustainability areas – sustainable properties, external relations, human capital, and ethical corporate behaviour. In 2020, and for the third year running, MUST was awarded 5 Stars by Global Real Estate Sustainability Benchmark (GRESB) Real Estate Assessment, ranking 4th out of 15 listed U.S. office REITs. In addition, MUST received an ‘A’ rating and was ranked 1st out of 10 Asia offices for GRESB Public Disclosure. MUST’s sustainability progress was also recognised by MSCI ESG with its rating upgraded from ‘BBB’ to ‘A’ in December 2020. Currently, 86.5% of MUST’s portfolio by gross floor area is green building certified by either LEEDTM, ENERGY STAR® or both.
Ms Jill Smith, Chief Executive Officer of Manulife US Real Estate Management Pte. Ltd., the manager of MUST, said, “We are very pleased to have secured this sustainability-linked loan which marks another first in our sustainability journey and provides us with more financial flexibility. We have always operated with the objective of conducting business responsibly, and this pandemic has made us more certain than ever that sustainability is the way forward. MUST’s properties are included in our Sponsor’s target to reduce 80% of GHG emissions by 2050. In 2021, to further our commitment to reducing our environmental footprint, we are working with our Sponsor to develop a model to identify GHG reduction opportunities specific to MUST’s buildings. We will continue to work towards our sustainability goals and translate these efforts into positive financial results to create long-term value for our Unitholders.”
Tan Su Shan, Group Head of Institutional Banking, DBS, said, “DBS’ relationship with Manulife US REIT dates back to even before its listing on the Singapore Exchange in 2016, as we worked closely with the management team to structure and launch the IPO. We are pleased to continue our longstanding partnership with Manulife US REIT as it charts a more sustainable growth trajectory. As the global shift towards lower carbon economies gains momentum, we are seeing growing interest among our institutional clients for more sustainable financing options, with the real estate sector being particularly active. Manulife US REIT’s maiden sustainability-linked loan attests to its firm commitment to sustainability, and we believe this will spur other companies and asset managers to consider adopting sustainable financing instruments as part of their ESG agenda. Every effort counts, and DBS will ramp up our engagement with like-minded businesses to encourage more sustainable operations and the adoption of responsible banking practices so that we can collectively build a sustainable future.”
Elaine Lam, Head, Global Corporate Banking, OCBC Bank, said, “We are pleased to support Manulife US REIT on yet another significant milestone in their sustainable finance journey. This sustainability-linked loan – which is Manulife US REIT’s first – comes on the back of their inaugural green loan which we extended last year after developing their green loan framework. It is evidence of their commitment to create real change in the sector by leveraging sustainable finance, and the constant drive towards integrating sustainable practices into their operations. Green buildings are the building blocks of sustainable cities, so Manulife US REIT’s mission is one that we are excited to support as we continue to work with our customers to do well and do good.”