Derwent London (“Derwent”), the largest London-focused Real Estate Investment Trust (“REIT”), has agreed and signed a new five-year £450 million revolving credit facility (“RCF”) from HSBC UK, Barclays and NatWest.
The financing includes a ‘green’ tranche of £300 million, making it the first revolving credit facility provided to a UK REIT that meets the LMA Green Loan Principles (“Green Loan Principles”).
The green tranche is available to fund activities that satisfy the criteria set out in Derwent’s newly established ‘Green Finance Framework’ (the “Framework”). This describes the Group’s sustainability objectives and outlines how Derwent intends to fund projects that will deliver first class working, amenity and outdoor spaces, improved energy efficiency and reduced consumption of natural resources. These include the development or refurbishment of commercial and residential buildings such as 80 Charlotte Street W1 and Soho Place W1 that target and receive minimum third-party verified green building certification, resulting in measurable improvements and positive environmental impacts. The Framework has been externally reviewed to ensure compliance with the Green Loan Principles.
Derwent London will be required to publish an independently verified report annually confirming that the green loans and the Framework continue to satisfy the requirements of the Green Loan Principles. Derwent London will also provide qualitative and quantitative environmental performance reporting of eligible projects in its annual Responsibility Report.
Paul Williams, Chief Executive of Derwent London, said:
“Sustainability is fundamental to our business at Derwent London, and it helps drive the creation of some of London’s most innovative office space. In the last five years we have invested over £750 million and this facility will support the next generation of Derwent’s buildings while recognising our social and environmental obligations to all our stakeholders.”
Damian Wisniewski, Chief Financial Officer of Derwent London, stated:
“Linking part of our financing to our projects’ green credentials is an important step towards understanding how we can help reduce our impact upon climate change. This new five-year facility will also increase our weighted average debt maturity.”
David Stephens, HSBC UK’s Head of Corporate Real Estate, London, added:
“HSBC UK are delighted to act as the joint mandated lead arranger, facility agent and the green loan coordinator for this facility. Derwent has an established and proven track record in developing sustainable buildings and this is core to the business’s strategy. This funding demonstrates the growing demand for green financing and the continued focus on sustainability across the real estate sector. The funding is a further example of our commitment and dedication to the green loan market, which we are determined to support and develop.”
Natalya Tueva, HSBC UK’s Director of Sustainable Finance, explained:
“According to the International Energy Agency, buildings consume 36 per cent of the world’s energy and contribute up to 40 per cent of greenhouse gas emissions. Our financing will support Derwent’s commitment to maximising positive social and environmental impacts through continuous improvement and responsible design, delivery and operation. HSBC is committed to helping businesses transition to a lower carbon economy having a public commitment to provide $100bn of sustainable financing and investment by 2025.”
Dennis Watson, Head of Real Estate at Barclays Corporate Banking, said:
“Derwent’s focus on design and sustainability is in line with our view on how good real estate should be managed, and we have built a strong relationship with the company over many years. Providing this facility will help Derwent deliver their strategy, and the loan structure will reward the sustainable activities. Our Barclays’ Green Product Framework is a great example of our commitment to providing more sustainable and innovative lending solutions to our clients. We’re confident that this will be the first of many facilities we’ll be able to provide that meet the Green Loan Principles and help accelerate the transition to a greener economy.”
Commenting on the transaction, Charlie Foster, Managing Director Large Corporate Commercial Real Estate at NatWest added:
“We are proud to continue our support of Derwent in providing the first Green RCF to a UK REIT. This transaction emphasises NatWest’s commitment to supporting sustainably financed projects across all sectors, with an increasing focus on real estate highlighted by this transaction.”