OUE Commercial REIT's OUE Downtown (Photo: REITsWeek)OUE Commercial REIT's OUE Downtown (Photo: REITsWeek)

OUE Commercial REIT (OUE C-REIT) has obtained a SGD540 million sustainability-linked loan.

The facility, which is the REIT’s first sustainability linked loan, was obtained from a consortium of five lenders including OCBC Bank.

It is also OUE C-REIT’s first loan which references the Singapore Overnight Rate Average (SORA).

The facility incorporates interest rate reductions linked to predetermined sustainability performance targets.

These targets include improving the energy and water efficiencies in relation to the commercial portfolio in Singapore and Shanghai.

This allows OUE C-REIT to enjoy savings in interest costs when the targets are achieved.

The proceeds of this sustainability-linked loan will be used to refinance existing borrowings and for general working capital requirements.

With the new facility in place, OUE C-REIT has no further refinancing requirements until December 2022 where only SGD163 million of debt is due for refinancing.

OUE C-REIT’s average term of debt is expected to lengthen from 2.9 years as at 30 June 2021 to 3.5 years on a pro forma basis, with the weighted average cost of debt remaining stable at 3.2% per annum.

All of the REIT’s commercial properties in Singapore and Shanghai have achieved green ratings.

OUE C-REIT was last done on the SGX at SGD0.455, which currently implies a distribution yield of 5.41% according to data on the Singapore REITs table.

By Shariffa Al-Habshee

Shariffa joined REITsWeek in 2017, and monitors Asia-Pacific REITs for the publication.