OUE REIT Management honoured with SBR National Business Award in Commercial Real Estate Trust category

It adopted ESG principles, accelerating the integration of green financing into its capital management framework.

OUE REIT Management Pte. Ltd. stands at the forefront of sustainable finance within the commercial real estate sector, earning recognition in the Commercial Real Estate Trust category at the SBR National Business Awards 2024. This accolade is a testament to OUE REIT's approach to aligning its financing requirements with broader sustainability commitments, marking a significant milestone in the industry.

Since 2017, OUE REIT has been on an ambitious journey to weave environmental, social, and governance (ESG) principles into the fabric of its asset and capital management strategies. This commitment took a giant leap forward in 2022-2023. Amidst the challenging monetary policy landscape, OUE REIT embarked on two pivotal actions to bolster its capital structure, enhance financial flexibility, and steadfastly adhere to its sustainability objectives.

In a landmark move in August 2022, OUE REIT secured a S$978m unsecured sustainability-linked loan (SLL), setting a new benchmark as the largest SLL obtained by any Singapore REITs to date. This financing, backed by an impressive consortium of 19 banks, was oversubscribed by 1.26 times, underscoring the financial community's robust confidence in OUE REIT's vision and execution. The journey continued in June 2023, with the completion of another unsecured SLL of S$430m for its indirect subsidiary OUB Center Limited.

The structure of these SLLs is intricately tied to OUE REIT’s sustainability performance targets, offering a novel mechanism through which interest rate reductions are realised upon achieving specified environmental targets. This approach underscores OUE REIT's dedication to minimising its environmental footprint, improving energy efficiency, and implementing effective water management practices across its portfolio. These efforts are aligned with the globally recognised recommendations by the Task Force on Climate-related Financial Disclosures.

The strategic issuance of these unsecured SLLs has significantly transformed OUE REIT’s debt profile by increasing OUE REIT’s unsecured debt from 30.9% as of 30 June 2022 to 69.5% as of 31 December 2023. With that, OUE REIT has no refinancing needs until 2025.

With the enhanced financial standing, OUE REIT was assigned an investment grade credit rating of BBB- with a stable outlook from S&P Global Ratings in October 2023. This rating enabled OUE REIT to enjoy a more favourable interest rate for the remaining tenure of its S$150m 4.20% five-year fixed-rate notes due in 2027.To further align its sustainability requirement with its financial requirement, OUE REIT also issued our Green Financing Framework in November 2023 to facilitate the issuance of green bonds and green loans to fund or refinance projects which will contribute to positive environmental and social impacts.

To commemorate its 10th anniversary, OUE REIT, together with its sponsor OUE Limited, has recalibrated its ESG targets in February 2024. This includes the commitment to reduce 40% of absolute GHG emissions by FY 2030, as well as to increase its proportion of green financing to 90% by FY 2030.

OUE REIT remains committed to accelerating the integration of green financing into its capital management framework. This commitment is aimed not only to optimise debt costs and foster a diversified debt maturity profile but also to ensure long-term sustainability and resilience in an ever-evolving economic landscape. The recognition at the SBR National Business Awards 2024 celebrates OUE REIT's leadership in sustainable finance, highlighting its role as a model for the commercial real estate industry and beyond.

The SBR National Business Awards is presented by Singapore Business Review Magazine. To view the full list of winners, click here. If you want to join the 2025 awards programme and be acclaimed for your company's exceptional contributions to the local business landscape in Singapore, please contact Jane Patiag at awards@charltonmediamail.com.