OUE Real Estate Investment Trust : TS0U 0% (Reit) has completed an interest rate swap with a set of voluntary carbon credits, through a transaction with OCBC, said the Reit’s manager, OUE Reit Management, on Monday (May 27).
OUE Reit Management said the S$75 million structured derivative transaction enables the Reit to hedge against interest rate risk. It is the first transaction of its kind completed by OUE Reit.
As part of the transaction, OUE Reit received a fixed amount of voluntary carbon credits sourced by OCBC’s emissions trading desk.
These voluntary carbon credits will be used to invest in a carbon reduction nature-based project in South-east Asia, said the manager. The project has been certified by Verified Carbon Standard Programme, a greenhouse gas crediting programme administered by non-profit organisation Verra, which manages standards for sustainable development, climate action and responsible business practices.
OUE Reit Management said the carbon credits will be used to offset OUE Reit’s residual emissions.
Han Khim Siew, chief executive of the manager, said that more than 92.5 per cent of OUE Reit’s assets are in Singapore, where renewable energy capacity is limited, which makes it challenging for the Reit to eliminate its greenhouse gas emissions in the short term.
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“The interest rate swap with voluntary carbon credits feature offered by OCBC allows us to leverage on high-integrity carbon credits that adhere to the United Nations and industry leading standards during our decarbonisation journey,” he said.
OCBC head of global markets Kenneth Lai said: “We are seeing demand from our corporate customers for sustainability-themed products and our goal is to help them achieve their sustainability targets with innovative bespoke solutions.”
Units of OUE Reit closed 3.8 per cent or S$0.01 higher at S$0.275 on Monday, before the announcement.
