The International Finance Corporation (IFC) has invested in a sustainability-linked bond in the hospitality sector globally for CapitaLand Ascott Trust (CLAS).
IFC is the sole subscriber for the JPY16.5 billion or about S$157.4 million sustainability-linked bond. The seven-year bond will mature in November 2029.
The sustainability-linked bond is being issued as part of CLAS’ S$2-billion Multicurrency Debt Issuance Program with a fixed coupon rate of 1.05 percent per annum and is paid semi-annually in arrears.
“We are delighted to support CapitaLand Ascott Trust, Asia-Pacific’s largest lodging trust, in its efforts to help address the climate crisis in the region through IFC’s first sustainability-linked bond in the hospitality sector,” Kim-See Lim, IFC’s Regional Director for East Asia and the Pacific, said.
“Our investment will support the decarbonization of a portfolio of energy-intensive buildings, while also ensuring that the energy reduction is specifically aligned with Net Zero targets,” Lim added.
IFC said the proceeds from the bond will be used to refinance CLAS’ existing borrowings and to further decarbonize three of CLAS’ serviced residences in Southeast Asia, namely Ascott Jakarta in Indonesia as well as Ascott Makati and Somerset Millennium Makati in the Philippines.
The three serviced residences are expected to achieve a 40.5-percent reduction in electricity consumption by December 31, 2028. The projects must also obtain IFC’s Excellence in Design for Greater Efficiencies (EDGE) certification within the same timeframe.
IFC said the electricity consumption reduction target is aligned with the targets set out under the CapitaLand 2030 Sustainability Master Plan.
The Master Plan outlines the Group’s efforts to accelerate its transition to a low-carbon business, improve water conservation and resilience, and to enable a circular economy.
“To date, CLAS has raised about S$450 million through sustainable financing. CLAS continues to collaborate with like-minded stakeholders in the financing and investment community to fight climate change through our collective efforts,” CapitaLand Ascott Trust Management Limited and CapitaLand Ascott Business Trust Management Pte. Ltd. (the Managers of CLAS) CEO Serena Teo said.
“Currently, 35 percent of CLAS’ portfolio is green-certified and we remain on track to green 50 percent of our portfolio by 2025 and our entire portfolio by 2030,” Teo added.
IFC said CLAS issued its first sustainability-linked bond of S$200 million under its newly established Sustainability-Linked Finance Framework in April 2022.
CLAS is the first hospitality trust globally to issue a sustainability-linked bond and is also the first listed real estate trust in Singapore to issue a sustainability-linked bond.
The bond was well-received by investors and was about 2.2 times oversubscribed. CLAS has achieved several firsts as part of its global sustainability drive, further consolidating its reputation as a leader in sustainability in the hospitality sector.
In 2018, CLAS’ sponsor, The Ascott Limited (Ascott) partnered with IFC to pioneer a green certification for serviced residences, as part of IFC’s EDGE framework.
The new international green benchmark for serviced residences paves the way for more serviced residences to achieve an accredited and well-recognized green certification.
Ascott’s partnership with IFC also includes an exchange of knowledge and research on sustainable design of serviced residences in developing regions such as Asia-Pacific, Indochina, and Africa.
An innovation of IFC, the EDGE certification empowers emerging markets to scale up resource-efficient buildings in a fast, easy, and affordable way.
It enables developers and builders to quickly identify the most cost-effective strategies to reduce energy use, water use and embodied energy in materials.
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