Two of the largest sustainable finance deals in Australian REIT history occurred recently, with Charter Hall has closing a $3.35 billion Green Loan and QIC securing $3.75 billion in Sustainability-Linked Loans.
Green loans fund green projects, with guidance listing areas like renewable energy. Sustainability-linked loans support general purposes, with terms tied to meeting sustainability targets, offering benefits if achieved.
Charter Hall’s green loan was led by led by CBA, WBC, ANZ, HSBC and SMBC as Mandated Lead Arrangers, Underwriters and Bookrunners with the transaction being a part of a strategic capital management initiative for its $8.6 billion flagship office fund, Charter Hall Prime Office Fund.
This transaction grows Charter Hall’s platform-wide sustainable finance to more than $9 billion, 100 per cent of which is in the Office sector.
The QIC deal was for its two largest real estate funds – the QIC Property Fund (QPF) and the QIC Town Centre Fund (QTCF). ANZ, CBA, and MUFG acted as joint sustainability coordinators on the transaction.
These deals combined, form one of the largest REIT SLLs to come to market within Australia in recent years, with a broad range of targets across core retail assets in the two funds. The KPIs seek to address the Funds’ carbon emissions (across scopes 1, 2 and 3), and represent one of the first deals to utilise the Green Building Council of Australia’s new Green Star Performance Tool v2 (released in July 2024).
In addition, these SLLs will see QIC Real Estate targeting Cleaning Accountability Framework certification across both fund’s portfolios to promote industry-leading ethical labour practices.
“Sustainable finance is an effective and critically important tool to deliver sustainability goals in a commercially responsible way,” Deborah Coakley, Managing Director, QIC Real Estate said.
“These SLLs build on QIC Real Estate’s track record in sustainable finance, having issued a A$300m Climate Bond Initiative (CBI) certified Green Bond in 2019 for the QIC Town Centre Fund – a world-first for the retail property sector. QTCF has outperformed its targets under the Bond, which is due to be repaid in 2025.”
Fund Manager for the Charter Hall Prime Office Fund, Miriam Patterson, said the group has been able to secure financial covenants that provide “market-leading headroom”.
“It also allows us operational flexibility to continue our strategic portfolio curation, reducing the average age of the portfolio and capitalising on the bifurcation of tenant demand toward new state-of-the-art office accommodation.
“This includes the development of new premium grade towers, such as recently completed 60 King William, Wesley Place and 555 Collins Street assets, as well as the under-construction premium grade Chifley South in the Sydney CBD and 360 Queen Street in Brisbane. Our portfolio curation also enables us to maintain sector-leading portfolio WALE, with our track record of new developments being fully leased prior to or upon completion and achieving longer WALEs than other stabilised assets.”