Charter Hall boosts sustainability finance

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PROPERTY fund manager Charter Hall has secured a further $1 billion in sustainability-linked loans, taking total sustainable finance transactions across the group for $2.4 billion.

The new facilities were completed by the Charter Hall Office Trust (CHOT) under its newly established sustainability linked loan framework, coordinated by Commonwealth Bank of Australia and Westpac, with ANZ, Bank of China and Credit Agricole Corporate and Investment Bank also acting as sustainability coordinators for the transactions.

The facilities are linked to sustainability performance targets and internationally recognised independent sustainability reporting standards, delivering a financial benefit or cost to the Fund dependent on its performance against the key performance indicators laid out in the loan agreements. They are measured against the NABERS and Green Star rating tools.

Charter Hall late last year sourced a $500 million sustainability-linked loan for the CHOT as part of the group’s new Green Financing Framework.

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 office project in inner Melbourne.

Major property players are increasingly turning to green financing, including Brookfield and Investa, and Cbus Property has just secured its first two green development loans.

“Our sustainable finance offers another opportunity for the business to integrate ESG objectives throughout our operations to deliver long term, risk-adjusted returns for investors, and lower operational costs,” Charter Hall’s head of treasury and group planning, Phil Schretzmeyer said.

“These initiatives reflect how Charter Hall is meeting the increasing demand from tenant and investor customers for high quality assets with strong sustainability credentials.”

RICS research shows more than half of property industry participants believe that green and sustainable buildings achieve a rent and a price premium. More than one-third believe that the rent and price premium stands at up to 10%, and around 15% judge it to be higher still.

Charter Hall’s group head of ESG, Andrew Cole, said, “Australian real estate outperforms global ESG benchmarks, largely as a result of the strong uptake of voluntary and mandatory performance rating tools like Green Star and NABERS, which provide transparent and independent assessments.”

“As the Australian economy transitions to net zero carbon, Charter Hall understands that buildings have – and will continue to have – a critical role in driving low carbon outcomes, given buildings account for a quarter of Australia’s emissions and almost half of the country’s electricity use.”

A new roadmap from the Green Building Council of Australia launched last month outlines a path to decarbonised precincts across the country, targeting a net zero goal for 2030 for new precincts and 2050 for existing precincts.

For Charter Hall’s newest loans, a second party opinion has been provided by Sustainalytics, which found the KPIs to be in line with five core components of the sustainability-linked loan principles 2022.

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