Ravi Chandran
Property owner of Waterway Point obtained their maiden $589 million green loan
Frasers Centrepoint Asset Management Ltd, the manager of Frasers Centrepoint Trust announced on 18 May that Sapphire Star Trust (“SST”), which owns Waterway Point has obtained its maiden S$589 million green loan. Frasers Centrepoint Trust (FCT) owns a 40% interest in Waterway Point.
The borrower of the Loan is FC Retail Trustee Pte. Ltd. (in its capacity as trustee-manager of SST). SST is a joint venture between FCT which owns 40%, Far East Organization which owns 40% and Sekisui House, Ltd. which owns 20%.
The Loan is a five-year SORA-based secured term loan and an uncommitted revolving loan facility arranged by Sumitomo Mitsui Banking Corporation Singapore Branch and United Overseas Bank Limited.
It is structured as a green loan based on the Green Loan Principles issued by the Loan Market Association, the Asia Pacific Loan Market Association, and the Loan Syndications & Trading Association. The Loan will be used to refinance existing borrowings, for working capital and general corporate funding requirements of SST in relation to Waterway Point.
Mr Richard Ng, Chief Executive Officer of FCAM, said, “FCT views sustainability as an integral part of its business strategy. As a testament of the Manager’s commitment to our sustainability objectives, we aim to finance the majority of FCT’s sustainable asset portfolio with green and sustainable financing by 2024.”
“This includes Waterway Point, which is managed by the Frasers Property Group and in which FCT has a 40% stake. With the completion of the green loan for Waterway Point, the proportion of green loans in FCT’s portfolio is now lifted to approximately 18%. We will continue to work with our partnering banks to achieve our sustainability goals.”
FCT’s share in this Loan is proportionate to its 40% interest in SST. The Loan will enjoy a reduction in margin on its second year, if Waterway Point retains its current Green Mark GoldPlus certification status issued by the Building and Construction Authority (BCA).
The composition of the Lenders and their respective roles is as follows:
| Mandated Lead Arrangers and Original Lenders | Sumitomo Mitsui Banking Corporation Singapore Branch and United Overseas Bank Limited. |
| Green Loan Coordinators | Sumitomo Mitsui Banking Corporation Singapore Branch and United Overseas Bank Limited. |
| Facility Agent | United Overseas Bank Limited. |
| Security Agent | Sumitomo Mitsui Banking Corporation Singapore Branch. |
Mr Paul Ho, chief mortgage officer at iCompareLoan, said, “SMEs usually cannot access green funds because they are unfamiliar with the framework and also don’t have the time to research the requirements. This prevents the, from shifting to greener business practices. Experienced loan specialists can help them here.”
Green loans are aimed at advancing environmental sustainability and until quite recently came under the umbrella of Green Bond Principles.
They now have their own guidelines known as Green Loan Principles (GLP). The green loan market aims to facilitate and support environmentally sustainable economic activity. GLP have been developed by an experienced working party, consisting of representatives from leading financial institutions active in the syndicated loan market, with a view to promoting the development and integrity of the green loan product.
The green loan market aims to facilitate and support environmentally sustainable economic activity. The GLP have been developed by an experienced working party, consisting of representatives from leading financial institutions active in the syndicated loan market, with a view to promoting the development and integrity of the green loan product.
Their aim is to create a high-level framework of market standards and guidelines, providing a consistent methodology for use across the green loan market, whilst allowing the loan product to retain its flexibility, and preserving the integrity of the green loan market while it develops.
The GLP comprise voluntary recommended guidelines, to be applied by market participants on a deal-by-deal basis depending on the underlying characteristics of the transaction, that seek to promote integrity in the development of the green loan market by clarifying the instances in which a loan may be categorised as “green”.
The need for SMEs to shift towards more sustainable operations is critical if Singapore is to achieve a wider societal shift, given the 220,000 companies make the lion share of corporate Singapore.
Businesses – both large and small – are waking up to the significance that sustainability will play in their business models. HSBC’s Navigator survey of 2019, including the views of 200 Singapore firms, of which half are SMEs, revealed that 64% of Singaporean companies believe they have a role to play in delivering the UN’s Sustainable Development Goals.
Moreover, looking ahead, respondents claimed they are struggling to find the time and funding needed to advance their sustainability agendas, looking to governments and regulators for support.
Li Lian Ng, Head of Business Banking, HSBC Singapore, said: “Singapore is an internationally recognised hub for green finance, underpinned by the development of market-leading frameworks and incentives. By utilising these well-developed certifications, we are drawing on the best of Singapore’s sustainability credentials to plug the financial gap felt by SMEs who want to start on a green transition.”
Ms Ng continued: “Green finance has been the preserve of large companies, yet SMEs want to play their own role; accessibility and simplicity are key to supporting them in opening the green finance door.”
“Achieving critical mass requires three things: a common understanding of what is green, comparable and verified information on the risks and opportunities this presents to borrowers and lenders, and the ability to make informed decisions based on such data. Drawing on Singapore’s established set of accreditations, this Loan is a starting block providing consistency and accessibility for SMEs to begin their shift to a sustainable future.”
