A double win puts Investa on top of property green bond charts
Cameron Jewell | 13 April 2017
Investa has become the first property entity to issue a certified green bond in Australian dollars, and has quickly followed it up with an additional issuance.
Investa Office Fund’s inaugural seven-year $150 million green bond, which has a fixed coupon of 4.262 per cent a year, was announced on 30 March, and will be certified under the Climate Bonds Initiative.
The bond will be used to reduce IOF’s existing bank debt facilities and will be fully allocated against a portfolio of low carbon buildings.
A statement from the fund said the bond had been received favourably by the market and was oversubscribed.
“We are very pleased to issue our first green bond. It highlights the fund’s strong sustainability credentials and demonstrates our commitment to a low carbon economy,” IOF fund manager Penny Ransom said.
“We congratulate Investa on its continued leadership in clean energy innovation in the commercial property sector,” CEFC debt markets lead Richard Lovell said.
“This transaction is the first AUD green bond issuance by a non-financial corporate and the first certified issuance by an Australian property entity in any jurisdiction.”
A green bond issued by Stockland in October 2014 was in Euros, however it was not certified, prompting chief executive of the Climate Bonds Initiative Sean Kidney to say the offer “could have been greener”.
Mr Lovell said the transaction provided a model for the rest of the property sector in seeking new sources of finance for clean energy projects.
“It also demonstrates the potential for different issuer types to access the green bond market and strengthens the case for investors to expand their mandates for investment in green bonds.”
ICPF gets in on the action
Not content with one green bond, Investa’s other fund, Investa Commercial Property Fund, on Thursday announced an “A-” rated, 10-year, A$100 million green bond issuance with a semi-annual fixed coupon of 4.25 per cent.
The bond was again oversubscribed and will be certified by the Climate Bonds Initiative, with cornerstone investments from the CEFC as well as Australian Ethical Super.
ICPF fund manager Jason Leong said he was pleased with the strong level of interest in the bond, saying it demonstrated the “underlying quality of the ICPF portfolio”.
“Diversifying our sources of debt with green bonds demonstrates our support for the growth of the green finance market, re-enforces our leadership position in corporate sustainability and reflects our long-term commitment to transitioning to a low carbon economy,” he said.
Investa recently announced it would become net zero by 2040.
General manager corporate sustainability Nina James said the proceeds would be applied to low carbon building projects that would meet stringent criteria set out in the Climate Bonds Standard, which must set a trajectory to net zero.
“This is yet another way Investa is proactively responding to investor demand for low carbon economy investment opportunities, further strengthening our position as a fund of choice for those looking to invest responsibly,” she said.
Australian Ethical Investment’s managing director Phil Vernon said investment in green bonds would help create the energy efficient infrastructure needed to transition to a net zero world.
“Coupled with the underlying quality of the ICPF portfolio and the fund’s performance, there was a compelling case for our investment in the ICPF green bond,” he said.