The manager of Frasers Centrepoint Trust J69U (FCT) has partnered with Oversea-Chinese Banking Corporation (OCBC) on Singapore’s first green financing solution that comprises a green loan and carbon credits, announced the companies on July 6.
Proceeds from the $419 million green loan will be used to refinance a maturing facility, says FCT, along with asset enhancement initiatives, decarbonisation projects like procuring energy-efficient technology for Tampines 1 shopping mall and other general corporate purposes.
The carbon credits, sourced through OCBC O39 ’s Emissions Trading Desk, will go towards investing in carbon reduction nature-based projects certified by Verra or Gold Standard.
According to FCT, the amount of carbon reduced will be equivalent to the financed emissions associated with the green loan.
FCT will further purchase additional carbon credits to account for the residual and unavoidable Scope 1 and 2 as well as energy-related Scope 3 emissions of the mall’s carbon footprint.
Richard Ng, chief executive officer of manager Frasers Centrepoint Asset Management (FCAM), says this is in line with Frasers Property Group’s goal to be a net-zero carbon company by 2050. “We are pleased to collaborate with OCBC on this innovative green financing solution that enables us to make further progress in our sustainability journey, particularly as we tackle energy-related Scope 3 emissions, hand-in-hand with our tenants, shoppers and suppliers.”
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The manager of FCT says it is committed to the Science Based Targets initiative (SBTi) and will release science-based targets later this year.
What this means for OCBC
Real estate is one of six priority sectors OCBC identified in May, as part of its plan to reach net-zero financed emissions from its corporate and commercial banking lending portfolio by 2050.
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For real estate, OCBC’s targets are to bring alignment delta to equal or below 0% by 2030. During OCBC’s 2021 base year, the real estate sector of its portfolio performed 8% better than the reference scenario from the Carbon Risk Real Estate Monitor (CRREM).
Alignment delta is derived based on emissions intensity, which is expressed as a percentage to measure how far current figures differ from the reference pathway. At a May 16 media briefing, OCBC said the alignment delta method is relevant for sectors made up of varying asset types and activities, compared to a range of diverse underlying reference pathways.
Elaine Lam, head of global corporate banking at OCBC, says the new financing solution will pave the way for the bank to support green buildings, while directing more capital towards carbon credit generating projects. “Through working with FCT and its sponsor Frasers Property Group, we have also achieved a deeper understanding of the sustainability ambitions and needs of our real estate clients, which will allow us to support them better in future.”
About Tampines 1
The seven-storey Tampines 1 mall has a total net lettable area of 268,514 sq ft as at March 31. It is certified with the Building and Construction Authority (BCA) Green Mark GoldPLUS status.
The mall’s existing energy efficient features include a chiller plant system, motion sensors for lighting in staircases and toilets, rooftop greenery to improve energy efficiency of its chillers and carbon dioxide sensors to monitor indoor air quality level.
In addition, Frasers Property Group has installed charging points at designated electric and hybrid vehicle parking lots at Tampines 1.
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The sponsor will also install rooftop solar panels in 4Q2023 to supplement the mall’s energy use.
In 2024, sustainability initiatives will focus on enhancing efficiency throughout the mall through Air-Conditioning and Mechanical Ventilation (ACMV) airside optimisation. “The aim is to maintain the highest standards in line with ISO 14001 for resource and waste management and ISO 50001 for energy performance indicators,” says FCT’s manager.
Tampines 1 will join fellow FCT mall Century Square in Singapore’s first brownfield Distributed District Cooling (DDC) network, a pilot project involving 14 buildings that is scheduled to be operational by 1H2025.
According to a whitepaper by Temasek and SP Group, the entire DDC is projected to reduce energy consumption by 17% and carbon emissions by 18% cumulatively across all participating buildings.
Property groups turn green
Property groups have been attaching green attributes to their loans and assets as sustainability initiatives turn material with new reporting frameworks and guidelines.
On June 28, GuocoLand F17 secured a $974 million green club facility from DBS Bank, United Overseas Bank U11 (UOB), OCBC and Sumitomo Mitsui Banking Corporation to refinance the commercial component of Guoco Tower.
The loan was also raised under its new Green Finance Framework, which gives GuocoLand and its subsidiaries access to various fundraising options linked to “eligible green projects”.
Initiatives to enhance green building performance at Guoco Tower, for example, include improvements to the efficiency of its air-conditioning and mechanical ventilation system and upgrades to the building management system to better monitor the tower’s energy consumption, says GuocoLand.
As at 9.31am, units in Frasers Centrepoint Trust are trading 1 cent higher, or 0.46% up, at $2.17; while shares in OCBC are trading 6 cents lower, or 0.49% down, at $12.17.
