OUE Reit obtains S$600 million unsecured sustainability-linked loan

OUE Real Estate Investment Trust : TS0U 0% (Reit) has obtained an unsecured sustainability-linked loan of S$600 million.

The proceeds will be used for the Reit’s early refinancing of S$540 million existing secured borrowings due in 2025 and for general corporate purposes, said its manager in a bourse filing on Tuesday (Apr 23).

OCBC was the sole mandated lead arranger and bookrunner, as well as the sustainability coordinator for the transaction.

This facility marks OUE Reit’s first sustainability-linked loan tied to its recalibrated sustainability performance targets announced on Feb 29. These new targets replace its previous goal, which was based on energy intensity, with a more ambitious aim of achieving a 40 per cent reduction in absolute greenhouse gas emissions for its commercial properties from the level in FY2023.

With the new facility in place, the Reit will have no further refinancing requirements until the second half of 2025. The average term of debt as at Dec 31, 2023 is expected to lengthen to 3.1 years, with the weighted average cost of debt to remain largely stable, on a pro forma basis.

Additionally, the proportion of unsecured debt is expected to increase significantly to 86.7 per cent post-refinancing.

“The increase in the proportion of unsecured debt enhances OUE Reit’s access to more diverse and competitive sources of funding while keeping borrowing costs stable,” noted Han Khim Siew, chief executive of the Reit’s manager.

“We will continue to leverage on our investment-grade credit rating and strengthened relationships with our bankers to enhance our capital structure for the benefit of all unitholders,” he added.

OUE Reit units closed on Tuesday at S$0.27 before the announcement, up S$0.01 or 3.9 per cent.