OUE Commercial REIT has obtained an unsecured sustainability-linked loan totalling $978 million from a consortium of to refinance existing debt.
The loan was oversubscribed by 1.26 times with interest from 19 banks.
The loan was syndicated by a consortium of four lead arrangers and bookrunners – CIMB Bank Singapore, Maybank Singapore, OCBC Bank and Standard Chartered Bank.
OCBC Bank is the “sustainability advisor” for the transaction.
With this new facility in place, OUE C-REIT would have no further refinancing requirements until September 2023, where only $291 million of debt is due.
With the refinancing, the average term of debt as at June 30 will lengthen to 3.2 years on a pro forma basis, with the weighted average cost of debt expected to remain largely stable.
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The proportion of OUE C-REIT’s unsecured debt will also increase from 30.9% to 70.2% on a pro forma basis.
“We are pleased to have secured OUE Commercial REIT’s second sustainability-linked loan and the largest extended to any S-REIT to date,” says Han Khim Siew, CEO of OUE C-REIT’s manager.
“Significantly increasing the proportion of unsecured debt is an important step in our prudent and proactive capital management strategy which will enhance OUE Commercial REIT’s access to more diverse and competitive funding sources while keeping borrowing costs stable,” he adds.
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Sustainability-linked loans now account for 58% of OUE Commercial REIT’s total debt.
According to OUE C-REIT, its sustainability-linked loans incorporate interest rate reductions linked to predetermined sustainability performance targets which are aligned with its commitment to reduce the environmental impact of its portfolio.
OUE C-REIT gets to enjoy savings in interest costs when the targets in water and energy are achieved.
The REIT owns assets such as the Hilton Singapore Orchard and OUE Bayfront Tower.
OUE C-REIT closed at 38 cents on Aug 17.
