This article is from the Australian Property Journal archive
AUSTRALIA’S largest owner and operator of purpose-built student accommodation (PBSA), Scape, has converted a $1.4 billion loan into a sustainability-linked loan (SLL), in what is believed to be the first and largest for the country’s PBSA sector.
In signing the SLL and pledging to switch to renewable electricity and pursue Green Star Performance ratings across its operating portfolio, Scape is incentivised to achieve a potential interest-rate reduction of up to five basis points against the finance borrowed, provided the agreed sustainability outcomes can be met, it said.
The loan agreement has been struck five months after Scape secured backing from Dutch pension provider APG and compatriot property fund manager Bouwinvest for its $1.5 billion build-to-rent fund.
Scape’s chief financial officer, Tim Peel, said its 27 core PBSA program assets across Sydney, Melbourne, Brisbane and Adelaide would be bound by the SLL targets, accounting for more than 80% of the operational portfolio.
“SLLs and similar sustainable finance instruments are relatively new to the Australian property sector so it is significant that Scape is undertaking this SLL, as a demonstration of the maturity of the PBSA sector as a critical component of the ‘alternative’ real assets category,” he said.
Peel referenced Australia’s Global Real Estate Sustainability Benchmark (GRESB) results since inception as evidence of the country’s status as a global leader in sustainable real estate.
“Scape is now demonstrating this level of global leadership in the residential space, which has historically lagged behind the commercial office market leadership position,” he said.
Scape’s which has a vision to be the “Earth’s Best Living Company”, a certain proportion of the proceeds of its SLL will go towards achieving its ESG objectives across all 27 of its operating core fund assets.
Scape’s range of ESG objectives will include aimed improved health and wellbeing outcomes for Scape residents, lower carbon emissions, minimised waste, improved recycling and circular economy initiatives, and accommodation scholarships for people in need.
It is aiming for 100% renewable electricity or equivalent large-scale generation certificates across all 27 core program assets, abd Green Star performance certification for all 27 assets.
Commonwealth Bank of Australia (CBA) served as joint sustainability coordinator and one of 12 lenders to the SLL. ANZ is another of the 12 SLL lenders, also acting as sustainability coordinator. In April this year, ANZ launched a new target to fund and facilitate at least $100 billion by the end of 2030 towards improving social and environmental outcomes through customer activities and direct investments by ANZ.
“This is a landmark SLL for the PBSA sector, which helps set a new industry standard, supporting ongoing development of sustainable student accommodation,” said ANZ’s head of sustainable finance, Katharine Tapley.
Deborah Leerhsen, executive general manager for global institutional banking coverage at CBA said, “With this SLL, Scape is embedding its ambitious sustainability strategy in its financing by tying the cost of funds to achieving targets for renewable energy procurement and Green Star building performance ratings – two areas that align with its mission to provide students with quality, purpose-built and purpose-driven accommodation”.
