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UAE developer Aldar Properties has secured its first ever sustainability-linked loan amounting to 300 million dirhams ($81.6 million).
The five-year financing agreement with HSBC links the payable interest margin to Aldar’s ability to achieve sustainability targets and is the first of its kind obtained by a real estate company in the Middle East region, the developer said in a statement on Sunday.
The loan will be used for “general corporate purposes”, including the planned rollout of environmental, social and governance (ESG) initiatives across the group.
“The [loan] includes a mechanism to adjust Aldar’s interest margin annually in line with achievement of targets on energy and water intensity, waste recycling and worker welfare,” the company said.
As part of the agreement, Aldar has also committed to investing a fixed amount in one or more qualifying ESG projects if it does not reach agreed annual targets.
“Our financial stakeholders are increasingly factoring sustainability assessments into their portfolio strategies. At Aldar, we believe this shift in capital allocation is a positive force that creates a powerful incentive for companies to up their sustainability game to benefit from these capital flows,” said Greg Fewer, group chief financial and sustainability officer at Aldar.
The transaction is structured according to the Sustainability-Linked Loan Principles (SLLP) published by the Loan Market Association (LMA), Asia Pacific Loan Market Association (APLMA) and Loan Syndications & Trading Association (LSTA).
(Writing by Cleofe Maceda; editing by Seban Scaria)
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