Hong Kong property developer Sun Hung Kai Properties (SHKP) on November 11 signed its first sustainability-linked loan (SLL) facility with oversubscription from eight leading international and local banks, amounting to HK$8.65 billion (US$1.11 billion). The four-year club loan, the largest for the real estate sector in Hong Kong, reaffirms the group’s commitment to sustainability in pursuing long-term growth.

The credit facility received an overwhelming response from banks, with the loan size having increased significantly from an initial amount of HK$3 billion, manifesting the banking community’s strong support for the group’s sustainability initiatives.

The facility was signed by Sun Hung Kai Properties (Financial Services), with SHKP as the parent company providing a guarantee. It has a 30:70 split between a term loan and revolving credit tranches. The proceeds will be used for general working capital and to fund ongoing sustainability initiatives.

SHKP has been incorporating elements of green and wellness in its operations to create sustainable value for its stakeholders. Apart from developing a number of certified green commercial landmarks in Hong Kong and in major mainland cities, the group strives for a balance between development and environmental conservation as evidenced by its residential developments, such as PARK YOHO and Wetland Seasons Park.

To help combat climate change, SHKP has established clear environmental targets and consistently reviews its completed properties for investment, looking for areas of environmental performance enhancements. The group is planning to install solar panels at its new buildings, where feasible, as well as promoting a wider use of electric vehicles in the community by installing more charging stations at its new developments. 

Bank of China (Hong Kong), DBS and HSBC were the sustainability advisers of the facility and advised SHKP on sustainability performance targets (SPTs). The facility is also backed by Mizuho Bank, MUFG Bank, Agricultural Bank of China, Sumitomo Mitsui Banking Corporation and Hang Seng Bank.

According to the loan agreement, SHKP is entitled to interest savings upon achieving a set of predetermined environmental, social and governance (ESG) targets. These SPTs include:

• Achieving annual reduction in electricity consumption intensity (ECI, measured in units of kWh/m2),
• Demonstrating continuous improvements in the S&P Global ESG Scores, and
• Retaining its status as a constituent member of the Hang Seng Corporate Sustainability Index with a designated rating.