SHKP signs sustainability-linked loan of HK$20.7 billion. Another record-breaking SLL in Hong Kong’s real estate sector

SHKP signs sustainability-linked loan of HK$20.7 billion
Another record-breaking SLL in Hong Kong’s real estate sector

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Sun Hung Kai Properties Limited (SHKP) today signed a five-year sustainability-linked loan (SLL) facility with 16 major international and local banks. The credit facility received an overwhelming response from the market, as it was oversubscribed by more than four times. The final size of the syndicated loan came to HK$20.7 billion, making it the largest of its kind for the real estate sector in Hong Kong.

This year’s SLL facility followed last November’s HK$8,650 million SLL for the Group, also a market record at the time. The successful formation of an SLL facility in two consecutive years shows the Group’s commitment to sustainability, as well as the banking industry’s trust in and support for the Group’s work in Environmental, Social and Governance (ESG). 

SHKP Chairman and Managing Director Raymond Kwok said: “SHKP has a firm belief in promoting sustainable development. This credit facility will allow us to better leverage the Group’s resources and advantages to meet more ambitious ESG goals. Despite the challenges arising from the pandemic, we have continued to uphold our belief in Building Homes with Heart and step up our ESG efforts. This, together with our quality products and services, is conducive to making Hong Kong a better place to live and work, and nurture the next generations.”

The Group has been incorporating ESG elements into its business operations to create long-term value for its shareholders and the community as a whole.  To help Hong Kong achieve a low-carbon transition and carbon neutrality, the Group is investing heavily in renewable energy generation. Its major initiatives include building solar farms and installing solar panels in its managed properties, with the Group set to be one of the largest solar panel operators in the city. In addition to constantly enhancing the environmental performance of its existing buildings, the Group targets to obtain LEED Gold or Platinum ratings for its core commercial projects under development. It has also pledged to reduce greenhouse gas emissions intensity and electricity consumption intensity of its major properties by 25% and 13% respectively by the 2029/30 financial year compared to 2019/20.

The Group places equal emphasis on safeguarding the health and well-being of the community. To help the city’s fight against the fifth COVID wave, the Group lent for free two pieces of land to the government to build community isolation facilities and provided space in two office premises as venues for community vaccination. Moreover, the Group is helping meet the short-term housing needs of the underprivileged by leasing a plot of land in Yuen Long to develop United Court, a 1,800-unit transitional housing project, which will officially open this month as Hong Kong’s largest transitional housing development to date.

SHKP’s ESG performance is well recognized by respected organizations and the financial community. The Group has been named one of the top three companies in the Hang Seng Corporate Sustainability Index (1) for three consecutive years and a constituent member of the FTSE4Good Index Series (2) since 2018. In 2022, SHKP received a rating of ‘A’ in the MSCI ESG Ratings assessment (3)

Bank of China (Hong Kong) Limited, The Hongkong & Shanghai Banking Corporation Limited and MUFG Bank, Ltd. will collectively act as sustainability advisors for the SLL facility and advise SHKP on sustainability performance targets. On top of the three advisors, the facility is also backed by Oversea-Chinese Banking Corporation Limited, China Construction Bank (Asia) Corporation Limited, DBS Bank Ltd., Industrial & Commercial Bank of China (Asia) Limited, Hang Seng Bank Limited, Bank of Communications Co., Ltd., Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, Fubon Bank (Hong Kong) Limited, Shanghai Commercial Bank Limited, United Overseas Bank Limited, Citibank, N.A. and Cathay United Bank Co., Ltd. 

Bank of China (Hong Kong) Limited’s (BOCHK) Deputy Chief Executive Wang Bing said: “SHKP is committed to incorporating sustainable building elements into its new development projects and enhancing the environmental performance of its existing buildings. BOCHK is pleased to be appointed as the sustainability advisor for SHKP’s sustainability-linked loan facilities for two consecutive years. Both loans received overwhelming response from the banking community, indicating market’s affirmation and support for SHKP and the development of green finance. BOCHK strives to embed ESG considerations into our daily operations, assisting and encouraging our customers to establish sustainable business models with diversified green finance products and services.”

Jonathan Drew, Managing Director, ESG Solutions, Global Banking, The Hongkong and Shanghai Banking Corporation Limited, said: “HSBC is delighted to be working with SHKP on its latest sustainability-linked loans following its debut in November 2021. The property sector plays a critical role in reducing electricity consumption and improving sustainability metrics across Hong Kong. Issuers like SHKP who set ambitious targets that address these challenges – continue to attract the strongest investor demand.”

Tony Lee, Managing Director and Head of Global Corporate Banking, East Asia of MUFG Bank, said: “SHKP is at the forefront of the development of sustainable cities and communities.  As a global leader in ESG financing, MUFG is extremely pleased to partner with SHKP in deepening its sustainability commitment.  MUFG is privileged to have supported SHKP in this facility as a sustainability advisor, and looks forward to further aligning our efforts to effect positive and meaningful change in Hong Kong and the rest of the region.”

According to the loan agreement, SHKP is entitled to interest savings after meeting a set of predetermined sustainability performance targets as follows:

  • Achieving a continuous increment in the proportion of green office buildings in our portfolio of core completed office buildings (4)
  • Achieving an annual reduction in electricity consumption intensity (ECI, measured in units of kWh/m2)
  • Demonstrating continuous improvement in the S&P Global ESG Scores (5)

The facility was signed by Sun Hung Kai Properties (Financial Services) Limited, with its parent, SHKP, providing a guarantee. It has a 30:70 split between term loan and revolving credit tranches and a maturity of five years. The proceeds will be used for general working capital and ongoing sustainability initiatives. SHKP has the highest credit ratings among property companies in Hong Kong, attaining an A1 and A+ rating with a stable outlook from Moody’s and S&P respectively. 


(1) The Hang Seng Corporate Sustainability Index includes the top 30 Hong Kong-listed companies that perform well on corporate sustainability.  The constituent companies of the index are assessed by the Hong Kong Quality Assurance Agency, an independent and professional assessment body, to ensure the index is objective and reliable.  SHKP attained AAA, the highest rating, in both 2020 and 2021.

(2) FTSE Russell (the trading name of FTSE International Limited and Frank Russell Company) confirms that SHKP has been independently assessed according to the FTSE4Good criteria and has satisfied the requirements to become a constituent of the FTSE4Good Index Series. Created by global index provider FTSE Russell, the FTSE4Good Index Series is designed to measure the performance of companies demonstrating strong Environmental, Social and Governance (ESG) practices. The FTSE4Good indices are used by a wide variety of market participants to create and assess responsible investment funds and other products.

(3) Please refer to the MSCI disclaimer: https://www.shkp.com/html/sustainable-development/mscidisclaimer.html.

(4) Definition of green office buildings: office buildings with LEED Gold or Platinum certification or pre-certification.

(5) The S&P Global ESG Scores (formerly known as the SAM ESG Scores; Dow Jones Sustainability Index scores) is an ESG data set that provides company-, dimension-, and criteria-level scores based on the S&P Global Corporate Sustainability Assessment process, an annual evaluation of companies’ sustainability practices
 

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