Investa Commercial Property Fund (‘ICPF’ or ‘the Fund’) has announced a 10 year, A$100 million Australian dollar, Green Bond issuance, with a semi-annual, fixed coupon of 4.25% and a maturity of April 21, 2027.
The bonds are rated 'A-' by Standard & Poor’s (S&P) with proceeds to be used to retire existing debt facilities and will be fully allocated against a portfolio of low carbon buildings in ICPF's portfolio.
The issuance, which was oversubscribed, has been approved as a ‘Certified Climate Bond’ by the London-based Climate Bonds Initiative, an international, investor-oriented, not-for-profit organisation focused on mobilising the $100 trillion bond market towards climate change solutions. It is ICPF’s third borrowing in the Australian dollar MTN market and its fourth in debt capital markets, most recently closing a US$150 million US Private Placement in December 2016.
The Investa Office Management Platform ('IOM') which manages ICPF, has a strong track record in market leading, environmental performance management of office buildings, demonstrated most recently in its November 2016 announcement of a Net Zero Carbon Emissions target by 2040. In March this year, listed AREIT and IOM managed Investa Office Fund (IOF), also closed its first A$150 million Green Bond Issuance oversubscribed, the first green bond issued in the $A MTN market for an Australian REIT.
Commenting on the issuance, ICPF Fund Manager, Jason Leong said: "We’re very pleased with the strong level of interest received in the Fund’s first Green Bond issuance, which clearly demonstrates the underlying quality of the ICPF portfolio and confidence in Investa’s ongoing ability to deliver strong performance.
Diversifying our sources of debt with Green Bonds demonstrates our support for the growth of the green finance market, re-enforces our leadership position in corporate sustainability and reflects our long-term commitment to transitioning to a low carbon economy.”
Nina James, General Manager, Corporate Sustainability said: "The critical factor in ICPF’s Green Bond issuance is the use of the proceeds. Given Investa's carbon reduction strategy and leadership in sustainable office building management and re-positioning, we plan to apply ICPF's Green Bond proceeds to low carbon building projects that meet the criteria set out in the Climate Bonds Standard.
This is yet another way Investa is proactively responding to investor demand for low carbon economy investment opportunities, further strengthening our position as a fund of choice for those looking to invest responsibly."
Sean Kidney, CEO Climate Bonds Initiative said: “'Investa is meeting the highest of international standards for green property bonds with this certified bond. They are demonstrating to the Australian commercial property market where the best practice bar now sits."
Demand for the issuance was strong amongst both 'green' and general debt investors. Clean Energy Finance Corporation (CEFC), an existing equity investor in ICPF is a cornerstone investor, along with Australian Ethical Super.
Richard Lovell, debt markets lead at the CEFC said: “We were pleased to work with Investa on this transaction, which continues its strong leadership in clean energy innovation in the commercial property sector and the green bond market. The transaction represents a significant step for the Australian dollar green bond market with a 10 year tenor transaction. We expect to see the continued issuance of green bonds from high quality issuers across a range of sectors as key to developing the green bond investor base and the market as a whole.”
Phil Vernon, Managing Director of Australian Ethical Investment, said: “Investment in quality green bonds helps drive essential capital to the climate solutions and energy efficient infrastructure needed for the transition to a net-zero emissions world. Coupled with the underlying quality of the ICPF portfolio and the Fund’s performance, there was a compelling case for our investment in the ICPF Green Bond.”
The Fund’s portfolio of 14 office assets valued at more than $4.1 billion includes interests in some of Australia’s leading office buildings, including 420 George Street, Sydney, Deutsche Bank Place at 126 Phillip Street, Sydney and 567 Collins Street, Melbourne.
The transaction was jointly led by ANZ and CBA.