Keppel Land has signed its first sustainability-linked loan from DBS Bank on June 1. The $150 million facility references the Singapore Overnight Rate Average (SORA), making it the first such loan for the group.
The loan follows Keppel Land’s first green loan facility of RMB850 million ($176.4 million) secured in 2019 for the development of Seasons City (Phase 1) in the Sino-Singapore Tianjin Eco-City in China.
The facility’s interest rate comprises a compounded daily SORA rate calculated in arrears and an applicable margin. The loan also incorporates interest rate reductions linked to pre-determined environmental, social and governance (ESG) targets such as Keppel Land achieving a five-star rating in the 2021 Global Real Estate Sustainability Benchmark (GRESB) real estate assessment.
The proceeds of the loan will be used for general corporate purposes including the refinancing of maturing debt, capital expenditure for new development projects, as well as land and property acquisitions.
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“In line with Keppel’s Vision 2030, Keppel Land places sustainability at the core of our strategy. This goes beyond the development and management of low-carbon, resource-efficient buildings, but also extends to the strengthening of our green funding sources,” says Tan Boon Ping, CFO of Keppel Land.
“We are pleased to secure our first sustainability-linked loan from DBS Bank. This will support us in our continuous efforts to drive ESG improvements, as we deliver Keppel Land’s vision to be a leader in redefining urban spaces for a sustainable future,” she adds.
“With conversations around a low-carbon economy fast gaining traction, we have observed a keen interest within the real estate sector for more sustainable financing instruments. We are pleased to walk alongside Keppel Land as it forges ahead with its sustainability journey by issuing its maiden sustainability-linked loan,” says Lim Wee Seng, head of energy, chemicals and infrastructure at DBS Bank.
“As a purpose-driven bank, we are committed to supporting progressive companies such as Keppel Land advance their ESG agendas for a more sustainable future. We are also delighted to support Keppel Land in closing their first SORA-based loan. By adopting SORA for this landmark facility, Keppel Land will be well-positioned as Singapore shifts toward the mainstream adoption of SORA as the new interest rate benchmark in the cash and derivatives market,” he adds.
Shares in Keppel Corporation closed 5 cents higher or 0.9% up at $5.38 on June 1.
