08 Mar 2022

Link Signs $12 Billion Sustainability-Linked Loan

  • Link’s sustainability-linked loan (SLL) amounting to $12 billion is the largest of its kind in the real estate sector and among REITs in Asia
  • Link stands to enjoy savings in borrowing costs by attaining sustainability targets through its portfolio in Hong Kong and Mainland China
  • Link receives strong support from 16 Hong Kong and international banks for the sustainability-linked loan with eight of them as Mandated Lead Arrangers and Bookrunners (MLABs)1

Link Asset Management Limited (Link), the manager of Link Real Estate Investment Trust (Link REIT; Hong Kong stock code: 823) announced today (Tuesday) that Link has signed a sustainability-linked loan (SLL) facility with 16 leading international, regional and local banks amounting to $12 billion. The SLL, the largest of its kind amongst the real estate sector and REITs in Asia to-date, reaffirms Link’s commitment to sustainability while pursing long-term growth.

The SLL is directly tethered to Link’s Environmental, Social and Governance (ESG) strategies and related targets, which include engaging its tenants in developing Green Leases, engaging contractors and other service providers to provide local employment opportunities as a means to promote upward social mobility, and upgrading its Net Zero strategy in pursuance of the Science Based Targets initiative (SBTi) Net Zero Standard.

Link has begun liaising with non-government organisations, tenants and service partners to start the local employment hiring. The local employment partnership will provide target groups with necessary training and job tailoring, which helps enhance their quality of life by reducing their travel time and costs.

According to the loan agreement, the SLL incorporates interest rate reductions linked to predetermined sustainability performance targets, which will allow Link to enjoy savings in borrowing costs as it achieves these targets through its portfolio in Hong Kong and Mainland China.

The SLL facility consists of four tranches, including a 4-year $3 billion revolving credit and $3 billion term loan, as well as a 5-year $3 billion revolving credit and $3 billion term loan. It received an overwhelming response from market, having attracted eight leading international, regional and local banks joining as MLABs and joined by another eight banks as participants. The Hongkong and Shanghai Banking Corporation Limited acted as the sustainability advisor of the facility. The proceeds of the loan will be used as general working capital and for corporate funding purposes of Link.

George Hongchoy, Link’s Chief Executive Officer, said, “The SLL is governed by Link’s new Sustainable Finance Framework (SFF), which requires all our sustainability-linked finance transactions to include at a minimum, one target under each of the ESG aspects. As our Vision 2025 sets out ambitious medium-term goals that comprehensively address ESG impacts on sustainability across all our operations, sustainability-linked financing is the natural step to ensure that ongoing investment in sustainability initiatives helps us to extend our track record of strong ESG performance2.”

Jonathan Drew, Managing Director for ESG Solutions, Global Banking of HSBC said: “Sustainability-linked loans are an effective way to incentivise positive change and to further align a company’s financing strategy with its sustainability goals. Link has set out ambitious and comprehensive targets covering ESG impacts in its updated SFF, as it continues its leadership in the development of Hong Kong’s green and sustainable finance markets.”

Ahead of the transaction, Link has updated its Green Finance Framework and published Hong Kong’s first-of-its-kind SFF that covers all ESG attributes in February 2022. The SFF builds on Link’s “Business as Mutual” mindset by stipulating, as standard, collaboration with stakeholders throughout its value chain – including tenants, contractors, NGOs and other business partners – to create system-wide positive impact for the community. The SFF has received dual Second Party Opinions from HKQAA and S&P Global.

Note:
1. Mandated Lead Arrangers and Bookrunners include Bank of China (Hong Kong) Limited, DBS Bank Ltd., Industrial and Commercial Bank of China (Asia) Limited, Oversea-Chinese Banking Corporation Limited, Bank of America, N.A. Hong Kong Branch, Bank of Communications (Hong Kong) Limited, CMB Wing Lung Bank Limited and HSBC.

2. Highlights of Link’s strong ESG performance such as third-party evaluations and ratings for the year 2021 and 2022 to-date include:

  • Retention of the “Green Star” rating for the tenth consecutive year and the highest “A” ranking in Public Disclosure for the second consecutive year from GRESB, an investor-led organisation that provides actionable and transparent ESG data to financial markets
  • MSCI ESG Rating of “A” for 2021/2022
  • ESG evaluation score of 73/100, on par with global best practices, from S&P Global Ratings ESG Evaluation
  • Continued improvement in 2021, as a constituent of the Dow Jones Sustainability Asia Pacific Index (DJSI Asia Pacific) since 2013
  • Continued improvement in 2021, as a constituent of the FTSE4Good Index series since 2013
  • Achievement of “AA–” grading for 2021/2022, as a constituent of the Hang Seng Corporate Sustainability Index Series since 2015
  • Classification as “Low Risk” by Sustainalytics in the 2021/2022 ESG Risk Ratings, indicating a low risk of experiencing material financial impact due to ESG related factors

 

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About Link

Link Real Estate Investment Trust (Hong Kong stock code: 823), managed by Link Asset Management Limited, is a leading retail-focused REIT in the world. Listed in 2005 as the first REIT in Hong Kong, Link has been 100% held by public and institutional investors and is a Hang Seng Index constituent stock. From its home in Hong Kong, Link owns and manages a diversified portfolio including retail facilities, car parks, offices and logistics assets spanning China’s Greater Bay Area (Hong Kong, Guangzhou and Shenzhen), Beijing and Shanghai, the UK’s London and Australia’s Sydney. Link seeks to extend its portfolio growth trajectory and grasp expansion opportunities in different markets in pursuit of its medium-term target Vision 2025.

For details, please visit https://www.linkreit.com.

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