Ascott Residence Trust is the first Hospitality Trust in the world to issue a S$200 million sustainability bond
Singapore-listed real estate trust’s first sustainability bond sees strong demand with 2.2x oversubscription
Singapore, 20 April 2022 – Ascott Residence Trust (ART) has issued its first S$200 million sustainability bond under its new sustainability-linked financing framework1. ART is the first hotel trust in the world to issue a sustainability bond. ART is also the first Singapore-listed property trust to issue a sustainability-linked bond.
ART’s sustainability bond is being issued under its S$2 billion multi-currency debt issuance program and proceeds from the bond issuance will be used to refinance ART’s existing borrowings. ART. With a fixed coupon rate of 3.63% per annum, paid semi-annually in arrears, the five-year sustainability bond will mature in April 2027.
ART has achieved “greenium”2 through the issuance of the sustainability bond and has committed to achieving a sustainable performance target (SPT) of greening 50% of its total portfolio by the end of 20253. Properties must meet a regional, national or internationally recognized green building standard or recognized third party certification by the SPT4 compliance date.
The operation met with strong demand from institutional investors and was oversubscribed approximately 2.2 times. The bond issue was eventually increased from S$150 million to S$200 million, and the final order book closed at S$335 million with orders coming from 47 accounts. In terms of distribution to investors, 79% of the bond was allocated to institutional accounts and 21% to private bank accounts.
ART simultaneously entered into a cross-currency interest rate swap transaction to swap the Singapore dollar-denominated coupon payments of the bond into Japanese yen at a fixed interest rate of 1.043% per annum.
Ms. Beh Siew Kim, President and CEO of Ascott Residence Trust Management Limited and Ascott Business Trust Management Pte. ltd. (the directors of ART) said, “Sustainability is at the heart of everything we do at ART.
A global sustainability strategy focuses on improving energy efficiency through technological or engineering solutions, as well as increasing the use of renewable energy. Our efforts are also guided by a Sustainability Committee comprised of members of ART’s management team as well as technical service and operations experts. As of December 31, 2021, 33% of ART’s portfolio is certified green and we aim to green the rest of our portfolio by 2030. We continue to work with our operators and tenants to green our properties globally and contribute to environmental and social protection. well-being of the communities in which we operate.
ART’s Sustainability Finance Framework facilitates future issuance of sustainability bonds and loans linked to its environmental, social and governance (ESG) objectives, including certain United Nations Sustainable Development Goals . ART engaged Moody’s ESG
Solutions for providing a Second Party Opinion (SPO)5 on ART’s Sustainability Related Funding Framework. According to Moody’s ESG Solutions, “ART’s key performance indicators are clearly defined, measurable and demonstrate a robust level of ambition relative to its hospitality industry peers. Its sustainability-linked financing framework has clearly revealed its strategies to achieve its SPTs and is credible. »
Fitch Ratings had assigned a long-term issuer default rating of “BBB-”, with a stable outlook to ART. The rating reflects the growing diversification of ART’s real estate portfolio into longer-term assets, such as student residences and rental accommodation, in the medium term. This improves its business risk profile and bolsters revenue stability as global travel demand gradually recovers. ART remains resilient thanks to a good diversification of the portfolio between asset classes and geographical areas. ART’s sustainability bond is also rated “BBB-” by Fitch. DBS Bank Ltd. is the only sustainable finance advisor, lead arranger and bookrunner for the transaction.
ART’s achievements and commitment to sustainable development
ART aligns with and actively contributes to the goals set out in CapitaLand’s 2030 Sustainability Master Plan. The strategic plan outlines the Group’s efforts to build a resilient and resource-efficient property portfolio, enabling thriving and adaptable communities in the future, and accelerating sustainability innovation and collaboration. This includes working towards targets for reducing carbon emissions, energy and water consumption and waste generation, as well as increased use of renewable energy.
ART’s leadership in sustainability has been recognized by international benchmarks. In October 2021, ART was named “Global Sector Leader – Hotel” in the Global Real Estate Sustainability Benchmark (GRESB) and ranked first in Singapore’s Governance and Transparency Index in the REITs and Business Trusts category.
In January 2021, ART was the first hotel trust in Singapore to obtain a green loan. Proceeds from the loan were used to finance lyf one-north Singapore, ART’s first development project. The newly opened co-living property is equipped with green, energy efficient and smart building features and is Green Mark GoldPLUS certified by the Building and Construction Authority of Singapore.