Our sustainable finance transactions, including use of proceeds transactions and sustainability-linked transactions are governed by our Sustainable Finance Framework, published in February 2022.  This framework has been developed in alignment with international market standards and best practices and serves as an update of our 2016 Green Bond Framework and 2019 Green Finance Framework.

Sustainability to Link means delicately balancing environmental, social, governance and prosperity considerations in a way that enables the organisation to grow responsibly. To align to this understanding, our new Sustainable Finance Framework requires all our future sustainability-linked finance transactions to include at a minimum, one target under each of the Environment, Social and Governance aspects. We are the first property company in Hong Kong with such requirement. We believe this ambitious new framework will support our organisation wide sustainability goals including our target to achieve net-zero emissions by 2035.

We continuously find ways to transition into a sustainable company.

In July 2016, Link REIT (Link) became the first Hong Kong business enterprise and the first property company in Asia, to issue a green bond, raising US$500 million at 2.875% fixed rate due 2026. This is one of the lowest rates ever achieved by a Hong Kong corporate.

Link’s Green Bond has been rated “A2” and “A” by Moody’s and S&P’s respectively. Our Green Bond issuance reinforces our commitment to our brand promise and enables us to continue creating value through building healthier, environmentally-friendly and low carbon buildings. We established a Green Bond Framework in 2016, which outlines how we select green projects and report on the use of proceeds.

In March 2019, Link became the first real estate sector worldwide and Hong Kong to issue a green convertible bonds due 2024, raising HK$4 billion at 1.6% p.a.. This is one of the lowest coupon rate achieved by Asian REITs.

The Bonds, which were allocated to a balanced mix of Asian and European investors, are convertible in the circumstances set out in their terms and conditions into Link’s new units at an initial conversion price of HK$109.39 per unit (subject to adjustments). The Bonds have received an “A” rating from S&P. The Bond issuance reinforces our commitment to enhance the long-term value of our portfolio with green efforts.  As a signatory of the Principles of Responsible Investment and member of the United Nations Environment Programme we are delighted to work with like-minded investors to promote and improve corporate sustainability performance as well as build thriving, low-carbon communities.

We have established a Green Finance Framework in 2019 to outline how we select green projects and report on the use of proceeds. The proceeds will be used to refinance or fund Link’s existing and future eligible green projects under its Green Finance Framework (2019) which has received second opinion by the Hong Kong Quality Assurance Agency.

Link’s Green Bond Framework (2016)

Use of Proceeds

The net proceeds of the issuance of Notes will be used to refinance or fund, in whole or in part, existing and future projects that are eligible as per the criteria specified below. 

Eligibility Criteria

In order for a project to be funded through the green bond proceeds, the project must meet one or more of the following eligibility criteria:

1. Any project for an existing or new building that has received, or expects to receive, certification according to the third party verified green building standards including a) BEAM Plus - Silver, Gold or Platinum; or b) LEED Silver, Gold or Platinum. Building project types can include:

  • Building developments and redevelopments
  • Renovations to existing buildings
  • Tenant improvements

2. Projects which result in achieving, based on third-party assessment, at least a 15% improvement in energy efficiency or, a NABERS (National Australian Built Environment Rating System) Shopping Centres rating equal to or greater than 3 or similar rating scheme to an equivalent rating level;

3. Projects such as those that reduce waste to landfill, improve water efficiency, promote adoption of low carbon transportation including electric vehicles, and improve climate change resilience.

Project Evaluation and Selection Process

The eligible green projects are selected by Link REIT’s sustainability team together with the treasury team in accordance with Link REIT’s Sustainability Framework, Green Initiatives and the eligibility criteria outlined above.

Management of Proceeds

As long as the Notes are outstanding, Link REIT’s internal records will show the allocation of the net proceeds of the Notes to existing and future eligible green projects. Pending the allocation of the net proceeds of the Notes to existing and new eligible green projects, the net proceeds will be used to repay amounts of outstanding debt. Link REIT will not hold any unallocated proceeds as cash; this is consistent with the cash management practices for REITs.

Link’s Green Bond Reporting (2016 Issuance)

Allocation Reporting

Throughout the Green Bond, Link REIT will make and keep readily available through Link REIT’s annual integrated report, and on this page of Link’s corporate sustainability website, up to date information on the allocation of the net proceeds, to be renewed annually until full allocation and as necessary thereafter in the event of new developments. This information will contain at a minimum:

  1. The list of eligible green project categories and amounts allocated to these categories;
  2. Balance amount of unallocated bond proceeds; and 
  3. A selection of project examples financed by the net proceeds of the Note.

By including this information in Link REIT’s annual integrated report, the allocation of net proceeds receives an external review by an independent third party. These projects are still ongoing. 

Allocation Site Allocation of Proceeds HK$ billion Project Update
Building development The Quayside 3.6 Received LEED platinum, BEAM Plus Platinum and WELL Gold certifications
Renovation to existing building T.O.P This is Our Place / 700 Nathan Road 0.1 Received BEAM Plus Good certification
Energy efficiency Portfolio-wide 0.1 Energy management projects including chiller replacement and lighting improvement
Total 3.8

Impact Reporting

Where feasible, Link REIT will include qualitative and (if reasonably practicable) quantitative environmental performance indicators on the eligible green projects. Link REIT will annually disclose impact reporting on our corporate sustainability website. Performance indicators may change from year to year and may include some of the following indicators:

  1. List of eligible buildings that received third-party verified green building certification; 
  2. Energy consumption reduced per square foot; 
  3. Greenhouse gas emissions reduced by an eligible green project; 
  4. Water consumption reduced; and
  5. Amount of waste sent to landfill reduced. 

Second Party Opinion of Link REIT’s Green Bond Framework (2016)
Framework Overview and Second Opinion by Sustainalytics
Download
Link’s Green Finance Framework (2019)

Use of Proceeds

An amount equal to the net proceeds of the issuance of Notes will be used to refinance or fund, in whole or in part, existing and future projects that are eligible per the criteria specified below.

Eligibility Criteria

In order for a project to be funded through the green bond proceeds, the project must meet one or more of the following eligibility criteria:

1. Any project for an existing or new building that has received, or expects to receive, certification according to third party verified green building standards including a)  BEAM Plus Silver, Gold or Platinum; or b) LEED Silver, Gold or Platinum, Building types can include:

  • Building developments and redevelopments
  • Renovations to existing buildings
  • Tenant improvements
  • Operations & Maintenance

2. Projects which result in achieving, based on third-party assessment, at least a 15% improvement in energy efficiency;

3. Projects, such as those that focus on Energy Efficiency, Pollution Prevention and Control, Sustainable Water Management and Wastewater Management, Clean Transportation or Renewable Energy to improve climate change resilience.

Project Selection Process

The eligible green projects are selected by Link REIT’s sustainability team together with the treasury teams in accordance with Link REIT’s Sustainability Framework, Green Projects and the eligibility criteria outlined above.

Management of Proceeds

As long as the Notes are outstanding, Link REIT’s internal records will show the allocation of an amount equal to the net proceeds of the Notes to existing and future eligible green projects. Pending the allocation of the net proceeds of the Notes to existing and new eligible green projects, the net proceeds will be used to repay amounts of outstanding debt. Link REIT will not hold any unallocated proceeds as cash; this is consistent with the cash management practices for REITS.

Link’s Green Finance Reporting (2019 Issuance)

Allocation Reporting

By including this information into Link REITS’s integrated audited annual report, the allocation of the net proceeds receives an external review from Link REIT’s auditors.

Allocation Site Allocation of Proceeds HK$ billion Project Update
Land acquisition premium and green building development costs The Quayside 3.99 Received LEED platinum, BEAM Plus Platinum and WELL Gold certifications
Solar PV installation Lok Fu Place, TKO Spot and Tai Yuen Commercial Centre 0.01 As of March 2021, 104MWh on-site renewable energy was generated from our first three sites
Energy efficiency Portfolio-wide 0.03 Energy management projects including chiller replacement and lighting improvement
Total 4.03

Impact Reporting

Where feasible, Link REIT will include qualitative and (if reasonably practicable) quantitative environmental performance indicators on these Eligible Green Projects.  Performance indicators may change from year to year and may include some of the following indicators:

  1. List of eligible buildings that received third party verified green building certification;
  2. Energy consumption reduced per square foot;
  3. Greenhouse gas emissions reduced by an eligible green project;
  4. Water consumption reduced; and
  5. Reduction in amount of waste sent to landfill.
  6. Progress made on SDGs

In the event Link REIT issues convertible bonds and the bond converts before allocation was completed, Link REIT will continue the commitment to allocate an amount equal to the net proceeds as soon as practicable but no later than the original maturity date of the convertible bond.

Link REIT has received proceeds in April 2019 and will allocate this year. 

1 Building Environmental Assessment Method (“BEAM Plus”)  is a voluntary, third party building certification process, developed in 2009 by BEAM Society Limited, providing an independently certified performance rating for a building in clearly defined terms. BEAM covers all types of new and existing buildings: residential, commercial, institutional, and industrial. It embraces and endorses exemplary practices in the planning, design, construction, commissioning, management and operation of buildings in the context of Hong Kong’s densely populated, predominantly high-rise cityscape. New buildings that are planned, designed, built and commissioned to the standards set under BEAM Plus for New Buildings are safe, healthy, comfortable and efficient buildings that sustain the quality of life and workplace productivity, whilst minimising the depletion of natural resources and reducing environmental loadings. Existing buildings managed and operated to the standards set under BEAM Plus for Existing Buildings can maintain high level performance over the life of the buildings. 

BEAM is owned and operated by BEAM Society Limited, an independent non-profit organisation whose membership is drawn from many professional and interest groups in Hong Kong’s building construction and real estate sectors. Following initial funding from The Real Estate Developers Association of Hong Kong (REDA), BEAM development is funded from assessment fees with voluntary support from the efforts of BEAM Society’s members and associates, and the professional supporting team.

2 Leadership in Energy and Environmental Design (“LEED”) is a voluntary, third party building certification process developed by the U.S. Green Building Council (“USGBC”), a non-profit organization. The USGBC developed the LEED certification process to (i) evaluate the environmental performance from a whole-building perspective over a building’s life cycle, (ii) provide a definitive standard for what constitutes a “green building,” (iii) enhance environmental awareness among architects and building contractors, and (iv) encourage the design and construction of energy-efficient, water-conserving buildings that use sustainable or green resources and materials.

Second Party Opinion of Link REIT’s Green Finance Framework (2019)
Framework Overview and Second Opinion by HKQAA

Download

We are pleased to adopt responsible financing practices and ensure the integration of sustainability best practices into our daily operations.

April 2021 - Arranged HK$500 million 5-year sustainability-linked loan

January 2021Converted £200 million 5-year loan to sustainability-linked loan

June 2020 - Arranged HK$1 billion 5-year sustainability-linked loan

May 2020 - Arranged HK$1 billion 5-year sustainability-linked loan

March 2020 - Arranged AUD 212 million 5-year sustainability-linked term loan

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