Sustainability-linked loans and credit facilities
Since 2019, sustainable financing has made it possible to align, in some instances, the cost of our loans and credit facilities with our ESG performance (sustainability-linked loans).
We have entered into a €250 million sustainability-linked margin loan with our financial partners. In the fall 2021, we continued our commitments and indexed C$8.5 billion of corporate financing to our ESG performance.
To measure our ESG performance, we selected three key performance indicators (KPIs): greenhouse gas emissions; low-carbon investments and improvement of our GRESB score.
For each KPI, we have defined annual targets over a period of 5 years. These targets allow us to achieve the objectives of our new “net zero carbon” strategy and improve our GRESB score.
Our GRESB‘s Score is based to the results of the Global ESG Benchmark for Real Assets (GRESB), which measures ESG performance by assigning quantifiable results to portfolios so businesses can compare themselves with competitors in their industry. Ivanhoé Cambridge was one of the first real estate companies to comply with GRESB standards. We leveraged this involvement to expand our CSR efforts overt the years and better gauge how to improve our performance.
Every year, our results will be evaluated or confirmed by independent experts. Depending on our results, cost of loans and credit will be adjusted upwards or downwards.
Aligning our financings with our CSR aspirations
Our commitment to corporate social responsibility (CSR) also extends to the financing of our operations.
Our industry-leading approach to sustainable finance incorporates environmental, social and governance (ESG) factors into a number of our transactions. These innovative tools make it possible to finance our activities in a way that is true to our corporate vision of having a meaningful and sustainable impact on our communities.
This approach allows us to align our financing activities with our CSR priorities, broaden our pool of investors and drive innovation forward within the real estate industry.
Over the past three years, we have deployed more than $10 billion in sustainable financing through a wide range of instruments. We will strive to build further on these efforts in the years to come, working in close collaboration with our partners.
85 Broad Street: First “green bond” CMBS in the U.S.
Acquired by Ivanhoé Cambridge in 2017, this prestigious office building in the heart of Manhattan was awarded LEED Platinum certification after a series of major upgrades to the property.
In collaboration with us, Natixis issued the first green-specific tranche in a commercial mortgage-backed security (CMBS) for 85 Broad Street.
As part of a securitization program, a $72-million green tranche was issued to refinance part of the mortgage loan provided to us by Natixis to acquire the building.
Natixis commissioned oekom research, a rating agency in the field of sustainable investment, for a second-party opinion on this green tranche. The agency analyzed the green tranche against the Green Bond Principles (GBP) set forth by the International Capital Market Association (ICMA) and its own green bond analysis framework. This specialised agency confirmed the alignment of the green tranche with the Green Bond Principles’ Green Use of Proceeds Securitized Bond’s formal concept and provided a positive opinion.
DUO: First green certification of a commercial real estate loan in Europe
DUO is a cutting-edge urban architectural project in Paris that is poised to become one of the most iconic buildings in the French capital. The two asymmetrically designed mixed-use towers are being built to the strictest environmental, energy efficiency, user comfort and healthy building standards. The property is aiming for Effinergie+, HQE Exceptionnel, LEED Platinum, WELL Platinum and WiredScore Gold certification.
The project is being financed through a €480-million loan granted by a banking syndicate. In collaboration with Natixis Assurances, we obtained the “Climate Bond Certified” label awarded by the Climate Bonds Initiative (CBI).
This was Europe’s first CBI-endorsed green commercial real estate loan. We asserted our role as a dynamic player in the emerging green lending market.
To obtain CBI certification, DUO mandated oekom research as independent verifier of the Low Carbon Buildings – Commercial Properties (real estate) standard and established the structure of the reporting for the monitoring of environmental certifications, energy consumption and CO2 emissions. Certification must be renewed annually by CBI.
First green loan from IFC
We are actively incorporating sustainable initiatives across all our projects with LOGOS, one of our major partners in Asia-Pacific for logistics development.
In 2020, LOGOS has established its first green loan with International Finance Corporation (IFC), a member of the World Bank Group, with up to US$120 million in debt financing for the development of LOGOS Cikarang Logistics Park and LOGOS KLOG Cibitung Logistics Hub. These two logistics estates in the greater Jakarta area are targeting a Green Mark award certification and are designed to comply with IFC’s green-building standards. This will include a wide range of sustainability initiatives to reduce greenhouse-gas emissions during construction and operation.
CIBC SQUARE 141 Bay: Largest Green Real Estate Construction Loan in the History of the Canadian Market
In 2021, along with our partner Hines, we have financed the construction of 141 Bay, phase II of CIBC SQUARE, with the largest green construction loan in the history of the Canadian market ($780M). Set to transform Toronto’s skyline, CIBC SQUARE 141 Bay was designed to attain a LEED® Platinum certification for the protection of the environment and limitation of carbon emissions, and WELLTM Platinum certification, for the health of its interiors. The loan was aligned with the Green Loan Principles as established by the Asia Pacific Loan Market Association, the Loan Market Association and the Loan Syndications and Trading Association.
First issuance of green bonds by a real estate company in Canada
In December 2019, we issued $300 million in senior unsecured green bonds, a first in Canada for a real estate entity, thus doing our part to keep nudging the industry toward green investment opportunities. Green bonds will help us attract investors whose mandates require them to include bonds in their portfolio for which proceeds will be used to finance or refinance sustainable projects.
Green Bond Framework
Accordingly, we have established a Green Bond Framework aligned with the Green Bond Principles endorsed by the International Capital Market Association (ICMA).
Sustainalytics’ second-party opinion
We submitted the Green Bond Framework to Sustainalytics, a firm in ESG research, ratings and analysis, for review. Sustainalytics’ second-party opinion confirmed that the framework is transparent, robust and in alignment with ICMA Green Bond Principles.
All the proceeds from the issuance were used to refinance the renovations at Édifice Jacques-Parizeau, Maison Manuvie and Place Ville Marie in Montreal, as well as Place Ste-Foy in Quebec City. Full details can be found in our allocation report.