A Green Loan Is Behind This Plush Singapore Tower in a Park

(Bloomberg) -- Asian property developers are delving deeper into green loans, as shown by a recent deal tied to a premium office tower in a Singapore park.

Singapore-based Frasers Property Ltd. raised a S$1.2 billion ($881 million) green loan, the first of its kind by a Southeast Asian borrower under principles set by Asia Pacific Loan Market Association in March that aim to standardize disclosure. The facility refinances existing loans tied to Frasers Tower, an energy efficient office with its own park and podium roof gardens.

Green and sustainability-linked loans are playing catchup to bond markets, as borrowers demand more channels for such financing amid a push to address pollution and congestion created by rapid urbanization. While critics of green finance have pointed to a lack of universal standards, measures like the APLMA’s guidelines aim to increase transparency on the use of proceeds and on the environmental impact of projects.

“There are strong returns for banks to get into sectors like green buildings and renewable energy as they are showing very strong financial performance,” said Jonathan Drew, Managing Director, Infrastructure and Real Estate Group, Global Banking Asia-Pacific at HSBC Holdings Plc.

Singapore’s Ho Bee Land Ltd. in August signed a 200 million pound ($264 million) green bridge loan for the acquisition of Ropemaker Place commercial building in London. Hong Kong real estate firm New World Development in March raised a HK$3.6 billion ($461 million) maiden green loan for a commercial re-development project.

"In Hong Kong, we increasingly see property firms that are developing green buildings based on the expectations of tenants, financiers and the community to develop projects that provide higher level of energy efficiency," said Drew, one of the lenders for New World transaction and the green structuring adviser for Ho Bee Land deal.

Asian borrowers outside of real estate have also been adopting green and sustainability-link loans. Hong Kong’s Leo Paper Group this month signed a HK$350 million loan for environmental projects in China. Singapore’s Wilmar International Ltd. this year has raised two separate credit facilities where the interest rate will be reduced based on sustainability targets achieved. Sydney-based Macquarie Group Ltd. in June raised 2 billion pound loan, with tranches to financing renewable energy-efficient projects and buildings.

--With assistance from Annie Lee.

To contact the reporters on this story: Mariko Ishikawa in Sydney at mishikawa9@bloomberg.net;Carol Zhong in Hong Kong at yzhong71@bloomberg.net

To contact the editors responsible for this story: Andrew Monahan at amonahan@bloomberg.net;Neha D'silva at ndsilva1@bloomberg.net

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