ARA Asset Management (Fortune) Limited, the manager of Fortune Real Estate Investment Trust (Fortune REIT), on July 15 announced that it has secured a five-year sustainability-linked loan amounting to HK$1.5 billion (US$193 million) from OCBC Bank – the sole lender and sustainability adviser for the facility. The loan is the latest sustainable financing for Fortune REIT, reinforcing its commitment in integrating sustainability into its operations.
The loan will be used to refinance Fortune REIT’s existing club facility and for general corporate funding purpose. The interest margins of the loan facility are tied up to a set of pre-determined environmental, social and governance (ESG) targets, including reduction in electricity consumption, greenhouse gas emissions and waste reduction in its properties.
The annual performance of these ESG metrics will be assessed by an external independent party, where Fortune REIT will be entitled to interest rate savings for the loan when the pre-determined ESG targets are achieved.
Commenting on the deal, which is Fortune REIT’s second green financing initiative, ARA Asset Management CEO Justina Chiu says the sustainability-linked credit facilities reflect the depth of the company’s commitment to advancing Fortune REIT’s ESG goals. “By tying our environmental metrics to our financial performance, we aim to achieve positive sustainable impact in our business while showing our support in the development of sustainable capital markets in Hong Kong,” she adds.
OCBC Bank regional general manager for North Asia Tan Wing Ming says the bank will continue to work with its stakeholders to proactively encourage more sustainable transactions.
Sustainable financing is a key tenet of OCBC Bank’s strategy. Having achieved its original sustainable finance portfolio target of S$10 billion (US$7.40 billion) in the first quarter of 2020 – two years ahead of schedule – the bank has set a new ambitious target of S$25 billion by 2025.
Fortune REIT secured its first sustainability-linked loan in October 2020 from DBS amounting to HK$1 billion for five years. The company was likewise eligible, under the facility, to interest rate savings upon achieving pre-determined ESG targets.
Established in 2003, Fortune REIT currently holds a portfolio of 16 private housing estate retail properties in Hong Kong, comprising of three million sq ft of retail space and 2,713 car parking spaces. They house tenants from diverse trade sectors such as supermarkets, food and beverage outlets, banks, real estate agencies and education providers.