Charter Hall secures $500m sustainability-linked loan

Photo: Note Viriyarat (Copyright Australian Property Journal)
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CHARTER Hall is funding a $500 million sustainability-linked loan for the Charter Hall Office Trust (CHOT), as part of the group’s new Green Financing Framework.

This latest financing brings Charter Hall’s sustainable deals total to in excess of $700 million, with this transaction being the largest sustainability-linked loan (SLL) so far.

“This transaction further demonstrates our commitment to embedding ESG objectives into every aspect of our business,” said Carmel Hourigan, CEO of Charter Hall.

The seven year facility is directly linked to CHOT’s performance as related to sustainability performance targets and independent sustainability reporting standards.

“This is an outstanding outcome for CHOT and reflects investor demand for high quality assets that deliver environmental and social value, alongside financial outcomes to our Funds and broader business,” added Hourigan.

MUFG Bank and Sumitomo Mitsui Banking Corporation (SMBC) syndicated the loan, with the former also acting as ESG structuring coordinator.

“MUFG is committed to helping our clients on their ESG and decarbonisation journeys and we have a target to arrange JPY35 trillion (approximately AUD 400 billion) in sustainable finance globally by 2030,” said Drew Riethmuller, head of global corporate and investment banking at MUFG Bank Oceania.

Back in September, Charter Hall was announced as the recipient of Australia’s first green development loan, with the Commonwealth Bank signing on as the sole financier and green coordinator on Charter Hall’s $410 million 480 Swan Street.

“SMBC is committed to financing the carbon transition with JPY30 Trillion (approximately AUD 360 Billion) of green financing to be executed between 2020 and 2029. Even as SMBC Group’s operations will be carbon neutral by 2030, we are working with key customers to also make our loan and investment portfolio carbon neutral by 2050,” said Rajeev Kannan, head of corporate banking at SMBC, Asia Pacific.

Sustainalytics also weighed in, offering a second party view and confirming that the KPIs set out in the loan are sufficient in meeting the five core components of Sustainability Linked Loan Principles 2021.

The KPIs will be measured against the NABERS and Green Star Rating tools.

CHOT has to date reduced its carbon intensity by 23.5%, reflecting Charter Hall’s platform-wide commitment to sustainability, with the group targeting net zero emissions in operation by 2030.