Abu Dhabi-based property development company, Aldar Properties has secured an $81.6 million loan from the British multinational investment bank, HSBC, whose interest margin is linked to the developer meeting sustainability goals.
The agreement signed between Aldar and HSBC makes Abu Dhabi’s property developer the first real estate firm in the Middle East and North Africa (MENA) region to enter into this type of financing.
The innovative five-year term sustainability-linked loan includes a mechanism to adjust Aldar’s interest margin annually in line with the achievement of targets on energy and water intensity, waste recycling and worker welfare. If it does not reach agreed annual targets, then Aldar will invest a fixed amount in one or more qualifying environmental, social and governance (ESG) projects.
“Aldar is deeply committed to its sustainability strategy. We’re proud to be issuing our first sustainability-linked loan that reflects how integrated sustainability is within our operations and in particular our best-in-class treasury function. Our financial stakeholders are increasingly factoring sustainability assessments into their portfolio strategies. At Aldar, we believe this shift in capital allocation is a positive force that creates a powerful incentive for companies to up their sustainability game to benefit from these capital flows. As a leader in our market, Aldar is ideally positioned to benefit from this trend.”
The transaction is structured in alignment with the Sustainability-Linked Loan Principles (SLLP) published by the Loan Market Association (LMA), Asia Pacific Loan Market Association (APLMA), and Loan Syndications & Trading Association (LSTA). The loan will be used for general corporate purposes like the roll-out of ESG initiatives across the group.
Mr. Mohammed Al Marzouqi, Head of Global Banking at HSBC UAE, said, “By securing the first LMA Sustainability Linked Loan Principles compliant facility in the real estate sector in the MENA region, Aldar not only demonstrates its commitment to addressing these relevant ESG issues in the sector but also sets an important precedent in the region.”
In 2020, Aldar initiated a sustainability strategy to ensure that the company positively impacts the economy, environment, people, and the communities in which it operates. The strategy is aligned to both national and international sustainability frameworks, including Vision 2021, Ghadan 21, the National Climate Change Plan, UAE Green Agenda and UN Sustainable Development Goals.
The key sustainability commitments of Aldar for this year are the introduction of a Sustainability Data Management System (SDMS). In its 2020 sustainability report, the company will also publish its first response in line with Task Force on Climate-related Financial Disclosures (TCFD) recommendations for best practice climate risk disclosures.
In addition, Aldar is prioritizing the development of an Energy Efficiency Plan to reduce energy consumption across 87 assets as well as a new Waste Management Plan.