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Ascott Residence Trust issues $200 mil sustainability-linked bond

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The newly opened lyf one-north Singapore, a coliving property owned by ART with a Green Mark GoldPLUS rating by the Building and Construction Authority of Singapore (Credit: Ascott Residence Trust)

SINGAPORE (EDGEPROP) - Ascott Residence Trust (ART) has issued a $200 million sustainability-linked bond, making it the first Singapore-listed real estate trust and the first hospitality trust globally to issue such a bond.

See also: Ascott opens co-living property in one-north

The bond was issued under ART's $2 billion Multicurrency Debt Issuance Programme under its newly-established Sustainability-Linked Finance Framework. The five-year bond will mature in April 2027 and carry a fixed coupon rate of 3.63% per annum, paid semi-annually in arrears.

In an April 20 press release, ART says the deal was oversubscribed by 2.2 times on the back of strong demand, resulting in the bond issue being upsized from $150 million to $200 million. The final orderbook closed at $335 million with orders from across 47 accounts. In terms of investor allocation, 79% of the bond issuance went to institutional investors, while private banking investors accounted for 21%.

Proceeds from the bond issuance will be used to refinance ART's existing borrowings. DBS Bank is the sole sustainable finance adviser, lead manager and bookrunner for the transaction.

According to ART, the issuance of the sustainability-linked bond has netted the trust a green premium, or "greemium", which refers to the lower cost of funding from issuing debt that has a positive environmental impact as compared to traditional bonds. ART has also committed to a sustainability performance target of greening 50% of its total portfolio by 2025. To achieve this, the properties must attain a regionally, nationally or internationally recognised green building standard or certification by a recognised third-party.

“Sustainability is core to everything we do at ART. Aligning our financing needs with our sustainability efforts to build a greener portfolio demonstrates ART’s focus on responsible growth,” says Beh Siew Kim, CEO of ART. “As of 31 Dec 2021, 33% of ART’s portfolio is green-certified and we target to green the rest of our portfolio by 2030."

Last year, ART secured the first hospitality trust green loan in Singapore, which was used to finance its maiden development project - lyf one-north, a co-living property certified with Green Mark GoldPLUS by the Building and Construction Authority of Singapore.

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